Agenda GROWER WORKSHOP - Part 1 SITES RESERVOIR PROJECT - PHASE 2A Location: District Headquarters, Highway 166, 6.5 miles west of Mettler, CA

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1 WHEELER RIDGE-MARICOPA WATER STORAGE DISTRICT Agenda GROWER WORKSHOP - Part 1 SITES RESERVOIR PROJECT - PHASE 2A Location: District Headquarters, Highway 166, 6.5 miles west of Mettler, CA 1. Project Description a. Project Benefits (multi-use) i. WSIP Prop 1 (state) - delta smelt enhancements, wildlife refugees, recreation, flood control ii. WIIN Act (federal) - salmon cold water pool, BuRec Operational Flexibility yield iii. Water Agencies - water supply for M&I and irrigation 2. Project Governance a. By law, no DWR or Bureau control or voting interest b. By law, only public agencies and Mutual Water Company members c. Role of JPA and RPC d. Bylaws and Delegation of authority to RPC from JPA 3. Phase 1 and 2 a. Description b. Timeline Graphic and Costs by Phase c. Phase 1 costs - Grower vs District payment d. Phase 2A costs by growers through EOY 2019 e. Difference between average annual yield and Participation Acre-feet f. Over/Under subscribed - 335TAF available vs 235TAF projected Reservoir Project Agreement a. Review highlighted text b. Project Agreement Members and Participation Percentage c. Term and Cost Obligation d Work Plan and Budget e. Refunds to Withdrawing Members 5. Politics 6. Water Supply Yield a. Water Rights - application in Phase 2A, junior to other Sac River rights b. Climate Change c. Delta Issues d. Project / Non-Project Water Modeled as Project Water e. Purchases from Others f. Incremental Yield NOD/SOD by Year Type g. Delta Carriage Losses - 18%/12%/30% h. No Spill Risk

2 7. Project Costs, Yield and Unit Rates a. Cost Estimates - Sites, BuRec and Risk Controlled b. Cost Uncertainty - contingency, risk assessment, risk register c. Construction Entity - Sites Project Authority d. Phase 2B Financing and Payment Structure - P&I, Interest only during construction, Capitalized interest (no payments during construction) 8. Project Pros/Cons for District Growers 9. Assurances/Risks a. Endangered Species Take Permits (federal and state) - salmon bypass flows b. State Water Resources Control Board - Water Quality Control Plan Phase 2 and Water Rights Permit c. California Division of Safety of Dams d. Adaptive Management e. Litigation (BiOps, CEQA/NEPA, Eminent Domain) f. Risk Management - Defaults in Phase 2A and beyond i. Phase 2A Agreement is for 1 year of planning costs with no financing/repayment obligation, so limited financial risk ii. Sites participation is voluntary iii. Non-payment risk within District to be distributed only among District participants; no nonpayment risk from other Sites participants iv. Phase 2B, 3, and 4 will likely be financed which increases default risk 10. Other Elements - SOC Billing, Banking Projects 11. Timeline for Phase 2A (Attachment 10) i. December District Grower Workshops ii. December 12, District Board to decide on certain elements iii. Develop grower Planning Cost Agreement iv. January 12, Board approves form of Planning Cost Agreement v. January 31, Deadline for Growers to return executed Planning Cost Agreements vi. February 14, Board approves execution of grower Planning Cost Agreements and Phase 2 Participation Agreement 12. Next District Workshop on Project Cost, Yield and Unit Rates

3 Grower Workshops Sites Reservoir Project Agenda Item # 1 Project Description Project Benefits (multi-use) 1. WSIP Prop 1 (state) - delta smelt enhancements, wildlife refugees, recreation, flood control 2. WIIN Act (federal) - salmon cold water pool, BuRec Operational Flexibility yield 3. Water Agencies - water supply for M&I and irrigation

4 2017 Aug 30 reservoir Commiteee Workshop, Agenda & Attachment 1-2 August 14, 2017 Sites Project Executive Summary FOR CALIFORNIA S WATER STORAGE INVESTMENT PROGRAM Providing high-quality water to enhance the environment, the economy and quality of life for Californians Sites is an innovative, environmentally sound solution to California s toughest water challenges. SITESPROJECT.ORG With broad statewide support, the Sites Project fulfills the clear Proposition 1 mandate from the People of California, who overwhelmingly said the state needs public benefits from new water storage.

5 Executive Summary Figure ES-2. NODOS Project Conveyance Measures ES-8 North-of-the-Delta Offstream Storage Investigation Draft Feasibility Report

6 Executive Summary ES-18 North-of-the-Delta Offstream Storage Investigation Draft Feasibility Report Figure ES-6. Features of NODOS Project Alternative D

7 Sites Project Facilities Water managers have long acknowledged that by creating a new source of water and adding more flexibility in the system, Sites can help California succeed in implementing 21st century water solutions to meet human AND environmental needs. To achieve this, the project includes the following facilities: Sites Reservoir The 1.8 MAF offstream reservoir will require two main dams (Sites and Golden Gate) and nine saddle dams. The resulting reservoir covers 14,200 acres. This reservoir will also improve local flood protection as witnessed by the February 18, 2017 storm event that flooded part of Maxwell and temporarily closed Interstate 5. Regulating Reservoirs 2a. Holthouse is an expansion of the existing Funks Reservoir, which provides flow equalization for the Tehama-Colusa Canal. Holthouse Reservoir is sized to allow pump-storage operations to generate renewable energy. Water entering Holthouse Reservoir will be pumped into Sites. 2b. The Terminal Regulating Reservoir will be constructed at the Glenn-Colusa Irrigation District Canal for flow equalization with flows pumped into Holthouse. Diversions Water from the Sacramento River will be diverted for conveyance to Sites Reservoir from three locations: 4 5 Sites Pumping/Generating Plant This facility will have a capacity of 5,900 cubicfeet per second to fill Sites Reservoir. Water released from the reservoir will flow in the reverse direction through the plant and generate seasonal hydropower and daily pumped-storage to contribute to the state s renewable energy goals. Conveyance Water from Sites can be delivered throughout much of California. Releases from Sites include the following: 5a. The existing Tehama-Colusa Canal conveys water from the Red Bluff Diversion to Holthouse and deliver releases from Sites to local users south of the reservoir. 5b. The existing Glenn-Colusa Canal conveys water from the Hamilton City Diversion to the Terminal Regulating Reservoir and deliver releases from Sites to local users south of the reservoir. 5c. The new 13.5 mile Delevan Pipeline connects the new Sacramento River intake with Holthouse to convey water in either direction. 5d. To the Colusa Basin Drain and either to the Sacramento River or into the Yolo Bypass through Knights Landing Ridge Cut. 3a. The existing Red Bluff Pumping Plant will divert water and convey it through the Tehama-Colusa Canal. Integrating local infrastructure reduces costs and ensures the project complements the Sacramento Valley water system. 3b. The existing Glenn-Colusa Irrigation District Pumping Plant will divert water and convey it through the Glenn-Colusa Canal. 3c. A new Delevan Intake Pumping/Generating Plant will divert water into a new pipeline that will convey water into Holthouse Reservoir. Both the Glenn-Colusa and Tehama-Colusa diversions currently utilize state-of-the-art fish screens and the Delevan Intake will include state-of-the-art fish screens to ensure fish friendly diversions. 6 7 Recreation Areas The project will include the construction of two new recreation areas on the shore of Sites Reservoir for camping, picnicking, hiking, horseback riding, boating and fishing, among other activities. A separate boat ramp will also be included. Powerlines Overhead powerlines will connect the three pumping/generating plants located at: Holthouse (Sites), the Terminal Regulating Reservoir, and Delevan to the state s electrical grid. EXECUTIVE SUMMARY 9

8 Sites Statewide Project Participation Sites is locally-led in partnership with the state and federal government, and is widely supported by water agencies and stakeholders from across the state. Organization and Amount of Sites Water Requested Authority Board Members Other Sacramento Water Agencies SITES RESERVOIR PROJECT REDDING SACRAMENTO VALLEY WATER AGENCIES Colusa County Colusa County Water District Glenn-Colusa Irrigation District Orland-Artois Water District Proberta Water District Reclamation District 108 Western Canal Water District Westside Water District Glenn County Maxwell Irrigation District Placer County Water Agency & City of Roseville Tehama-Colusa Canal Authority REPRESENTED 4M Water District Cortina Water District Davis Water District Dunnigan Water District LaGrande Water District City of American Canyon Carter MWC Garden Highway MWC Total for Sacramento Valley Water Agencies 173,911 AF SACRAMENTO SAN FRANCISCO FRESNO NON-SACRAMENTO VALLEY WATER AGENCIES Organization* Antelope Valley-East Kern WA California Water Service** Castaic Lake Water Agency Coachella Valley Water District Desert Water Agency Metropolitan Water District Pacific Resources MWC San Bernardino Valley Municipal WD San Gorgonio Pass Water Agency Santa Clara Valley Water District Wheeler Ridge-Maricopa WSD Zone 7 Water Agency Total for Non-Sacramento Water Agencies 230,500 AF TOTAL REQUESTED PARTICIPATION 404,411 * Total authorized to participate as of 7/31/17 = 32 Sacramento Valley Hydrologic Region Boundary ** Also provides water to Sacramento Valley communities The acre feet is being used to apportion the study costs associated with preparing the proposal for potential state s participation in accordance with Proposition 1, Chapter 8 (WSIP) LOS ANGELES Water managers from across the state are participating in the planning of Sites Reservoir. The Authority proposes to give the state the first right to up to 710,000 AF of storage capacity to be used to achieve Proposition 1-eligible public benefits. The Authority has established a waiting list from its participants which would be used to finance the project should the state and federal investment level be lower than the 40% proposed. SAN DIEGO EXECUTIVE SUMMARY 7

9 Sites Reservoir Committee Workshop Project Update: ACWA Conference, November 27, 2018

10 Water Commission Results Legend: 6 Rank 7 Size = Funding amount (MCED) Green: Brown: Surface Storage Groundwater/ conjunctive use 8 5 Blue: Treated Wastewater Map & Description: John Blanchard/The Chronicle

11 Water Commissioner s Decisions 1. Eligible Funding (Public Benefits)$ million Water for wildlife refuges Water for Delta smelt Recreation Flood reduction 2. Early Funding (cost-share) $ 40.8 million Environmental documentation Approvals, certifications, and agreements 3. Submitted 1 st Quarterly report 3

12 Estimated 2019 Participation Sac. Valley Agriculture Evaporation & Seepage Loses Bureau of Reclamation (Operational Flexibility & Anadromous Fish) San Joaquin Agriculture 500,000 a-ft/year California: Delta smelt & Wildlife Refuges Bay Area M&I Drier year releases are larger Water Supply is FOB Holthouse 2018 October 07, Subjec t to Cha nge S. California M&I Available for other uses Page 4

13 Current list of Phase 2 Participants: Sacramento Valley Beyond the Sacramento Valley Authority Board Acre-ft. Colusa County 10,000. Colusa County Water District 13,100. Glenn County - Glenn-Colusa Irrigation District 5,000. PCWA & City of Roseville - Reclamation District 108 5,000. Sacramento Co WA & City of Sacramento - Tehama-Colusa Canal Authority - Western Canal Water District - Westside Water District 15,000. Associate Members (non voting) Maxwell Irrigation District - Orland-Artois Water District (pending) - TC-4 (pending) - Cortina Water District 300. Davis Water District 2,000. Dunnigan Water District 2,774. LaGrande Water District 1,000. Reservoir Committee American Canyon, City of 4,000. Carter MWC 500. Working Draft dated 2018 Sept 24. Subject to change Reservoir Committee Acre-ft. Antelope Valley-East Kern WA 500. Coachella Valley Water District 10,000. Desert Water Agency 6,500. Metropolitan Water District 50,000. Pacific Resources MWC 20,000. San Bernardino Valley Muni WD 21,400. San Gorgonio Pass Water Agency 14,000. Santa Clara Valley Water District 24,000. Santa Clarita Valley Water Agency 5,000. Wheeler Ridge-Maricopa WSD 14,000. Zone 7 Water Agency 10,000. Total acre-ft: 234,074. Board: 12 Agencies Combined: 31 Agencies + Key Stakeholders (Non-Voting): US Bureau of Reclamation Department of Water Resources Page 5

14 Grower Workshops Sites Reservoir Project Agenda Item # 2 Project Governance 1. By law, no DWR or Bureau control or voting interest 2. By law, only public agencies and Mutual Water Company members 3. Role of JPA and RPC 4. Bylaws and Delegation of authority to RPC from JPA

15 Grower Workshops Sites Reservoir Project Agenda Item # 3 Phase 1 and 2 1. Description 2. Timeline Graphic and Costs by Phase 3. Phase 1 costs - Grower vs District payment 4. Phase 2A costs by growers through EOY Difference between average annual yield and Participation Acre-feet 6. Over/Under subscribed - 335TAF available vs 235TAF projected

16 Phase-level Schedule Phase 1 Jan 2018 Time Now Phase 2A 2B 3 Phase PROP 1 CA WATER COMMISSION Application Review Proposed investment Early Funding Encumber Prop 1 Funds FEDERAL WIIN ACT Feasibility Report Re-evaluation Report Federal Investment Appropriate Funds PLANNING & PERMITTING Draft EIR/S Final EIR/S Consultation & Permits Final EIR/EIS Certify EIS & Accept BiOps ENGINEERING & RIGHTS OF WAY Preliminary Design & Geotech Final Design Construction Management CONSTRUCTION & COMMISSIONING ROW Construction OPERATIONS Early Ops Full Operations 2018 July, Working Draft, Subject to Change Page 2

17 Four Strategies Evaluated for Phase 2 S in Millions TOTAL Relative Risk Plan A Lowest Participants WIIN WSIP Plan B Highest Participants WIIN WSIP Plan C Moderate Participants WIIN WSIP Plan D Participants WIIN , WSIP NOTE: State and Federal cost-share amounts shown are to conservatively estimate Participants' cost-share. Should additional funding become available, the work plan amounts could be increased. $ 420 million is provided in the Sept 7 financial package. This included funds to keep the Project moving forward until construction financing is in place, which is the difference equal to $ 42.2 million Oct 1 9, Staff Working Draft, Subject to Change Page 6

18 4. Interim (Phase 2) Financing Projections Estimate of Phase 2 Costs: Phase 2 Costs $ 418 million Less: Prop1 Funds $ 45 million Less: WIIN Act Funds $ 30 million Amount to be Financed $ 343 million Phase 2 Interim Financing $350 million bank line of credit Funds available beginning in early 20 Minimum payment: Interest-only through end of Phase 2 Payments begin in January 202 Line of credit refinanced with long-term bonds at beginning of Phase July, Working Draft, Subject to Change Page 10

19 W H E E L E R R I D G E - M A R I C O P A W A T E R S T O R A G E D I S T R I C T MEMORANDUM TO: FROM: Board of Directors Robert Kunde DATES: August 7 and September 11, 2018 SUBJECT: Sites Reservoir Project - Excerpts August 7 Excerpts: Sites Reservoir July activity included: 1. An application was submitted for a USDA loan of $533 million. 2. The California Water Commission allocated $816.3 million in public funds to Sites Reservoir. This funding depends on the timely and successful achievement of various milestones. This includes $40.8 million in early funding for Phase 2. Phase 2 of the Project will include final EIR, additional federal studies to qualify for WIIN Act funding, endangered species and water right permitting, geotechnical investigations, and preliminary and final design of dams, pipelines, pumping plants, etc. The current estimate for Phase 2 costs is: public funding for environmental benefits $ 75 million participant funding for water supply $343 million Total $418 million

20 W H E E L E R R I D G E - M A R I C O P A W A T E R S T O R A G E D I S T R I C T Agenda Item 8. MEMORANDUM TO: FROM: Board of Directors Robert Kunde DATE: November 13, 2018; revised December 15, 2018 SUBJECT: Sites Reservoir - Recovery of Past Costs Attached find a Sites status report from the October 2018 Engineer-Manager s Report. From that report: In October, the District Board directed staff to solicit individual grower participation rather than District participation for Phase 2. With the above changes, it is anticipated grower workshops will be scheduled for the week of December 3 to 7. The District has made no commitment for Phase 2 participation. Funding agreements between the District and growers will be necessary to collect the 2019 Phase 2 funding. It is anticipated the workshops will use a similar format to the Water Fix workshops to identify Cost, Yield and Assurances. A grower water cost modeling tool may be developed. In order to estimate grower costs for Phase 2, direction is sought regarding the costs already incurred by the District in Phase 1. These are: a. direct costs of $831,023 paid by the District for 20,000 acre-feet of participation; and b. overhead costs of District labor, travel expenses and contract services during Phase 1 estimated at about $130,000. The direct costs are subject to a true-up process for Phase 1 which could increase or decrease depending on grower participation in Phase 2. The Phase 1 costs will be $48.50 per acre-foot for each acre-foot of Phase 2 participation. The District Phase 1 investment is less than this because Class 2" water costs were $24.50 per acre-foot for about 9,000 acre-feet of Phase 1 participation. The cost of Phase 2A participation (2019 only) is expected to be $60.00 per acre-foot of participation. The economic viability of the Sites Project is dependent on Project Yield which will not be known until the Phase 2 permitting is completed. A range of costs has been estimated that vary by assumed permitting conditions (essentially how much Sacramento River diversion quantity will be allowed). The Questions. 1. Should the District recover its Phase 1 direct costs from growers? 2. Should the District recover its Phase 1 overhead costs from growers? 3. Should the District delay said recovery until the Project is known to be viable, and forego recovery if the Project is not viable? Attachment (filename \\WRM-DC-01\Users\rkunde\A\2018\Sites\8.7_Sites_Ph1_CostRecovery_B_D_Dec.mem) Page 1 of 2

21 Excerpt from October 2018 Engineer-Manager s Report Sites Reservoir. At the October 18 meeting, the Sites Reservoir Project Committee directed that significant changes be made to Phase 2 of the Project, to wit: 1. Sites staff will advance the alternative work Plan C with an estimated ceiling of $40.2 million for the 2019 calendar year. An estimated $15.0 million will be funded by Sites participants. A budget for formal approval will be presented at the November Project Committee meeting. 2. The Phase 2 Participation Agreement will be revised to have continued participation decision points at the end of 2018, 2019 and 2020 based on calendar years. The revised Agreement will need to be approved at the November Project Committee meeting. 3. The start of Phase 2 will be shifted one month to April Phase 2 funding (April December) will be based on a cash call instead of financing. Based on the current estimate of Phase 2 water agency participation of 235,000 acre-feet and $15.0 million, this is about $63.83 per acre-foot for 2019, or about $64,000 per 1,000 acre-feet of participation. Phase 2 is the permitting and early design phase. At least 24 permits will be required, and many will be required by December 2021 in order to remain eligible for continued Proposition 1 funding. In July 2018, and subject to meeting certain conditions and deadlines, Sites was awarded $816 million in Proposition 1 funds for Sites Reservoir public benefits (recreation, flood control, wildlife refuges, fishery and habitat benefits) including $40.8 million in early funding to assist in completing the necessary environmental analyses and obtaining permits. In Phase 1, public water agency participation in Sites Reservoir was oversubscribed. However, the estimated Phase 2 participation of 235,000 acre-feet is undersubscribed compared to the estimated average yield (North of Delta) for public water agencies of about 330,000 acre-feet per year. The remainder of the 500,000 acre-feet per year of yield is allocated to public benefits and a contingency for permitting. These yield estimates may be optimistic the yield will depend on conditions imposed to meet currently unknown endangered species act and water rights requirements (among other permit requirements). The 235,000 acre-feet of Phase 2 water agency participation is an estimate prepared by Sites staff and includes 14,000 acre-feet for Wheeler Ridge. In October, the District Board directed staff to solicit individual grower participation rather than District participation for Phase 2. With the above changes, it is anticipated grower workshops will be scheduled for the week of December 3 to 7. The District has made no commitment for Phase 2 participation. Funding agreements between the District and growers will be necessary to collect the 2019 Phase 2 funding. Other Sites activities chaired by the Engineer-Manager included (a) continued effort to identify a way for Sites charges to be included on the DWR Statement of Charges (on a voluntary basis) of participating contractors, and (b) continued effort to improve the yield modeling results in the Reservoir Operations Work Group. The Engineer-Manager participated in 7 meetings and conference calls, and spent about 5 days, on Sites matters. Page 2 of 2

22 Grower Workshops Sites Reservoir Project Agenda Item # Reservoir Project Agreement 1. Review highlighted text 2. Project Agreement Members and Participation Percentage 3. Term and Cost Obligation Work Plan and Budget 5. Refunds to Withdrawing Members

23 2018 November 16 Reservoir Committee Meeting Agenda Item 3-4, Attachment A Stradling Yocca Carlson & Rauth Draft of 11/12/18 SITES PROJECT AUTHORITY 2019 RESERVOIR PROJECT AGREEMENT DATED AS OF [APRIL] 1, 2019 BY AND AMONG SITES PROJECT AUTHORITY AND THE PROJECT AGREEMENT MEMBERS LISTED HEREIN DRAFT

24 TABLE OF CONTENTS Section 1 Definitions... 2 Section 2 Purpose... 3 Section 3 Reservoir Project Committee... 3 Section 4 Funding... 5 Section 5 Participation Percentages... 6 Section 6 Future Development of the Sites Reservoir Project... 6 Section 7 Indemnity and Contribution... 7 Section 8 Term... 7 Section 9 Withdrawal From Further Participation... 7 Section 10 Admission of New Project Agreement Members... 8 Section 11 Amendments... 8 Section 12 Assignment; Binding on Successors... 8 Section 13 Counterparts... 9 Section 14 Merger of Prior Agreements... 9 Section 15 Severability... 9 Section 16 Choice of Law... 9 Section 17 Notices... 9 EXHIBIT A PROJECT AGREEMENT MEMBERS... A-1 EXHIBIT B 2019 WORK PLAN... B-1 EXHIBIT C NOTIFICATIONS... C-1 DRAFT

25 TABLE OF CONTENTS Section 1 Definitions... 2 Section 2 Purpose... 3 Section 3 Reservoir Project Committee... 3 Section 4 Funding... 5 Section 5 Participation Percentages... 6 Section 6 Future Development of the Sites Reservoir Project... 6 Section 7 Indemnity and Contribution... 7 Section 8 Term... 7 Section 9 Withdrawal From Further Participation... 7 Section 10 Admission of New Project Agreement Members... 8 Section 11 Amendments... 8 Section 12 Assignment; Binding on Successors... 8 Section 13 Counterparts... 9 Section 14 Merger of Prior Agreements... 9 Section 15 Severability... 9 Section 16 Choice of Law... 9 Section 17 Notices... 9 EXHIBIT A PROJECT AGREEMENT MEMBERS... A-1 EXHIBIT B 2019 WORK PLAN... B-1 EXHIBIT C NOTIFICATIONS... C-1 DRAFT

26 THIS 2019 RESERVOIR PROJECT AGREEMENT is made effective as of April 1, 2019, by and among (a) the Sites Project Authority (the Authority ) and (b) certain Members and/or Non- Member Participating Parties, listed on the attached Exhibit A and is made with reference to the following facts: RECITALS A. Various public agencies in the Sacramento River Watershed created the Authority in Various public agencies in the Sacramento River Watershed, including certain Project Agreement Members, previously entered into the Fourth Amended and Restated Sites Project Authority Joint Exercise of Powers Agreement, dated November 21, 2016, pursuant to which they are developing the Sites Reservoir Project, which is contained in the CalFed Bay-Delta program Programmatic Record of Decision, August 28, The Joint Powers Agreement provides a mechanism for Project Agreements (as defined in the Joint Powers Agreement) to undertake specific work activities for the development of the Sites Reservoir Project. On August 20, 2018, the Authority s Board of Directors also adopted Bylaws for Phase 2 of the Sites Reservoir Project, which also address Project Agreements and their management through Reservoir Project Committees. B. On April 11, 2016, certain Authority Members of the Authority entered into the PHASE 1 RESERVOIR PROJECT AGREEMENT which was amended and restated as of November 21, C. The Authority and certain Project Agreement Members have undertaken a process to negotiate a 2019 Reservoir Project Agreement to undertake specific work activities. D. The Project Agreement Members wish to continue development of the Project pursuant to a Work Plan approved by the Authority on, 2018 and the Reservoir Project Committee on, 2018 and a summary of which is described in Exhibit B attached hereto. The Project will be undertaken in the name of the Authority and in accordance with the Authority s stated Mission as set forth in the fourth Recital of the Joint Powers Agreement. The Project Agreement Members are entering into this Project Agreement to satisfy the requirements of Article VI of the Joint Powers Agreement. E. All members of the Authority have also been given the opportunity to enter into this Project Agreement. The form of this Project Agreement was determined to be consistent with the Joint Powers Agreement and the Bylaws and approved by the Authority s Board of Directors on August 20, F. The Authority and the Project Agreement Members acknowledge that one of the Authority s goals, in addition to providing environmental benefits, is to develop and make both a water supply and storage capacity available to water purveyors and landowners within the Sacramento River watershed, and in other areas of California, who are willing to purchase either or both a water supply and storage capacity from the Sites Reservoir Project, and that the Project Agreement Members should have a preference to the water supply or storage capacity. DRAFT G. The Authority and the Project Agreement Members acknowledge that the approval and execution of this Project Agreement does not commit the Authority, the Project Agreement Members or any other party to any definite course of action regarding the Sites Reservoir Project. As set forth in Section 6(a) of this Project Agreement, there are no assurances that the Sites Reservoir 1

27 Project will be constructed. One of the prerequisites that would need to be fulfilled before the Sites Reservoir Project could be constructed is the completion of environmental review under the California Environmental Quality Act ( CEQA ). As part of this environmental review, the Authority, as the lead agency that is conducting the review, reserves all of its rights, responsibilities, obligations, powers, and discretion under the provisions of CEQA to: (i) evaluate the environmental impacts of the Sites Reservoir Project; (ii) deny and disapprove the Sites Reservoir Project if the environmental review reveals significant environmental impacts that cannot feasibly be mitigated; (iii) adopt feasible mitigation measures and/or an alternative to the Sites Reservoir Project to avoid or lessen significant environmental impacts; or (iv) determine that any significant environmental impacts that cannot feasibly be mitigated are outweighed by the economic, social or other benefits of the Sites Reservoir Project. AGREEMENT THEREFORE, in consideration of the facts recited above and of the covenants, terms and conditions set forth herein, the parties agree as follows: Section 1 Definitions Authority means the Sites Project Authority, a joint exercise of powers agency created pursuant to the Joint Powers Agreement. Authority Members means the members of the Authority executing the Joint Powers Agreement, as such members may change from time-to-time in accordance with Section 3.3, Section 7.12 and Section 7.2 of the Joint Power Agreement. Board means the Board of Directors of the Authority. Bylaws means the Bylaws for Phase 2 of the Sites Reservoir Project adopted by the Authority on August 20, 2018, as such Bylaws may be amended or supplemented from time-to-time in accordance therewith. Committee means the Reservoir Project Committee described in Section 3 of this Project Agreement. Fiscal Year means the fiscal year of the Authority, which currently begins on January 1 of each calendar year and ends on December 31 of each calendar year, or such other twelve month period which may be designated by the Authority as its Fiscal Year. Joint Power Agreement means the Fourth Amended and Restated Sites Project Authority Joint Exercise of Powers Agreement, dated November 21, 2016, as such agreement may be amended or supplemented from time-to-time in accordance therewith. DRAFT Law means Articles 1 through 4 (commencing with Section 6500), Chapter 5, Division 7, Title 1 of the California Government Code, as amended or supplemented from time-totime. Material Change Item shall have the meaning ascribed thereto in the Bylaws. 2

28 Participation Percentage means the Participation Percentages as set forth in Exhibit A hereto, as such Participation Percentages may be modified in accordance herewith Budget means the 2019 Budget approved by the Committee on, 2018 and the Authority on, 2018, as such 2019 Budget may be amended or supplemented from time-to-time in accordance with the Joint Powers Agreement, this Project Agreement and the Bylaws. Project or Sites Reservoir Project means the Sites Reservoir Project as described in Exhibit B hereto, as modified from time-to-time in accordance therewith. Project Agreement means this Project Agreement, dated as of [April] 1, 2019, by and among the Authority and the Project Agreement Members listed on Exhibit A from time-totime, as such Project Agreement may be amended or supplemented from time-to-time in accordance herewith. Project Agreement Members means (a) the Authority Members listed in the attached Exhibit A, (b) the Non-Member Participating Parties listed in the attached Exhibit A and (c) additional Authority Members or Non-Member Participating Parties who execute this Project Agreement from time-to-time pursuant to Section 10 hereof. Work Plan means the activities described in Exhibit B hereto as such description may be amended or supplemented from time-to-time. Section 2 Purpose The purpose of this Project Agreement is to permit the Authority and the Project Agreement Members to continue development of the Project in the name of the Authority consistent with the Joint Powers Agreement. The activities undertaken to carry out the purposes of this Project Agreement shall be those, and only those, authorized by the Authority and the Committee in accordance with this Project Agreement, the Joint Powers Agreement and the Bylaws. Without limiting in any way the scope of the activities that may be undertaken under this Project Agreement, such activities shall include funding the Authority s costs undertaken to carry out the directions of the Committee. Notwithstanding any other provision of this Project Agreement, no activity undertaken pursuant to this Project Agreement shall conflict with the terms of the Joint Powers Agreement or the Bylaws, nor shall this Project Agreement be construed in any way as creating an entity or combination of entities that is separate and apart from the Authority. Section 3 Reservoir Project Committee DRAFT (a) Committee Membership. The business of the Project Agreement Members under this Project Agreement shall be conducted by a Committee consisting of one member appointed by each Project Agreement Member. Appointment of each member of the Committee shall be by action of the governing body of the Project Agreement Member appointing such member, and shall be effective upon the appointment date as communicated in writing to the Authority. Project Agreement Members may also appoint one or more alternate Committee members, which alternate(s) shall assume the duties of the Committee member in case of absence or unavailability of such member. Project Agreement Members may also appoint an alternate Committee member from a different Project Agreement Member for convenience in attending Committee meetings, who may 3

29 cast votes for such Project Committee Members, provided that no person shall represent more than five other Project Committee Members and more than 20% of the weighted vote as provided in Subsection 3(g) at any given meeting; provided however, that if the appointing Project Committee Member is an officer of the Committee, the appointed alternate Committee member shall not assume the capacity of such officer position. In order to serve as an alternate Committee member, a written evidence of such designation shall be filed with the Committee Secretary. Each member and alternate member shall serve on the Committee from the date of appointment by the governing body of the Project Agreement Member he/she represents and at the pleasure of such governing body. (b) Officers. The Committee shall select from among its members a Chairperson, who shall annually act as presiding officer, and a Vice Chairperson, to serve in the absence of the Chairperson. There also shall be selected a Secretary, who may, but need not be, a member of the Committee and a Treasurer. All elected officers shall be elected and remain in office at the pleasure of the Committee, upon the affirmative vote of at least a majority of the total weighted vote as provided at Subsection 3(g); (c) Treasurer. The Authority Treasurer shall serve as the Committee s Treasurer and shall act as the Committee s liaison to the Authority s General Manager and Authority Board on financial matters affecting the Committee. The Treasurer shall prepare and provide regular financial reports to the Committee as determined by the Committee. The Treasurer shall not be required to be a member of the Board of Directors of the Authority. (d) General Manager. The Authority s General Manager shall (1) serve as the Project Director responsible for advancing the Sites Reservoir Project, (2) be a non-voting member of the Committee, (3) ensure coordination of activities between the Authority and Committee, (4) convene, on an as needed basis, legal representatives from the Project Agreement Members and Authority Members to advise the General Manager on legal matters that will be reported to the Committee and Authority on a timely basis, and (5) coordinate the activities between the Committee and both the United States Bureau of Reclamation and Department of Water Resources. (e) Meetings. The Chairperson of the Committee or a majority of a quorum of the members of the Committee are authorized to call meetings of the Committee as necessary and appropriate to conduct its business under this Project Agreement. All such meetings shall be open to the public and subject to the requirements set forth in the Ralph M. Brown Act (Government Code Sections et seq.). (f) Quorum. A majority of the Committee members based on the weighted vote provided in Subsection 3(g) shall constitute a quorum of the Committee. DRAFT (g) Voting. Notwithstanding any provisions of the Bylaws that might be construed otherwise, for purposes of this Project Agreement, the voting rights of each Project Agreement Member shall be determined as follows: (i) an equal number of voting shares for each Project Agreement Member as defined in Exhibit A, that being for each Project Agreement Member, 1 divided by the total number of Project Agreement Members, multiplied by 50%; plus 4

30 (ii) an additional number of voting shares for each Project Agreement Member equal to its respective Participation Percentage described in Exhibit A, multiplied by 50%, using the version of Exhibit A in effect at the time the Committee votes. The resulting weighted total of all voting shares shall equal 100. An Example of this weighted voting incorporating the formulas for determining participating percentages is attached at Exhibit A. (h) Decision-making Thresholds. In accordance with Section 5.7 of the Bylaws, for purposes of this Project Agreement, approval by the Committee for material and non-material changes shall be as follows: for actions other than Material Change Items, action of the Committee shall be taken upon the affirmative vote of at least a majority of the total weighted vote as provided in Subsection 3(g); for Material Change Items, action shall be taken upon the affirmative vote of at least 75% of the total weighted vote as provided at Subsection 3(g). (i) Delegation of Authority/Powers and Limitations Thereon. Subject to the direction of the governing bodies of the Project Agreement Members, the Committee shall undertake all actions necessary for carrying out this Project Agreement, including but not limited to setting policy for the Project Agreement Members acting under this Project Agreement with respect to the Project; recommending actions to be undertaken in the name of the Authority under this Project Agreement; determining the basis for calculation of the Participation Percentages for each fiscal year, and the timing required for payments of obligations hereunder; authorizing expenditure of funds collected under this Project Agreement within the parameters of the Work Plan and budget; and such other actions as shall be reasonably necessary or convenient to carry out the purposes of this Project Agreement. This Section 3(i) is subject to any and all limitations set forth in the Joint Powers Agreement and Bylaws, including but not limited to, any action that constitutes a material change as defined at Section 12.3 of the Bylaws requiring the approval of both the Committee and the Authority Board, and actions specified in Section 10 of the Bylaws which remain exclusively with the Authority Board. Section 4 Funding (a) Budget. The Committee shall, in cooperation with the Authority s Board, provide and approve both a Fiscal Year operating budget and reestablish a Phase 2 budget target, annually or more frequently as needed. On November 19, 2018, the Board approved the Fiscal Year 2019 operating budget. The Work Plan, including annual budget, dated November 19, 2018, is attached at Exhibit B, along with the budget approval process and requirements. The Project Agreement Members shall contribute their respective pro-rata share of the budgeted sums in accordance with Section 5 of this Project Agreement. DRAFT (b) Fiscal Responsibilities. Exhibit B specifies the Authority s requirements regarding the fiscal responsibilities of the Committee. (c) Allocation of Project Agreement Expenses. The Project Agreement Members agree that all expenses incurred by them and/or by the Authority under this Project Agreement are the costs of the Project Agreement Members and not of the Authority or the Project Agreement Members of the Authority that do not execute this Project Agreement, and shall be paid by the Project Agreement Members; provided, however, that this Section shall not preclude the Project Agreement Members from accepting voluntary contributions and/or Authority Board s pre-approval of in-kind services from other Authority Members, or Project Agreement Members, and applying 5

31 such contributions to the purposes hereof. The Project Agreement Members further agree to pay that share of any Authority costs reasonably determined by the Authority s Board to have been incurred by the Authority to administer this Project Agreement. Before the Authority s costs of administering this Project Agreement become payable, the Authority will provide its calculation of such costs to the Committee, which will have the right to audit those costs and provide comments on the calculation to the Authority Board. The Authority Board shall consider the Committee s comments, if any, including the results of any such audit, in a public meeting before the Authority Board approves a final invoice for such costs. Section 5 Participation Percentages Each Project Agreement Member shall pay that share of costs for activities undertaken pursuant to this Project Agreement, whether undertaken in the name of the Authority or otherwise, equal to such Project Agreement Member Participation Percentage as established in this Section 5. The initial Participation Percentages of the Project Agreement Member are set forth in the attached Exhibit A. These initial Participation Percentages are for the purpose of establishing the Reservoir Project Agreement Members respective responsibilities for costs under this Project Agreement and other amounts contained in the approved Fiscal Year budget and Phase 2 budget target, which is defined as the Reservoir Total on Exhibit B. The Participation Percentages of each Project Agreement Member will be modified by the Committee from time to time as the result of the admission of a new Project Agreement Member to this Project Agreement or the withdrawal of a Project Agreement Member, and Exhibit A shall be amended to reflect all such changes. Such amended Exhibit A shall, upon approval by the Committee, be attached hereto and upon attachment, shall supersede all prior versions of Exhibit A without the requirement of further amendment of this Project Agreement. Section 6 Future Development of the Sites Reservoir Project (a) The Project Agreement Members acknowledge that the Sites Reservoir Project is still in the conceptual stage and there are no assurances that the Sites Reservoir Project will be constructed or that any water supplies will be developed as a result of this Project Agreement. Exhibit B includes a partial list of some of the risks and uncertainties that underlie the lack of assurances. The Project Agreement Members therefore recognize that they are not acquiring any interest in the Sites Reservoir Project other than their interest in the specific permitting, design, engineering and other materials that will be in the Work Plan Project as described in Exhibit B, and that the Project Agreement Members are not acquiring under this Project Agreement any interest in any future water supply or access to any other services from the Sites Reservoir Project except as provided hereunder. DRAFT (b) Without limiting the foregoing, any Project Agreement Member that elects to continue participating in the development, financing, and construction of the Sites Reservoir Project to the time when the Authority offers contracts for a water supply or other services, will be afforded a first right, commensurate with and in proportion to that Project Agreement Member s participation and financial contribution to the Sites Reservoir Project, to contract for a share of any water supply that is developed, and for storage capacity that may be available from, the Sites Reservoir Project. In any successor phase agreements, Project Agreement Members who are parties to this Project Agreement that submitted a proposal to participate before [February 15, 2019], shall be granted rights to contract for a share of any water supply that is developed, and for storage capacity that may be available from the Sites Reservoir Project prior to the rights of those becoming parties to this 6

32 Project Agreement after that date. The Authority and the Project Agreement Members will cooperate on the drafting of provisions in the water supply contract that will allow a Project Agreement Member or other eligible entity that commits to purchase a Sites Reservoir Project water supply to transfer water that the entity may not need from time to time on terms and conditions acceptable to the such Project Agreement Member. Section 7 Indemnity and Contribution (a) Each Project Agreement Member, including Authority Members acting in their capacity as Project Agreement Members, shall indemnify, defend and hold the Authority, Authority Members and other Project Agreement Members and their directors, trustees, officers, employees, and agents harmless from and against any liability, cause of action or damage (including, without limitation, reasonable attorneys; fees) arising out of the performance of this Project Agreement multiplied by each Project Agreement Member s Participation Percentage. Notwithstanding the foregoing, to the extent any such liability is caused by the negligent or intentional act or omission of an Authority Member or a Project Agreement Member, such Authority Member or Project Agreement Member shall bear such liability. (b) Each Project Agreement Member, including Authority Members acting in their capacity as Project Agreement Members, shall indemnify, defend and hold the Authority and the members of the Authority that do not execute this Project Agreement and their directors, trustees, officers, employees and agents harmless from and against any liabilities, costs or expenses of any kind (including, without limitation, reasonable attorney s fees) arising as a result of the activities described in or undertaken pursuant to this Project Agreement multiplied by each Project Agreement Member s Participation Percentage. All assets, rights, benefits, debts, liabilities and obligations attributable to activities undertaken under this Project Agreement shall be assets, rights, benefits, debts, liabilities and obligations solely of the Project Agreement Members in accordance with the terms hereof, and shall not be the assets, rights, benefits, debts, liabilities and obligations of the Authority or of those members of the Authority that have not executed this Project Agreement. Members of the Authority not electing to participate in the Project Agreement shall have no rights, benefits, debts, liabilities or obligations attributable to the Project Agreement. Section 8 Term (a) No provision of this Project Agreement shall take effect until this Project Agreement has been duly executed and delivered by the Authority and by [one] Project Agreement Member. [2019, 2020]. Section 9 (b) The term of this Project Agreement shall continue until the later of, Withdrawal From Further Participation DRAFT To withdraw from this Project Agreement, a Project Agreement Member shall give the Authority and other Project Agreement Members written notice of such withdrawal not less than 30 days prior to the withdrawal date. As of the withdrawal date, all rights of participation in this Project Agreement shall cease for the withdrawing Project Agreement Member. The financial obligation as prescribed in the Bylaws Section 5.10 in effect on the withdrawal date, shall consist of the withdrawing Member s share of the following costs: (a) payment of its share of all non-contract 7

33 costs incurred prior to the date of the written notice of withdrawal, and (b) those contract costs associated with funds approved in either contract amendments or task orders that were approved prior to the date of the written notice of withdrawal for which the contractor s work extends beyond the withdrawal date. However, a withdrawing member shall have no liability for any change order or extensions of any contractor s work that the remaining Project Agreement Members agree to after the withdrawing Member provides written notice of withdrawal. Withdrawal from this Project Agreement shall not be considered a Material Change Item and shall not be subject to the Dispute Resolution process provided for in Section of the Bylaws. Section 10 Admission of New Project Agreement Members Additional Members of the Authority and Non-Member Participating Parties may become Project Agreement Members upon (a) confirmation of compliance with the membership requirements established in the Bylaws, (b) the affirmative vote of at least 75% of the total weighted vote as provided at Subsection 3(g) of the then-current Project Agreement Members, (c) the affirmative vote of at least 75% of the total number of Directors of the Authority, and (d) upon such conditions as are fixed by such Project Agreement Members. Section 11 Amendments This Project Agreement may be amended only by a writing executed by the Authority and at least 75% of the total weighted vote as provided in Subsection 3(g) of the then-current Committee members. Section 12 Assignment; Binding on Successors Except as otherwise provided in this Project Agreement, the rights and duties of the Project Agreement Members may not be assigned or delegated without the written consent of the other Project Agreement Members and the Authority, which consent shall not be unreasonably withheld. Any attempt to assign or delegate such rights or duties in contravention of this Project Agreement shall be null and void. Project Agreement Members may assign and delegate their rights and duties under this Project Agreement to other Project Agreement Members, and they may assign, sell, trade, or exchange all or a fraction of the potential benefits (e.g. acre-feet of water supply, megawatt-hours of power) they expect to receive through their participation in this Project Agreement. Any approved assignment or delegation shall be consistent with the terms of any contracts, resolutions, indemnities and other obligations of the Authority then in effect. This Project Agreement shall inure to the benefit of, and be binding upon, the successors and assigns of the Authority and the Project Agreement Members. DRAFT 8

34 Section 13 Counterparts This Project Agreement may be executed by the Authority and each Project Agreement Member in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. Facsimile and electronic signatures shall be binding for all purposes. Section 14 Merger of Prior Agreements This Project Agreement and the exhibits hereto constitute the entire agreement between the parties and supersede all prior agreements and understanding between the parties relating to the subject matter hereof. This Project Agreement is intended to implement, and should be interpreted consistent with, the Joint Powers Agreement. Section 15 Severability If one or more clauses, sentences, paragraphs or provisions of this Project Agreement shall be held to be unlawful, invalid or unenforceable, the remainder of the Project Agreement shall not be affected thereby. Section 16 Choice of Law Section 17 This Project Agreement shall be governed by the laws of the State of California. Notices Notices authorized or required to be given under this Project Agreement shall be in writing and shall be deemed to have been given when mailed, postage prepaid, or delivered during working hours, to the addresses set forth Exhibit E ( Notifications ), or to such other address as a Project Agreement Member may provide to the Authority and other Project Agreement Members from time to time. DRAFT 9

35 IN WITNESS WHEREOF, the Authority and Project Agreement Members hereto, pursuant to resolutions duly and regularly adopted by their respective governing bodies, have caused their names to be affixed by their proper and respective officers on the date shown below: Dated: SITES PROJECT AUTHORITY By: Name: Title: [PROJECT AGREEMENT MEMBER] Dated: (Authority & Project Agreement Member) By: Name: Title: DRAFT 10

36 EXHIBIT A PROJECT AGREEMENT MEMBERS Participation (Annualized Acre-Foot) Participant Preliminary Percent American Canyon, City of ~4, % Antelope Valley-East Kern Water Agency ~ % Carter Mutual Water Company ~ % Coachella Valley Water District ~10, % Colusa County ~10, % Colusa County Water District ~13, % Desert Water Agency ~6, % Glenn-Colusa Irrigation District ~5, % Metropolitan Water District of S. CA ~50, % Pacific Resources Mutual Water Company ~20, % Reclamation District 108 ~5, % San Bernardino Valley Municipal Water District ~21, % San Gorgonio Pass Water Agency ~14, % Santa Clara Valley Water District 24, % Santa Clarita Valley Water Agency ~5, % TC-4: Cortina Water District ~ % TC-4: Davis Water District ~2, % TC-4: Dunnigan Water District ~2, % TC-4: LaGrande Water District ~1, % Westside Water District ~15, % Wheeler Ridge-Maricopa Water Storage District 14, % Zone 7 Water Agency ~10, % Potential new participants TBD % Total: 234, % NOTE: Any annualized amounts listed for Phase 2 are preliminary and are based on best estimates received after participants respective review of the draft financing plan and draft Phase 2 Reservoir Project Agreement. These amounts do not represent the results of any action having been taken by the participants respective governing body to formally execute the Phase 2 Reservoir Project Agreements. Final participation amounts will be established after interim financing terms and conditions have been provided and incorporated into the final Phase 2 Reservoir Project Agreement. DRAFT Denotes a non-public agency. Refer to California Corporations Code Section et. seq. with additional requirements provided in both the Public Utilities Code and Water Code. A-1

37 EXHIBIT B 2019 WORK PLAN [TO COME FROM AUTHORITY] DRAFT B-1

38 EXHIBIT C NOTIFICATIONS [TO COME FROM AUTHORITY] DRAFT C-1

39 Grower Workshops Sites Reservoir Project Agenda Item # 5 Politics

40 Grower Workshops Sites Reservoir Project Agenda Item # 6 Water Supply Yield 1. Water Rights - application in Phase 2A, junior to other Sac River rights 2. Climate Change 3. Delta Issues 4. Project / Non-Project Water Modeled as Project Water 5. Purchases from Others 6. Incremental Yield NOD/SOD by Year Type 7. Delta Carriage Losses - 18%/12%/30% 8. No Spill Risk

41 Sites will be operated to provide a variety of environmental benefits that will be managed by the state to provide water for ecosystem and water quality purposes. This pool of dedicated water will be managed to improve coldwater conservation storage, augment river flows during critical periods for fish migration, increase flows through certain watercourses and/or facilities (such as the Yolo Bypass), improve water quality and/or enhance habitat restoration. Collectively, the state and the Authority will manage a sizable supply of water to address real-time needs and achieve both intermediate and long-term goals. Sites Reservoir water will also be used to supplement existing municipal and agricultural supplies for use in the Sacramento Valley and south of the Delta. These operations will be conducted in cooperation with CVP and SWP operations. Sites is particularly beneficial during dry and critical years and extended drought periods, increasing overall water supplies despite climate change impacts. Storage (TAF, End-of-September) Sites Project Contribution to combined Shasta, Folsom and Oroville Storage in Extremely Dry Conditions , "In Conference" (Red Zone) Year During droughts, Sacramento Valley reservoir operations become severely constrained when combined storage levels of Shasta, Folsom and Oroville are reduced to approximately 3 MAF. The addition of Sites Reservoir adds approximately 15% additional storage for the Sacramento Valley. Using the 2030 WSIP hydrology, when drought conditions occur, Sites Reservoir would provide relief during that year for both listed native fish species and for water agencies. Approximately 700,000 acre-feet of the Sites water would carry over into the next year should drought conditions continue. Sites Reservoir Provides Water for Public and Non-Proposition 1-Eligible Public Benefits in All Water Year Types Sites Reservoir Increase in Water Supply Change in Deliveries, TAF Long-term average Dry Critical Long-term average Dry Critical 2030 Projection 2070 Projection North of Delta South of Delta Ecosystem and Water Quality (Proposition 1-eligible) EXECUTIVE SUMMARY 11

42 Water Cost. The ultimate cost of water from Sites Reservoir is a factor in which (if any) option to select. In 2016 (in 2015 dollars), I estimated the Sites cost could range from $440 per acre-foot to $1600 per acre-foot South of Delta. In a recent Sites internal draft work product, this cost could range from $400 to $1100 per acre-foot North of Delta. Assuming a 20% (optimistic?) loss factor, this would equate to about $500 to $1340 per acre-foot South of Delta (F.O. Equivalent). The low and high end values are not considered realistic. For this discussion, assume the cost would be $620/$775 per acre-foot of wet water (North/South of Delta). For comparison, the current SWP F.O. cost (based on a 60% average annual allocation) is about $215 per acre-foot. The WaterFix F.O. cost (in 2017 dollars) is about $1600 per incremental acre-foot (excluding the Article 21 benefit). Per discussion below, Sites water (as Project Water) could be available in wet and dry years whereas WaterFix water would not be available in dry years.

43 Grower Workshops Sites Reservoir Project Agenda Item # 7 Project Costs, Yield and Unit Rates 1. Cost Estimates - Sites, BuRec and Risk Controlled 2. Cost Uncertainty - contingency, risk assessment, risk register 3. Construction Entity - Sites Project Authority 4. Phase 2B Financing and Payment Structure - P&I, Interest only during construction, Capitalized interest (no payments during construction)

44 ESTIMATE OF CAPITAL COSTS, OPERATING COSTS, YIELD, AND $/AF UNIT RATES Capital Cost Estimate (2018$) Project Cost Estimate less Phase 1 & 2A cash calls from Public Agencies less WSIP Calif Water Storage funding for recreation & flood control less WIIN Act funding for non-water supply public benefits Project Cost Estimate for Water Supply Split to Public Benefits and Public Agencies less WSIP public benefits water supply funding less WIIN public benefits water supply funding = Public Agency water supply funding to be financed $ $ $ $ $ $ $ $ 5,500,000, ,000, ,282,000, ,000,000-1,000,000,000 3,684,000,000 leave out to reflect time value of initial $50M investment 11.3% 18.9% 69.7% Assuming entire cost is bonded up front (more likely costs bonded over several years): Water Supply Financed Cost - 40 years, 5% interest $ 214,696,746 Water Supply Financed Cost - 40 years, 4% interest $ 186,128,535 per year, conventional P&I financing per year if get WIFIA and USDA loan funding O&M Cost Estimate (2018$) Hydropower revenues Project O&M Costs Net O&M costs with hydropower revenues Net O&M costs without hydropower revenues $ $ $ $ -127,000,000 98,000,000-29,000,000 98,000,000 per year per year per year net revenue per year cost Project Yield Estimate (average annual AF per year) Original analysis yield Best case yield (if no WaterFix tunnels) Mid-range yield Worst case yield 500, , , ,000 acre-feet per yield North of Delta (Holthouse releases) AF NOD = 401,800 AF South of Delta at Banks PP AF NOD = 340,000 AF SOD AF NOD = 263,500 AF SOD Public Agencies Yield Estimate (average annual AF per year % of total) Original analysis yield 348,732 Best case yield (if no WaterFix tunnels) 341,757 Mid-range yield 278,985 Worst case yield 216,214 acre-feet per yield North of Delta (Holthouse releases) AF NOD = 280,241 AF South of Delta at Banks PP AF NOD = 237,137 AF SOD AF NOD = 183,782 AF SOD Unit Rates WITH Hydropower revenues and 5% interest rate First 10 years Next 30 years---- Unit Rates WITHOUT Hydropower revenues and 5% interest rate Unit Rates WITH Hydropower revenues and 4% interest rate Unit Rates WITHOUT Hydropower revenues and 4% interest rate TO BE DETERMINED TO BE DETERMINED TO BE DETERMINED U:\A\2018\Sites\Sites_GrowerWS_Calcs.qpw 12/04/18 - RJK

45 Sites Project: Preparations for Phase 2 1. State (Prop 1) and Federal (WIIN Act) Participation 2. Phase 2 Agreements 3. Construction Financing and Repayment Disclaimer: This presentation is for informational use only. It contains working assumptions, primarily regarding schedule, operations, costs, and financing that are subject to change. Page 1