EXHIBIT 99.1
SUMMARY OF
METROPOLITAN-CADIZ DEFINITIVE ECONOMIC TERMS & RESPONSIBILITIES
1. TERM 50 years
2. CAPITAL FACILITIES COSTS Estimated at $150,000,000.
Metropolitan and Cadiz shall equally
share capital costs.
Each party shall be responsible for
financing its portion of the capital
costs.
3. PROGRAM OPERATING COSTS Metropolitan will be responsible
for operational costs of the Program.
However, Cadiz will assume pro rata
operational costs associated with the
sale of indigenous groundwater to
third parties.
4. MITIGATION COSTS Metropolitan and Cadiz shall
share equally the capital costs
required for mitigation at outset of
the Program. Cadiz shall assume
remaining mitigation costs, including
the ongoing annual cost of operating
the Groundwater Monitoring and
Management Plan ("Management Plan").
5. PROGRAM OPERATIONS & PAYMENTS
* STORAGE COMPONENT: Metropolitan shall pay to store Colorado River
Aqueduct ("CRA") water in the Cadiz aquifer system at a rate of
$50/acre-foot ("AF") for "putting" water into the basin and $40/AF for
"taking" stored water from the basin, or a total of $90/AF to cycle
water into and out of the basin.
* Storage Fees will be adjusted by CPI, with the adjustment
commencing on approval of contract "as to form" by Metropolitan's
Board of Directors.
* Metropolitan's total minimum commitment for storage shall be
900,000 AF. Metropolitan shall purchase the initial 600,000 AF of
put and take activity upon final contract execution and completion
of the environmental review process ($54,000,000 before CPI
adjustment). Metropolitan shall then purchase an additional 300,000
AF of put and take activity at the earlier of delivery or payable
in 30,000 AF increments per year during Years 5-14 of Program
operations ($27,000,000 before CPI adjustment).
* TRANSFER COMPONENT: Metropolitan shall purchase 30,000 acre-feet per
year ("AF/Y") of indigenous groundwater for 25 years at a $230/AF
Transfer Fee, subject to a fair market value adjustment as described
below. In addition, Cadiz may elect to either sell up to an
additional 30,000 AF/Y of indigenous groundwater to third parties in
Metropolitan's service area at fair market value or require
Metropolitan to purchase that amount of water at a fixed Transfer Fee
of $230/AF. Accordingly, Metropolitan's total potential minimum
commitment for the life of the Program will be 1,500,000 AF of
indigenous groundwater at a minimum payment of $345,000,000 (before
any fair market value adjustment). All transfers of indigenous
groundwater, whether to Metropolitan or third parties, will be made in
accordance with the terms and conditions of the Management Plan.
* The Transfer Fee will reflect a "fair market value" adjustment,
which shall be determined up to once a year. The Transfer Fee will
be adjusted by one-half of any increase or decrease in the fair
market value, above or below the base $230 rate. For example: If
the fair market value is $350/AF, then the adjusted Transfer Fee
shall be $230 + 50% * ($350 - $230) = $290/AF. Each increase or
decrease in the fair market value may not exceed 30%.
* Cadiz' right to sell to third parties within Metropolitan's service
area includes scheduled access to Metropolitan's system at the
wheeling rate charged for "as available capacity," plus power costs
and any standard water stewardship fee that is uniformly charged to
Metropolitan member agencies or third parties. Depending on
availability of system capacity, Metropolitan may elect to exchange
other water for delivery to Cadiz customers and "bank" the water
Cadiz has sold.
* If indigenous water supplies are determined to exceed 1,700,000
acre feet, Metropolitan shall have the first right of refusal to
purchase one-half of that excess yield.
6. WATER QUALITY
* Cadiz groundwater meets all existing federal and state water
quality standards.
* Metropolitan's CRA water meets all existing federal and state water
quality standards.
* Metropolitan shall be responsible to ensure, at its expense, that
CRA water introduced into the Cadiz groundwater basin shall, at a
minimum, meet all existing and potential future federal and state
water quality standards applicable to the CRA.
* Cadiz shall be responsible to ensure, at its expense, that
indigenous groundwater introduced into the Metropolitan delivery
system shall, at a minimum, meet all existing and potential future
federal and state water quality standards.
* If both indigenous groundwater and stored Colorado River water
exceed any future federal or state water quality standard, then the
parties will share compliance with the new standard based pro rata
on the contribution to exceedance of the standard.
* In recognition of water quality and water supply benefits provided
by the indigenous water, Metropolitan shall not impose any
additional ambient quality requirements on the indigenous
groundwater as long as it continues to meet federal and state water
quality standards.
7. RISK ALLOCATION AND SECURITY
* SECURITY INTEREST: Metropolitan shall receive a security interest in
land, improvements and water rights in the Program area. Such
security interest will be subordinate to (a) direct construction liens
on the capital facilities and (b) liens on Program area lands owned by
Cadiz, approved by Metropolitan, not to exceed $25,500,000.
* YIELD DETERMINATION: The parties, in consultation with the Management
Plan and in compliance with all applicable permit requirements, will
determine the total expected yield for the life of the Program on an
ongoing basis. The expected yield will be reassessed every two years,
beginning with the first year that Metropolitan withdraws water. If
the parties cannot agree, the issue will be submitted to binding
arbitration.
* Cadiz' option to sell indigenous groundwater to third parties or
put the water to Metropolitan will be limited by the amount of
expected total yield, if it falls between 750,000 and 1,500,000 AF.
If the determined total yield for the Program falls below 750,000
AF, Metropolitan may elect to proceed with or cease participation
in the Program.
* If Metropolitan elects to cease participation in the Program due to
a total yield determination below 750,000 AF, Cadiz will have three
years to purchase Metropolitan's interest. If Cadiz fails to
purchase Metropolitan's interest in the Program, it will turn over
all the land and facilities it owns in the Program area to
Metropolitan.
* If Cadiz elects to purchase Metropolitan's interest in the Program,
the purchase price and terms for access to Metropolitan's
facilities for wheeling water are as follows:
* The purchase price will be the remaining unpaid balance of
capital facilities costs incurred by Metropolitan, based on a 30-
year mortgage amortization schedule, with interest at
Metropolitan's bond rate. In addition, Cadiz would purchase any
potential additional lands acquired for the Program.
* Subject to its availability, Metropolitan will purchase 300,000
AF of indigenous groundwater, less any amount previously sold to
Metropolitan or third parties, paid on a schedule of 30,000 AF
per year at the adjusted Transfer Fee rate in effect at the time
Metropolitan terminated the Program.
* For 25 years, Cadiz may operate the facilities to deliver 150,000
AF of indigenous groundwater per year to third parties in
Metropolitan's service area. Terms for gaining access to
Metropolitan's system will be the same as noted previously for
Cadiz' option to sell indigenous groundwater to third parties
(see Section 5).
* The parties will alternate priority of use of the Program
facilities for the purpose of withdrawing any stored or
transferred water for which Metropolitan has previously paid.
* SURPLUS CRITERIA: It is anticipated that Interior Secretary Babbitt
will authorize Interim Surplus Criteria in January of 2001. If Interim
Surplus Criteria is not granted by the U.S. Department of the Interior
or if it varies materially from the Seven States Proposal (dated July
18, 2000) such that there is a critical lack of water available for
storage, Metropolitan will evaluate whether to proceed with the
Program or the off-ramp noted below.
* LITIGATION: Either party may suspend performance in the event of
litigation against the Program. The parties shall equally share
defense of any potential litigation.
If, after the parties have commenced Program operations, there is a
final legal determination that permanently prevents future Program
operations, Cadiz shall repay Metropolitan for any storage payments
that cannot be used and up to 300,000 AF of transfer payments.
Otherwise, each party shall bear the loss of its investment in the
Program.
* OFF-RAMP: If Metropolitan elects to withdraw from the Program based
on either of the above two scenarios, Cadiz may construct and operate
the facilities required to transfer indigenous water to Metropolitan's
CRA and market to third parties. Cadiz may operate for up to 50
years. Metropolitan will continue to act as "lead agency" for CEQA
purposes unless the parties mutually agree to transfer such
responsibilities to another public agency.
* Metropolitan will purchase a minimum of 300,000 AF of storage
rights for cycled CRA water for $30,000,000.
* In accordance with the terms and conditions of the Management Plan,
Cadiz may sell up to 150,000 AF of indigenous groundwater per year
to third parties in Metropolitan's service area, with Metropolitan
guaranteeing the purchase of up to 300,000 AF of this amount.
Metropolitan's purchase price will be $205/AF, adjusted annually by
an average of CPI/PPI for the first ten years.
* During the first 25 years, terms for gaining access to
Metropolitan's system will be the same as noted previously for
Cadiz' option to sell indigenous groundwater to third parties (see
Section 5). When both Cadiz and Metropolitan have water to deliver
in excess of the capacity of the facilities, the parties will
alternate priority of use. During the second 25 years, Cadiz will
be provided access to Metropolitan's system on a "space available"
basis.
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