HomeMy WebLinkAbout2010/02/23 Item 8
ITEM TITLE:
SUBMITTED BY:
REVIEWED BY:
4/5THS VOTE:
CITY COUNCIL
AGENDA STATEMENT
:!)- (~ CITY OF
.~ (HULA VISTA
Item No.: 6'
Meeting Date: 02/23/10
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA DIRECTING STAFF TO TAKE ALL ACTION
NECESSARY TO SECURE FINANCIAL ASSURANCE ON THE
OTAY VALLEY QUARRY, AS REQUIRED BY THE STATE OF
CALIFORl"lIA SURFACE MINING AND RECLAMATION ACT
(SMARA), INCLUDING EXERCISING ITS RIGHTS UNDER
THE EXISTING LETTER OF S.~YIT FOR $2.3 MILLION.
DEPUTY CITY MANAGiWDEVELOPMENT SERVICES
DIRECTOR
CITY ATTORN~
CITY MANAGE7
YES
NO X
BACKGROUND
The City Council is being requested to direct staff to take all actions necessary to secure the
Financial Assurance for the Otay Valley Quarry under the State of California Surface Mining and
Reclamation Act (SMARA), including exercising its rights under the existing letter of credit issued
by First National Bank in the amount of $2.3 million (Letter of Credit). Staff is recommending that
the funds be transfened to another secured account to be held in trust by the City and State, such
that, there would not be a forfeiture of the funds under the Letter of Credit. The City and State
would hold the monies received from the Letter of Credit in a special trust account until such time
as it can be released to Rimrock as allowed by SMARA.
ENVIRONMENTAL REVIEW
The Environmental Review Coordinator has reviewed the proposed activity for compliance with
the California Environmental Quality Act (CEQA) and has determined that the activity is not a
"Project" as defined under Section 15378 of the State CEQA Guidelines; therefore, pursuant to
Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no
environmental review is necessary.
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Date, Item No.: 'is
Meeting Date: 02/23/10
Page 2 of 3
RECOMMENDATION
That the City Council adopt the Resolution.
BOARDS/COMMISSION RECOMMENDATION N/A.
ANALYSIS
The Otay Valley Quarry is located at the eastern terminus of Main Street and has been in
operation since the early 1900's. The site was formerly located within the jurisdiction of the
County of San Diego and was annexed into the City of Chula Vista in 1997. The City of Chula
Vista affirmed the vested right to mine the site in December of2008.
The original reclamation plan for the Quarry was approved by the County of San Diego in 1979.
An amended reclamation plan was approved for the site by the State Mining and Geology Board
in 2006. The amended reclamation plan for the site includes a financial assurance estimate for
mine reclamation in the amount of $2.3 million. The Letter of Credit in the amount $2.3 million
was provided by the previous mine operator Rimrock CA LLC (Rimrock).
In April of 2009, ownership of the Otay Valley Quarry was transferred from Rimrock to Otay
Valley Rock LLC (New Operators). Even though ownership of the mine was transferred to the
New Operators, the Quarry is still openiting under the financial assurance provided by Rimrock
by the Letter of Credit. The Letter of Credit provided by Rimrock purports to expire on March
1,2010.
Pursuant to the requirements of the SMARA, mine operations are required to provide a financial
assurance that covers the costs of the mine reclamation activities specified in the adopted mine
reclamation plan. In addition, SMARA requires financial assurances to be provided by the
operator for the duration of the mining operation or until reclamation is completed. If the mining
operation is sold or ownership is transferred to another person, the existing financial assurance is
required to remain in force and shall not be released by the lead agency until new financial
assurances are secured from the new owner. Therefore, even though ownership of the mine was
transferred to the New Operators, the existing Letter of Credit is required to remain in effect.
The City notified Rimrock on February 10,2010, (Attachment "A") that it is required by state
law to provide the City with financial assurance that is good for the duration of the mining
operation or until reclamation is completed. The Letter of Credit previously provided by
Rimrock did not comply with the requirements of the law under SMARA.
The City has made numerous requests for the New Operator, who bought the operations from
Rimrock, to provide a financial assurance to replace the Letter of Credit due to expire on March
I, 2010. To date, a new financial assurance has not been provided to the City in spite of
countless attempts to work with the New Operator (Attachment B). Finally, the City has notified
First National Bank that it is not allowed by either the terms of the Letter of Credit nor by law to
J:\Planning\SteveXP\Quarry\StatTRepclIt cityversion part 2 - fmal.doc
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Date, Item No.: '6
Meeting Date: 02/23/10
Page 3 of 3
release the Letter of Credit without the approval of the City and State. The City will continue to
pursue recourse against the Bank should it become necessary.
Under SMARA, the purpose of providing financial assurance is to protect the general health.
safety and welfare of the public in the event a quarry operator is not financially capable of
performing reclamation in accordance with an approved reclamation plan. In such instances, the
financial assurance would be available to complete reclamation of the quarry site in order to
prevent an unsafe condition and permanent visual blight.
The action tonight would permit the City to secure the financial assurances held by the City
under the Letter of Credit. In order to protect the general health, safety and welfare of the
community, the City will hold the monies from the Letter of Credit in a special trust account for
the period of time allowed by SMARA.
DECISION-MAKER CONFLICTS
Staff has reviewed the property holdings of the City Council and has found no property holdings
within 500 feet of the boundaries of the property which is the subject ofthis action.
CURRENT YEAR FISCAL IMP ACT
There will be no net fiscal impact to the 'General Fund from this work effort. All costs associated
with processing this request have been paid by the quarry operator.
ON-GOING FISCAL IMPACT
There will not be an on-going fiscal impact associated with this action since the action does not
commit the City of Chula Vista to the expenditure of any City funds.
Attachment A - Notice of Violation
Attachment B - Letters from staff to Quarry Operator
Attachment C - Order to Comply
Attachment D - Letter of Credit
prepared by: Steve Power. Alep Principal Planner, Planning & Building Dept.
J:\Planning\SteveXP\Quarry\StaffReport cityversion part 2 ~ final.doc
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NOTICE OF VIOLATION
February 10,2010
Rinrrock CA, LLC c/o
Mr Rob Cameron
1392 East Palomar Street, Suite 202
Chula Vista, CA 91913
Deal Nil. Cameron:
In accordance with the requirements set forth in Califomla Public Resources Code Section 2774 1
you are hereby notified that Rirnrock CA~ II C is in violation of Public Resources Code Sections
2773 l(a)(2) and 2773 1(b)(4)(c)
Public Resources Code Section 2773 I(a) (2) provides tbat:
"The financial assurances shalllemain in effectfoT the dUfation oj the surface
mining operation and any additional period unti/leclamation is complete"
Public ResoUIces Code Section 2773. 1 (b) (4) (c) lequires tbe following:
"If a mining opelation is sold 01 owner:ship ls tUltlSfel1'€d to another per.son, the
existingflnancial assurance shall remain in force and shall not be released by
the lead agency until new financial assurances ate secured from the new owner
and have been approved by the lead ag~ncy in accoldance with Section 2770 "
RiII1I ock CA, I.L-C provided financial assurance fO! the quarry reclamation activities in a form of
letter of credit issued by First Bank which is unlawfully due to expire on March 1, 2010 You
are required to provide a fOIID of financial assUlance to remain in effect for the duration of the
surface mining operations_ The transfer of ownership of the rock quarry operations does not
relieve you of this obligation A new financial aSSllmllce has not been provided by the new quarry
operato! Therefore we ate hereby requesting that you take action to rectify this situation and
remain in compliance with the law by extending the letter of credit issued by Fust Bank to meet
the requirements of Public Resources Code Sections 2773 l(a)(2) and 27731 (b)(4Xc) rfyou do
not comply the City will take actioTIs allowed by law Please call Principal Planner Stephen
Power al (619) 409-5864 should you wish to discuss this matteI further .
~:]y, LLfftr-
:xJ:;;~l~~i1cp
Deputy City lvIanageIiDevelopment Services Director
cc: Stephen Power AICP, Principal Planner
State Office of Mine Reclamation
City of Chub Vista
Attachment A
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C1lY OF
CHlUiA VISTA
DEPARTMENT OF ENGINEERING
SENT VIA CERTIFIED MAlL
October 20, 2009
File No. 0710-46-PG-782
Otay Valley Rock, LLC
Attn: Chris Orbon
601 E Palomar Street, Suite CI12
Chula Vista, CA 919 I 1
FOLLOW UP TO OUR OCTOBER 13, 2009 INSPECTION. OTAY RANCH
QUARRY, CA MINE ill NO. 91-37-0035
This is a follow up to our recent inspection of your mine operation that was performed on
October 13, 2009. During the inspection, you agreed to comply with the following items
and deadlines:
1- Revised Financial Assurance
The Department of Conservation requires the financial assurance amount be updated
annually. Failure to comply with this requirement will result in removing your-mining
operation from the AB 3098 List. Public Contract Code preclude mining operations that
are not on the AB 3098 List from selling sand, gravel, aggregate, or other mined
materials to state or local agencies. As we discussed during the inspection, we have been
asking your office for the submittal of a Revised Financial Assurance Amount
Calculation for over six months. To date, we have not received it. The cost estimate
must be prepared professionally by a person deemed qualified to do so. Therefore, if we
do not receive the Revised Financial Assurance Amount Calculation by October 30,
2009, we will advise the Department of Conservation to remove you from the AB 3098
List.
2- Aerial Photographs
As a requirement of the annual inspection, you must provide recent aerial photos of your
mining site and delineate the property lines and the reclamation plan on the aerial photos.
This is a requirement of the City of Chula Vista, Surface Mining Operations Ordinance
No. 2921, Section 19.69.120.c. The aerial photographs shall consist of:
i) Defined, marked and permanent ground controls; and
ii) Planimetric map of the mining site based on the aerial models with five-foot contours
and drawn to 1 inch equal 200 feet scale.
27(, FOURTH AV~NUE I (HULA VISTA, CALIFORNIA 91910-2631 / (619) 691.5021
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Attachment B
Otay Valley Rock
2
October 20, 2009
According to the City Ordinance, the Aerial photos are due on July first of every year.
So far we have not received the aerial photos for the year 2009. If do not receive the
aerial photos by November 16, 2009, we will consider your action as a violation of the
City Ordinance and the City Municipal Code and proceed with an enforcement action in
accordance to State of California Public Resources Code Sections 2774.1 and 2774.2, as
well as the provisions of the Chula Vista Municipal Code concerning violations and
penalties.
3- Marking the PVC Posts
As we discussed during the inspection, upon our request the previous owner of the
mining operation delineated the reclamation boundaries with PVC posts that had
numbering system that correspond to a marked map. These posts were very helpful in
guiding your operators by preventing any encroachment outside the boundaries of the
reclamation plans, and guiding us during inspection, Unfortunately, the numberings on
the posts were faded out because they were marked with permanent markers that could
not withstand outside weather. We bighly recommend that you re-mark these posts with
aluminum tape for future reference. Please refer to the map and the information sheet on
the aluminum tape that I handed you during the inspection.
Weare aware that you are currently processing a permit with the City to expand your
mining operation, and we are looking forward to assist you in meeting your deadlines.
If you have any questions regarding this inspection report, please call Jamal Naji at (619)
409-571.
cc: Melody Mitchell, Department of Conservation, Office of Mine Reclamation, 801
K Street, 9th Floor, MS 09-06, Sacramento, CA 95814-3530
Kbosro Aminpour, Department of Public Works Operations
Steve Power, Department of Planning and Bnildings
Verne Freeman, Freeman Associates, 994 San Antonio Road, Palo Alto, CA
94303
J:\Engineer\LANDDEV\Projccls\1\tfiscdl:mcous Projects\OTA Y RAr."tCH QUARRY\2009\FoUow up Letter to Inspection on Oct 13
09.doc
CITY OF CHULA VISTA
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(IN OF
CHUIA VISTA
December 4, 2010
File No. 071 0-46-PG-782
DEPARTI"IENT OF ENGINEERING
Otay Valley Rock, LLC
Altn: Liam Devlin
601 E Palomar Street, Suite Cl12
Chula Vista., CA 91911
FINAL REQUEST FOR PROVIDING FINANCIAL ASSURANCE FOR OTAY
RANCH QUARRY,CA MINE ID NO. 91-37-0035
The City hereby requests that you replace the financial assurance to the satisfaction of the
City staff and Office of Mine and Reclamation by January 4, 2010 (60 days prior to
expiration date of the current financial assurance) to secure the reclamation plans and be
allowed to continue operation. It is your responsibility, as signatory of the Statement of
Responsibility (see Attachment) to maintain the financial assurance for reclaiming the
whole mining operation as depicted in the reclamation plans.
The current financial assurance for your mine was provided by Rimrock CA, LLC, in the
form of Irrevocable Standby Letter of Credit with an expiration date of March 1,2010.
It is imperative that the City be assured that the financial assurance for the mine be
secured until the reclamation process is finalized. As you recall, we have been asking for
a replacement to the financial assurance since you took control of the mine operation in
Aprilof2009.
We thank you for your cooperation. Please acknowledge the receipt of this letter by
in" below. If you have any questions, please call Jamal Naji (619) 409-5921.
Acknowledgment of Receipt of this Letter
U 1/11 (J 8/L-i..-l
Print Name
/~/O~/2009
Date /
cc: Melody Mitchell, Department of Conservation, Office of Mine Reclamation, 801
K Street, 9th Floor, MS 09-06, Sacramento, CA 95814-3530
Khosro Aminpour, Department of Public Works Operations
Steve Power, Department of Planning and Buildings
Verne Freeman, Freeman Associates, 994 San Antonio Road, Palo Alto, CA
94303
J:\Enginccr\L\NDD,EV\Projccts\vlisccll:mcous Projccts\OTA Y RANCH QUAR:itY\2009\Rcqucs.ting Rcpl<lccmCnl to F A.doc
276 FOURTH AVENUE I CHUlA YlSTA, CAl1FORN!A 91910-2631 f ((19) 691-5021
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STATEMENT OF RESPONSIBILITY
I, the undersigned, hereby agree to accept full responsibility for reclamation of all
mined lands as described and submitted herein and in conformance with the
applicable requirements of Articles 1 and 9 (commencing with Sections 3500 et
seq. and 3700 et seq., respectively) of Chapter 8 of Division 2 of TitIe 14 of the
California Code of Regulations, the Surface Mining and Reclamation Act of 1975,
as amended (Section 2710 et seq. of the Public Resources Code), and with any
modifications requested by the administering agency as conditions of approval.
Signed this
'1
day of, NDvEfr}(JEt?.
2009
MINE OPERATOR OR OPERATOR'S AGENT
(Printed Name) JOHN NOL.:L..Er(
d' ~ J~~
(Signature) (~--r~ ~->--
MINE NAMe
D Ph} v J1 t-t.J:Y I( (J ctC U--G.
CA MINE 10 #
91-37-0035
LEAD AGENCY
Citv of Chula Vista
The original copy must be qiven to the lead aqency and one copy to be
forwarded by the lead agency to:
Department of Conservation
Office of Mine Reclamation
801 K Street, MS 09-06
Sacramento Ca 95814-3529
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CI1Y OF
CHLJIA VISTA
DEPARTMENT OF ENGINEERING
December 11, 2009
File No. 071O-46-PG-782
Otay Valley Rock, LLC
Attn: Chris Orban
601 E Palomar Street, Box C354
Chula Vista, CA 91911
2009 SURFACE lvlINING ANNUAL INSPECTION REPORT FOR OTAY RANCH
QUARRY, CA.M1NE ill NO. 91-37-0035
Enclosed is the 2009 annual inspection report for the subject mining operation. This
inspection was performed on October L3, 2009.
The City has been requesting a replacement to the financial assurance since you started
operating the mine in April of 2009. The current financial assurance was supplied by the
previous owner, Riinrock CA, LLC, in the form of a Letter of Credit. This letter of credit
is going to expire within three months (March I, 2010). As we discussed during our
meeting on December 4, 2009, you must provide by January 4,2010, the City with an
approved financial assurance covering the currently approved cost estimate. If you need
an extension to this deadline please submit a written request by December 18, 2009, with
a proposed timelines and reasons for requesting the extension. Please note that you
cannot operate the mine without a financial assurance in place. Please allow time for
reviewing your proposed financial assurance, the Office of Mine and Reclamation may
require up to 45 days for their review (please log in to the website lin.lc below and refer to
Section 6 of the Financial Assurance Guidelines).
http://www.conservation.ca . eov 1 sm 2bl eu i del i n es/fi nc I % 20assurances/Docu men ts/04a eui
delines.pdf
W,i):h'/11k you for your cooperation and your courtesy during the inspections. If you have
~q Il!;~t~::::~iPg this inspection report, please call Jamal Naji (619) 409-5921.
eIf~mo
e ior ivillEngineer
Attachme J 2009 Inspection Report, Copy of the Financial Assurance, and Statement of
Responsibility
cc: Melody Mitchell, Department of Conservation, Office of Mine Reclamation, 801
K Street, MS 09-06, Sacramento, CA 95814-3529
Khosro Aminpour, Department of Public Works Operations
Steve Power, Department of Planning and Buildings
Verne Freeman, Freeman Associates, 994 San Antonio Road, Palo Alto, CA
94303
276 FOURTH AVE.......UE / (HUlA VISTA CAUFORNJA 91910-2&31/ (619) 691.5021
J;\Engine~r\LANDDEV\Projccts\fy!isccllaneous Projccts\OTA Y RANCH ~UARR Y\2009 lnspection\letter to with inspection
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CITY OF
CHULA VISTA
DEPARTMENT OF ENGINEERING
Order to Comply
February 2,2010
File No. 0710-46-PG-782
Certified !vI ail
Otay Valley Rock, LLC
Attn: Liam Devlin
601 E Palomar Street, Suite Cl12
Chula Vista, CA 91911
ORDER TO COMPLY WITH THE FINANCIAL ASSURANCE REQUlRENffiNTS FOR
OTA Y RANCH QUARRY, CA MJNE ID NO. 91-37-0035
This is a follow up to our letter dated December 4, 2009 (see attached letter). The City hereby
orders you to replace the financial assurance that is due to expire on March 1, 2010, to the
satisfaction of the City and the Office of Mine and Reclamation, for your current .mining
operation under Permit NO. PG-715. If you fail to provide financial assurance by February 17,
'2010, the City will proceed to issue an order to cease and desist your mining activity pursuant to
Public Resources Section 2774.1. It is your responsibility, as signatory of the Statement of
Responsibility to maintain the financial assurance needed to ensure that reclamation is performed
in accordance with the approved reclamation plan fouhe mining operation under Permit No.
PG715.
"
As you are aware, the current financial assurance for your mining operation was provided by
Rimrock CA, LLC, (the previous owner of the mine) in the amount of $2,353,259.00, in the form
of Irrevocable Standby Letter of Credit with an expiration date of March I, 2010.
It is imperative that the financial assurance for your mining operation be provided as required by
Public Resource Section 2770 The City has been asking for a replacement to the financial
assurance since you took control of the mine operation in April of 2009. Therefore you have had
more than ample time to comply with this requirement.
You recently indicated that you have been unable to purchase a security bond in the amount of
$2,353,259.00 due to stringent requirements of the bonding company.
As an option, you may want to consider, if possible, a minor amendment to your current
reclamation plan that would reduce the cost for reclaiming your site and would subsequently
reduce the amount of financial assurance needed. If you choose to follow up with this option
then the minor amendment to the reclamation plan, the reduced cost estimate, and financial
276 FOURTH AVENUE / CHULA VISTA, CALIFORNIA 91910.2631/ (619) 691-5021
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Attachment C
Order to Comply
Otay Valley Rock
2
February 1,2010
assurance must be approved by the City before February 17,2010 deadline. Otherwise, the City
will proceed with the cease and desist order. The financial assurance shall be provided in a form
approved by the City Attorney by February 17, 20 10.
We thank you for your cooperation. If you have any questions, please call Jamal Naji (619) 409-.
597
cc (sent electronically & U.S. Mail):
Ann Moore, Norton Moore & Adams, LLC.
525 "B" Street, Suite 1500, San Diego, CA 92101
Jim Pompy, De~artment of Conservation, Office of Mine Reclamation
801 K Street, 9' Floor, MS 09-06, Sacramento, CA 95814-3530
Mike Luksic, Department of Conservation, Office of Mine Reclamation
801 K Street, 9'h Floor, MS 09-06, Sacramento, CA 95814-3530
Gary Halbert, Department of Planning a"d Building
Richard Hopkins, Department of Public Works Operations
Verne Freeman, Freeman Associates,
994 San Antonio Road, Palo Alto, CA 94303
Khosro Aminpour, Department of Public Works Operations
Steve Power, Department of Planning and Buildings
Tom Adler, Department of Planning and Building
.
l:\Engineer\LANDDEV\Projects\Miscellaneous Projects\OTA Y RANCH QUARRY\20I O\Order To Comply\ORDER TO COMPLY BY FEB
17th.doc
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FIRST BANK
08:36:22 a.m.
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DATE: MARCH 2, 2009
CITY OF CHUlA VISTA
276 4TH AVE.,
CHUlA VISTA, CA 91910
05-27-2009 2/2
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MI'l'l IWl:IUa
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ORIGINAL
CALIFORNIA DEPARTMENT
OF CONSERVATION
OFFICE OF MINE REClAMATION
801 K STREET MS 09-06
SACRAMENTO, CA 95814
AMENDMENT NUMBER: 1
OUR LC NO.: DSCA9200316
WE HAVE AMENDED THE CAPTIONED LETTER OF CREDIT FOR THE ACCOUNT OF:
RIM ROCK CA, LLC
AMENDED TERMS AND CONDITIONS:
EXPIRATION DATE AMENDED TO: MARCH 01, 2010.
AUTOMATICALLY EXTENDED CLAUSE IN PARAGRAPH 4 DELETED.
THIS AMENDMENT MUST BE ATTACHED TO AND BECOME AN INTEGRAL PART OF THE
ORIGINAL CREDIT. ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
SINCERELY,
FIRST BANK
(AUTH
8-12
Attachment D
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lntemation<::! Ban:':ir;g
t;325 Del Arno Boule\lard
LaKewood, California SOT12
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Advice of Lie Charges
TO: Rimrock CA LLC
270 Newport Center Or, Ste 200
Newport Beach, CA 92660
Re: UC Fee
UC Number:
DSCA9200316
Renew21 Fee for yr 2006
Amount debited from AfCii9406943704
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Date: March 4, 2008
USD12,500.00
USD12,500.00
For and on behalf of
FIRST BANK
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Au\hori.::.ed Signature(s)
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432S De.l Amal:lvd.
13k~Joo-j.CA 9071"l
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fcx: 562.653.6i2!l
S\'JiFT: FBOlUS6L
Tl'.lex: '27135'2 F80LA UR
IRREVOCABLE STANDBY L8TER OF CREDIT NO. DSCA..9200316
DATI:: MARCH 1, 2007
RE: OTAY RANCH PIT
CA MINE ID NO. 91-37-0035
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BENEFlOARY: CiTY OF CHUlA VISTA
276 4Tn AVE.,
CHUlA VISTA, CA 91910
OP:RATORjAPPUCANT: Rl'~ROQ( C;, LLC
270 NEWPORT GENTER DR., #200
NE'NPORT BEACH, CA 92660 US
CALIfORNlA. DEPARTMEHT
Of CONSERVATION
OFFICE OF l"1lNE RECLAMATION
801 K STF.ET ~lS 09-05
SACRAI~ErITO, CA 95814
A~lOUNT: U5D2,3S3,2S9.00
US DOLlARS TWO MlLUOt/ TrlREE HUNDRED
FIFTY 11-1REE THOUSAND TWO HUNDRED FIFTY
NINE Ot/LY
EXPIRATION DATE: t<1ARCH 1, 200B AT OUR.
COUNTER
GENTl.Er-iEN:
WE HEREBY ISSUE OUR IRREVOCABLE STANDBY IE, I tR OF CREDIT NO. OSCA9200316 DATI:D MARCH 1,2007
IN YOUR FAVOR FOR THIS ACCOUrIT OF Rl~1ROCK CA, LLC, 270 NEWPORT CENTER DR., #200, NEWPORT
BEACH, CA 92550 US, IN TnE AMOUrIT Of USD1,353,2S9.00 (UNITED STATES DOLLARS TWO 'I,IWON 11-1REE
HUNDRED FIFTY THKEE THOUSAND TWO HUNDRED FIFTY NINE ONLY) ALL OR ANY PART SHALe BE
UNCONDmONAl.!..i AVAILABLE FOR PAYMErIT BY YOUR DRAfT(S) AT SIGHT DRAWN ON FIRST BANK,
INTERNATIONAL D=PT., 4325 DEL A~lO BLVD., LAKEWOOD, CA 90712
EACH DRAFT MUsr STATE THAT IT IS "DRAWN UNDER FIRST BANK, II'ITERNA110NAL DEPT., 4325 DEL AHO
BLYD.,LO.KEWOOD, CA 90712, lETTER OF CREDIT NO. OSCA9200316 DATED MARCH 1, 2007.
PARTIAL DRAWlNGS ALLOWED.
IT IS A CONDmON OF TnIS L"lTER OF CREDIT THAT IT IS DEE~IED TO BE AUTO'.IAl1CALl Y EXTENDED
WITHOUT At~ENDr~E,'lT FOR ONE YEAR FROM THE EXPIRATION DATE HEREOF UNLESS tBO DAYS PRlOR TO
TI1E CURRENT EXPIRATION DATE WE NOTIfY YOU BY OVERNIGHT COURlER THAT WE ELECf NOT TO
CONS10ER n1IS LETTER OF CREDIT pa:EVIED FOR ANY SUCH ADomOtJAL PERlOD. IT IS UNDERSTOOD
11-1AT THE cm OF CHULA VISTA AND THO' CAUFORNlA DEPART1-1ENT Of CONSERVATION omcr OF r.\!NE
REOLAMATION HAS TrlE RIGHT TO DE~lANO THE AMOUNT OF THIS SO'CURITY IF NOTICE OF EXPIRATION IS
GIVEN, UPON RECElPT BY YOU OF SUCH NOTICE, YOU MAY DRAW AGAINSTnnS LETTER OF CREDIT BY
PRESO'IffiNG YOUR DRAfT ONLY.
11-1E AGGREGATE Ar~OUNT OF 11-1IS CREDIT SHALL BE FURTHER REDUCED AUTO~IATICALL Y AND
H.11I'\EDIATELY WTIHOVT AN Ar.tE~mMENT AT ANY TII"'1E, UPON RECEiPT BY US ATTI-iE BElOW ADDRESS OF A
WR.!TIEN STATE1'lENT, SIGNED BY THE OTY ENGINEER AND T1-lE CITY ATIORNEY OF SAID ClTY AND TI1E
CALIfORNIA DEPARIMENT OF CONSERV^110~ OFFICE Of MINE REClN1ATION IDElffifYlNG nns O?EDIT,
AND STATING THE A~IOU,T OF SUCH REDUCT10N.
If, PRIOR TO 11-1E E:<?IRATION Of THIS LETTER OF CREDIT, IVE SHALL HAVE RECENED TrlE WRITTEN
CERTIFICATION Of TnE OT'( ENGINEER AND THE CITY ATTORNEY STATING TeAT 11-1E APPLICANT HAS
cmlPLETED TO THE CITY ENGlNEEP:S AND THE CAUfORNIA DEPARTI-IENT Of CONSERVATION OFFICE OF
t.1WE RECLAMATION'S SATISFAcnON THE RECL~MAT10N PLAN GUARANTEED BY THIS lETT2R Of rnEDIT,
11-1E fULL AGGREGATE ANOUrIT OF THIS LETTER OF CREDIT SHALL EXPIRE UPON RECElPT OF THE SAID
CERTIFICATION AND SHALL NO LONGER BE AVAILABLE fOR DRAWING THEREAFTER. A CHANGE OF
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OWNERSHIP OF IHE ?ROPERTf SHALL NOT BE aAS!S FOR RELEASING OR CANceUNG IHIS LEmR OF
CREDIT.
ANAL EXPIRATION DATE: t'\ARCH 1, 2009
THE DRJGINAL OF THIS CREDIT MUST ACCOMPANY ALL DRAFT(S) AND DOCUt"ENTS.
WE HEREBY ENGAGE WIlli YOU IHAT YOUR DRAFT(S) DRAWN UNDER AND IN COMPUANCE WITH THE TERNS
OF THE lEITER OF CREDIT, TOGEn.i::R V...Tn-i l'HE DOCUMENTS SPEOFIED HER3.N, WILL BE DULY HONORED
If PR.ESENTED ON OR BEfORE ThE EXPIRATION DATE HEREOF.
nus CREDII IS SUBJECT TO THE INTERNATIONAL STANDBY PRAmCES 1998 (ISP9B) INTERNATIONAL
Q1AM8ER OF COMt.jERCE PUBUCATION NO. 59D.
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8-15
RESOLUTION NO. 2010-
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA DIRECTING STAFF TO TAKE ALL ACTION
NECESSARY TO SECURE FINANCIAL ASSURANCE ON
THE OTAY VALLEY QUARRY, AS REQUIRED BY THE
STATE OF CALIFORNIA SURFACE MINING AND
RECLAMATION ACT (SMARA), INCLUDING EXERCISING
ITS RIGHTS UNDER THE EXISTING LETTER OF CREDIT
FOR $2.3 MILLION
WHEREAS, RR Quarry, LLC; Rimrock CA LLC; and Otay Valley Quarry LLC (referred
to collectively as "Rimrock") previously owned and operated the Otay Ranch Pit/Rock Mountain
Mine, located at the eastern terminus of Main Street; and
WHEREAS, pursuant to the requirements of the California Surface Mining and
Reclamation Act (2773.1), Rimrock secured a letter of credit in the amount of $2.3 million for
mine reclamation activities as specified in the adopted Otay Valley Quarry reclamation plan but
did not comply with state law with respect to the duration of said letter of credit; and
WHEREAS, in April of 2009 ownership/operation of the quarry was transferred from
Rimrock to Otay Valley Rock, LLC; and
WHEREAS, the existing letter of credit purports to expire on March 1,2010, and such
expiration would be in violation of state law; and
WHEREAS, a new financial assurance has not been established by the current mine
operator for mine reclamation activities required under the adopted Otay Valley Quarry
reclamation plan; and
WHEREAS, Public Resources Code Section 2773.1 requires a mining operator to maintain
financial assurances for the duration of the mining operation or until reclamation is completed, in
order to guarantee mine reclamation activities and, thus, promote the general health, safety and
welfare of the community; and
WHEREAS, Public Resources Code Section 2773.1 requires the eXlstmg financial
assurances to remain in force and prohibits their release by the lead agency even if the mining
operation is sold or ownership is transferred to another person; and
WHEREAS, a noticed public hearing was held on February 23, 2010, and evidence was
presented to the City Council concerning the need for the City of Chub Vista to transfer the
money from the letter of credit in the amount of $2.3 million, established for mine reclamation
activities pursuant to the requirements of state mining law (SMARA); and
8-16
WHEREAS, the Environmental Review Coordinator has reviewed the proposed activity
for compliance with the California Environmental Quality Act ("CEQA") and has determined
that the activity is not a Project as defined under Section 15378 of the State CEQA guidelines;
therefore, pursuant to Section 15060 (c) (3) of the State CEQA Guidelines the activity is not
subject to CEQA, so no environmental review was necessary.
NOW, THEREFORE, BE IT RESOLVED that the City Council based upon the public
testimony, information and materials provided hereby: direct staff to take all actions necessary to
secure financial assurance for the Otay Valley Quarry and to withdraw the money from the letter
of credit issued by First National Bank and transfer the financial assurance of $2.3 million from
the letter of credit to a separate account to be held in trust for the period required under SMARA.
Presented by:
Gary Halbert, PE AICP
\..-:- ~;
Rart . iesfeld
City Attorney
Deputy City ManagerfDevelopment
Services Director
8-17