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BOARD MEMORANDUM

DATE: December 29, 2017

TO: SCV Water Board of Directors
FROM: Valerie L. Pryor
Assistant General Manager

SUBJECT: Dissolution of the Valencia Water Company, as Required by SB 634

SUMMARY

On February 17, 2017, California Senator Scott Wilk introduced SB 634, which Governor Brown
signed into law on October 15, 2017. The bill established the Santa Clarita Valley Water
Agency (SCV Water), effective on January 1, 2018, and directs SCV Water to take the
appropriate steps together with the Board of Directors of Valencia Water Company (VWC) to
authorize the dissolution of VWC no later than January 31, 2018, and the transfer of the
company’s assets, property, liabilities, and indebtedness to SCV Water. SB 634 requires that
the dissolution and transfer shall be finalized no later than May 1, 2018. Staff have developed a
plan of action to effect this transaction by January 31, 2018 and recommends the Board:

1. Adopt the Plan of Dissolution approved by the Board of Directors of VWC and authorize
the General Manager to take the necessary steps on behalf of SCV Water to implement
the plan and carry out the Dissolution in accordance with SB 634.
2. Find that the proposed Board action is not a CEQA “project” or, alternatively, is exempt.

DISCUSSION
Plan of Dissolution

Staff have worked with legal counsel and management of VWC to prepare the attached Plan of
Dissolution that will allow for (i) the legal dissolution of VWC and all filings required in
connection therewith; (ii) the transfer of the assets and liabilities of VWC to SCV Water; and (iii)
a smooth transition of the operations of VWC to SCV Water. The Plan was approved by the
VWC Board of Directors on December 28, 2017 and is recommended by the VWC Board to
SCV Water as the sole shareholder for adoption. In summary, the Plan of Dissolution provides
that:

1. All assets, property, liabilities and encumbrances of VWC will be transferred to SCV
Water by January 29, 2018, and will be further covered by an Assignment and
Assumption Agreement.
2. Employees will be transferred from VWC to SCV Water on January 20, 2018.
3. VWC and the Agency will notify all VWC customers informing them of the transition of
service to SCV Water (letter dated December 20, 2017).
4. VWC will provide tail insurance coverage to the Company and its Directors and Officers.
5. VWC will repay its existing loan from revenue refunding bonds issued by SCV Water and
with future debt service paid by the Valencia Water Division.

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