Company and Central Valley Farmers Sign Letter of Intent
LOS ANGELES – Cadiz Inc. (“Cadiz”, the “Company”) reported today that it has executed a Letter of Intent (“LOI”) with the San Luis Water District (“San Luis”), a retail water agency that serves farmers in California’s Central Valley. San Luis is one of the region’s water suppliers that has been hardest hit by a combination of historic drought and ongoing regulatory restrictions to the State’s water deliveries. President Obama toured San Luis earlier this year as part of his visit to California to assess the State’s drought conditions.
“We are mindful of the tragedy being experienced by Central Valley farmers as a result of water shortages and we have turned our attention towards creative ways we might help,” said Cadiz CEO Scott Slater. “Assisting these farmers will require an exchange with a State Water Project contractor but we are evaluating all of the options, because it’s worth the effort.”
According to the terms of the LOI, up to 10,000 acre-feet of water can be reserved by the District’s farmers under a definitive agreement while the exchange arrangements are evaluated and any additional regulatory compliance is completed. Under the LOI Cadiz will receive $960 per acre-foot. However, costs to San Luis may be reduced by off-setting contributions provided by third parties in exchange for benefits conferred.
“We intend that San Luis’ participation will be complementary to existing project participants and we are open to working with the farmers to consider a contract of a shorter duration than 50 years,” Slater added.
Similar to the Lake Arrowhead Community Services District, which also recently executed an LOI with the Company, San Luis would join six Southern California agencies already participating in the Project. The Project received key approvals under the California Environmental Quality Act (“CEQA”) in 2012. Santa Margarita Water District, the CEQA lead agency, certified the Final Environmental Impact Report and executed a Purchase & Sale agreement in July 2012. San Bernardino County, a CEQA responsible agency, issued approval of the Project under its Desert Groundwater Ordinance in October 2012. The Project approvals were recently upheld against legal challenges.
The Company has now executed LOIs and option agreements that are in excess of Project capacity and continues to pursue additional LOIs with public water suppliers consistent with the Project approvals. Participation in the Project would be prioritized in definitive agreements as required.