City says NEF Lake raw‑water pipeline acquisition delayed by title issues; closing extended to September

City staff updated the Water and Sewer Board May 21 on the planned acquisition of the NEF Lake raw water system from a Chevron subsidiary and said closing will be extended into September to resolve title issues.

Sean (director) said the pipeline system was developed to deliver raw water for oil‑and‑gas operations and that the seller and city negotiated a purchase that includes a 10‑year leaseback permitting the seller to complete scheduled pad development. The agreement also includes a lease of excess water supply that offsets acquisition cost, Sean said, adding that the city’s due diligence has not surfaced major infrastructure defects but has identified a number of punch list items for correction.

The primary remaining obstacle, Sean said, are title and easement discrepancies that are common with pipelines installed rapidly for oil‑and‑gas purposes; in some places the easement descriptions do not match the pipeline alignment. The seller is correcting the easement documents either with corrected easements or by purchasing new easements. To allow time for title work and to preserve current environmental and closing due‑diligence work, staff said they will execute an extension to the closing to a date in early September and obtain an updated title policy prior to closing.

Why this matters: acquiring the NEF Lake raw water system would add conveyance capacity for raw water options; the 10‑year leaseback and lease of excess water supply were structured to make the acquisition fiscally neutral over time, but title clarity is required before transfer of ownership.

Staff said both parties remain committed to the transaction and expect to complete title cures and close in September, subject to satisfactory title and environmental review.