HomeMy WebLinkAbout2021-11-12 Draft Mill Agreement press releaseSteve King, Public Works Director
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CITY AND PORT TOWNSEND PAPER CORPORATION MAKING PROGRESS ON
A WATER AGREEMENT WITH DRAFT NOW AVAILABLE FOR PUBLIC REVIEW
Draft agreement still evolving in discussions and being presented to City Council at next business
meeting on 11115121 with a focus on key elements; final adoption expected by mid -December 2021
PORT TOWNSEND — The City of Port Townsend and the Port Townsend Paper Corporation (Mill)
have been working diligently the past two years toward renegotiating a water agreement, with an
aim to finalize a new agreement before the current lease expires on December 31, 2021. The
current lease has been in place and extended since 1956.
"This is a historic opportunity to work together with the Mill to ensure reliable and affordable water
supply for our community and for Mill operations into the distant future," says John Mauro, City
Manager. "We have not yet finalized the agreement but have worked in good faith with the
leadership of Port Townsend Paper Corporation to get to this point where the public can review
draft agreement text."
The agreement being negotiated is built on the principle of collaboration, which has been
fundamental to the construction and operation of the 1928-era, 29-mile long water supply system
for nearly a century. Looking forward, collaboration also provides the best outcomes (including
financial) over the long-term for both parties. Over the past year alone, a number of collaborative
efforts have been made, including a full survey of the pipeline (also called the Olympic Gravity Water
System or OGWS), two joint public presentations about the Mill and water system in partnership
with the Jefferson County Historical Society and the Port Townsend Public Library, multiple public
City Council presentations, development and finalization of technical whitepapers, and financial
analyses.
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Beyond collaboration, other core principles include acknowledgement of reliable water supply as
paramount to the existence of the City and Mill; recognition of the limitations in water supply
options; an evidence -based understanding that sections of the steel pipeline are reaching the end
of design life; a rationale for investing in the existing water system as the least costly and most
sustainable option; the value of public feedback and interest in conservation and equitable
allocation of costs; conservation as a driver for system resilience in the face of a changing climate;
and prioritization of the capital replacement of pipeline at highest risk of failure given the scale of
capital replacement costs.
While the City is still working through final language edits, the draft agreement currently includes
several key provisions, including:
• A management and replacement strategy for the water pipeline. A sinking fund based on
volume of water used and cost -shared between City and Mill will help address operational
and capital needs over the 20-year term of the agreement with an option to extend the
agreement for another 20 years. The sinking fund will fund planned capital projects on a
scheduled basis and will maintain a minimum balance of $2 million to provide for any
unforeseen emergency repairs.
• Measurement of water use. The City and Mill water use will be metered to allocate cost by
volume of water use beginning April 1, 2022. The City will also track all revenues, expenses
and records, with budgets and expenditures approved by City Council on an annual basis
• Cost of water. The cost of water (the raw water rate model) will be updated every five years,
including inflationary adjustment and actual costs and revenues realized. The City's retail
water rate model may need to be updated and adjusted to ensure the City can pay for its
portion of water used.
• Volume limitations for Mill use, including a maximum day demand. The system capacity is
limited, and the priority of water use is for the City which is consistent with the past
operations of the system. Excessive use of raw water by the Mill without additional capacity
negatively impacts to the City's Water Treatment Facility, so limitations are set to ensure
reliable flow of water for retail customers, especially during times when the City's water use
needs are high.
• Measures addressing low water supply. Water supply depends on year-to-year factors like
snowpack, rainfall, river flows and water use. Additional reductions of water use will be
assessed and implemented mutually by both parties, with the City retaining the ability to
implement restrictions to ensure adequate water supply for the City.
• Opportunity for additional industrial customers. If water conservation by the City and Mill
is successful in driving down average water usage, the City may offer raw water to other
parties and reallocate costs based on use. The Mill will not be able to resell raw water.
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• Repairs and improvements. The City and Mill will coordinate and work cooperatively to
make repairs and improvements to the system during regular Mill shut downs during low
water use periods.
• Operations. Historically, the Mill has provided reliable and successful operations of the
OGWS. The Mill will continue to operate the system on behalf the City by contractual
arrangement.
• Quality of water. The City will meet all relevant state and federal water quality standards.
Additional elements like air pollution are not in the City's jurisdiction to govern and are not
addressed as part of the agreement.
"We've enjoyed productive and constructive meetings with the Mill, built on years of the teams
working closely together to maintain and operate the system. City and Mill staff have a real deep
understanding of the water system, which is a benefit to us all. I'm hopeful a new agreement will
be the basis for continuing the good work necessary in providing reliable water for our community
over many years to come," says City Public Works Director Steve King.
The draft agreement will be presented to City Council at the next City Council business meeting on
Monday evening, November 15, 2021. For more information, including the draft agreement,
previous public presentations, meeting materials and finalized white papers, please visit the City's
webpage at: �tt, ,.::/„ t e water-sor the City Council ,,p
meeting agenda and materials at:
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