HomeMy WebLinkAbout2777 Authorizing Utility Purchase and Exchange Agreement with the Public Utility District #1 for Water Utility Properties and FacilitiesOrdinance No. 2777
AN ORDINANCE OF THE CITY OF PORT TOWNSEND MAKING
FINDINGS AND DECLARATIONS; APPROVING AND AUTHORIZING
AND DIRECTING THE EXECUTION, DELIVERY AND
PERFORMANCE OF A UTILITY PURCHASE AND EXCHANGE
AGREEMENT WITH JEFFERSON COUNTY PUBLIC UTILITY
DISTRICT NO. 1, FOR THE SALE AND EXCHANGE OF CERTAIN
WATER UTILITY PROPERTIES AND FACILITIES OF EACH PARTY,
AND PROVIDING FOR OTHER CONSIDERATION; AUTHORIZING
AND DIRECTING THE CITY MANAGER AND OTHER CITY
OFFICIALS AS NECESSARY TO SIGN ALL APPROPRIATE
DOCUMENTS AND DO ALL THINGS REASONABLE AND
NECESSARY TO EFFECTIVELY AND EFFICIENTLY CARRY OUT
AND PERFORM SUCH AGREEMENT; AND RATIFYING CERTAIN
ACTIONS.
WHEREAS, the City operates a water supply and distribution system within the
City and also outside its boundaries, particularly in what is commonly known as the Tri-
Area; and
WHEREAS, Public Utility District No. 1 of Jefferson County, Washington (the
"PUD" or "District"), operates a water supply and distribution system in parts of
Jefferson County with some of its facilities located in the vicinity of the City of Port
Townsend, Washington (the "City") in what is commonly known as the Glen Cove Area;
and
WHEREAS, favorable preliminary review and analysis was accomplished by the
District and the City regarding the feasibility of transferring by sale or exchange the
ownership and operation of certain of their respective water supply and distribution
facilities in the Glen Cove Area and the Tri-Area, which facilities are believed to be
surplus to the needs of the present owners; and
WHEREAS, a Letter of Intent dated May 16, 2001 was negotiated and prepared
with respect to such sale and exchange of facilities.whereby, among other things, the
District would transfer its water supply and distribution facilities in the Glen Cove Area
(the "District Properties") to the City, and the City would transfer its water supply and
distribution facilities in the Tri-Area (the "City Property") to the District. The terms,
1 Ordinance 2777
among other things, called for a 90 day due diligence review, calculation of the difference
in value of the assets being exchanged based on the replacement cost new less
depreciation approach, and providing that arrangements for such utility system transfers
to be effective on or about December 31, 2001, should be set forth in a definitive
Purchase and Exchange Agreement to be entered into between the City and the District;
and
WHEREAS, a joint meeting of certain members of the City Council and District
was held on April 25, 2001 at the Chimacum Grange to receive information from staff
and public comment; and
WHEREAS, at a combined City Council Finance Committee and Public Works
Committee May 10, 2001, the Committees recommended that the City continue to move
forward on the sale and exchange of the Tri-Area water system with the District on the
terms outlined in the Letter of Intent; and
WHEREAS, in furtherance of its determination that ownership and operation of
the City Property and the District Property should be transferred from one to the other in
the manner intended, the City Council by motion passed at its May 14, 2001 meeting,
approved the recommendation of the Finance Committee and the Public Works
Committee that the City move forward on the exchange, and authorized the Manager to
execute the Letter of Intent dated May 16, 2001 with the District outlining the terms of
the proposed exchange; and
WHEREAS, in furtherance of its determination that ownership and operation of
the City Property and the District Property should be transferred from one to the other in
the manner intended, the District by Resolution No. 2001-026 adopted May 2, 2001
approved the Letter of Intent dated May 16, 2001 with the City outlining the terms of the
proposed exchange; and
WHEREAS, certain of the City Property was financed by means of a Public
Works Trust Fund Loan (No. PW-98-791-047), and the District is willing to assume
responsibility for repaying a proportionate share of that outstanding loan obligation; and
WHEREAS, on September 12, 2001, the Manager presented a Memo to the
Council and made a presentation to the Council on the results of the due diligence; and
2 Ordinance 2777
WHEREAS, on October 15, 2001, at a joint special meeting and public hearing
before the City Council of the City and the Commission of the District, of which notice
was given as provided in RCW 39.33.020, information concerning the proposed transfers
of the surplus City Property and surplus District Property was presented and public
comments were heard; and
WHEREAS, the period for accomplishing due diligence investigations provided
for in the Letter of Intent has passed, and the District and the City being satisfied with the
facilities to be received in each case, and the appropriateness of the proposed water
facility transfers, now wish to proceed and cooperate in establishing the terms of a
definitive Utility Purchase and Exchange Agreement (the "Agreement"), a copy of which
is attached hereto as Exhibit A and made a part hereof, in anticipation of accomplishing
before yearend the intended transfers of City Property and District Property and the
making of the District Payment; and
WHEREAS, the purchase and exchange is consistent with and implements a
series of prior City actions relating to the City's water system and service area planning,
the City's Comprehensive Water Plan (1998), and the Jefferson County Coordinated
Water System Plan ("CWSP"), including:
Resolution 96-122. On September 15, 1996, the Council adopted Resolution 96-122,
providing:
Adoption of a water service area map showing Glen Cove within the City's future
Water service area.
That the City should negotiate "with the PUD to exchange service areas ... on the
premise that service area exchanges should be fair and equitable for both utilities
as well as their customers."
"The service area revisions contemplated by this Resolution and Resolution 96-
023 will serve as the City's proposed service area of the City's Water Plan and the
CWSP." (Resolution 96-122, Resolution paragraph 6)
"[T]he City should concentrate its water utility planning efforts within the City's
municipal boundaries, in areas immediately adjacent to the City, in areas
identified in the CWPP as probable future Urban Growth Areas (UGAs), [and in
areas subject to existing written City contracts]. The discussions [with Jefferson
County Water Utility Coordinating Committee] have likewise reaffirmed the
3 Ordinance 2777
Council's preliminary direction that the City is not the appropriate utility to
provide ongoing, long-term water service to rural areas which are not adjacent to
the City's municipal boundaries." (Resolution 96-122, Findings, paragraph 4)
"Consistent with the policy direction in Resolution 96-023, the City Council has
determined that the best interest of the City and its utility customers are served by
working with the PUD to negotiate for the PUD to assume control of those areas
[depicted on a map attached to the Resolution as the Tri-Area water service
area]." (Resolution 96-122, Findings, paragraph 5.4)
"The Council has determined that transferring areas outside the City's new service
area boundaries to the PUD, and providing City water by wholesale contracts, will
best serve the City's customers within the City, and within the City's out-of-City
service areas, by improving levels of service and lowering operation and
maintenance expenditures. The City's fiscal analysis shows that such transfers
will not have a significant impact on the revenues or cost of serving remaining
City customers, should enable the PUD to more efficiently consolidate its service
areas and serve existing and new customers, and will enable the City to
concentrate 'its utility and planning and service within the City, in areas which are
urban in character, and in areas immediately adjacent to urban areas." (Resolution
96-122, Findings, paragraph 5.5)
The Resolution (and resolution 96-023) "constitute the proposed general policy
framework for the City's Water System Plan process and further constitute the
City's water service area proposal for the Coordinated Water System Plan
(CWSP) process. This resolution and Resolution 96-023 are intended to provide
the City with general policy direction to use in the Water System Plan and the
CWSP processes, and to provide City staff and the Utility Committee with
direction in negations with the PUD." (Resolution 96-122, paragraph B. 1)
B. City Service Area Agreement - Agreement for Establishing Water Utility Service
Area Boundaries (between City of Port Townsend and Jefferson County as part of the
CWSP) (9/20/96)
· Resolution 96-122 provides the policy basis for the City to prepare its Service
Area Agreement for the Coordinated Water System Plan (CWSP).
· The City Agreement provides: "The City has designated a portion of the
Jefferson County PUD #1 service area (The Glen Cove area) as its service area ....
C. City of Port Townsend 1998 Water Service Plan (August, 1998)
· The Water System Plan is the guidance document for the development and
improvement of the City water system.
4 Ordinance 2777
"The City views its role as providing urban levels of water service within the
urban (and urbanizing) areas of the County. In terms of utility planning, and
consistent with GMA, the City believes that the PUD and other rural water
utilities are appropriate entities to provide water service within rural area of the
County." (Paragraph 4.1.)
"The City has included part of the Glen Cove area as its proposed future service
area and the long-term planning for the City's system incorporates water supply to
accommodate growth in this area." To serve the area "will require a negotiated
transfer of the service area with the PUD." (Paragraph 3.1.3.)
WHEREAS, the state Department of Health supports the consolidation of regional
water systems as proposed in the purchase and exchange agreement, as shown by letter
dated June 6, 2001 to the PUD;
WHEREAS, the City Council determines that such purchase and exchange of water
supply and distribution facilities as provided in the Agreement will be in the public
interest, and be beneficial to the City. The Agreement is consistent with and
accomplishes prior City actions relating to the City's water system and service area
planning, the City's Comprehensive Water Plan (1998), and the Jefferson County
Coordinated Water System Plan ("CWSP"). The Agreement will best serve the City and
City's customers by improving levels of service and lowering operation and maintenance
expenditures, and will enable the City to concentrate its utility and planning ad service
within the City, in areas which are urban in nature, and in areas immediately adjacent to
urban areas. Further, the Agreement will best serve the City and City's customers for the
following reasons:
Elected Representation for the Tri-Area water customers. Currently the Tri-Area
customers do not elect the legislative body (Port Townsend City Council) that oversees
the operation of their water system.
More efficient and better Water System Management. By reducing the number of
entities managing the water systems in a particular area, the efficiency of the overall
system planning in the area should increase. The proposed system changes will allow
both the PUD and the City to develop more comprehensive water system plans with
fewer requirements for coordinating system improvements with multiple agencies. Both
entities will be able to provide better service to the customers of each purveyor in ht
future.
5 Ordinance 2777
Consolidation of Like Systems. The City draws its water from surface water in the
Olympic National Forest. The Tri-Area is supplied by wells located in the Tri-Area. Glen
Cove is serviced from the City's surface water supply. Surface and subsurface water
sources operate under different Federal and State parameters. The proposed transfer
would allow both the City and the PUD to focus on the requirements of just one water
source, not two.
Professional Staff. The City will lose some of its professional staff (water plant/water
distribution operators) that will remain with the Tri-Area system. While this will reduce
the City's capability to monitor and respond to water problems, in particular on
weekends, the City's remaining water distribution crew will be able to focus on the
maintenance and improvement of the City's older and more complex water distribution
system.
Cooperation. While the transfer should reduce some of the day-to-day coordination
issues between the PUD and the City, it remains in the interest of both system operators
to work together as we have in the past to ensure safe, reliable water for the areas
customers.
Priority of Efforts. The transfer would eliminate any false perceptions that the City
treats the Tri-Area system as a lower priority than the City system.
Steady Rates. The City has worked toward separating the costs of the City System and
the Tri-Area System to more equitably set rates in each area. Future rates within the City
will be even more closely aligned with the actual cost of service to City customers,
reflecting current costs and projected improvements to the City system.
Part of the Community. The City will be able to concentrate on water issues within the
City, and the PUD will be able to focus on its customers in the lower Quimper Peninsula
area.
Aligns Water Service Areas. The City currently serves areas adjacent to and outside of
the City boundary. The water comes from the City's surface water system. These areas
are logical extensions of the City system near the City boundary line. The Glen Cove
system fits into this category as it is already fed from the surface water system, not an
independent well as in the Tri-Area.
Septic Systems. The City has no intention of providing wastewater collection and
treatment to the Tri-Area in the future. Should that need arise the PUD would provide the
service. It makes good sense to have a single utility provider for a given area.
System Improvements. The PUD is in a better position to make comprehensive system
improvements in the Tri-Area by linking the Tri-Area system to their surrounding
systems thus improving looping, fire flows, and system redundancy.
6 Ordinance 2777
NOW, THEREFORE, the City Council of the City of Port Townsend ordains as
follows:
Section 1. After due consideration and being fully advised, the Council finds
and declares, as follows:
(1) The City Property should be and is found and declared to be
surplus and excess to the present and foreseeable future needs of the City.
(2) 'The Agreement is found to be in the public interest and beneficial
to the City and its customers for the reasons set forth above. The Agreement therefore
should be and is approved.
Section 2. The City Manager, and other City officials as necessary, are
authorized and directed to promptly execute, deliver and perform the Agreement in
substantially the form of Exhibit A. The Manager and such offiCials are further
authorized and directed to sign all appropriate documents and do all things reasonable
and necessary to effectively and efficiently accomplish the Closing on the Transfer and
Payment Date as provided in the Agreement.
Section 3. Upon closing, the City Administration shall take necessary steps to
notify Jefferson County and the state Department of Health of the exchange and
modification of service areas accomplished by the Agreement. Further, the
Administration shall develop a work plan to undertake planning for the amendment of the
City's Water System Plan to establish policies for Glen Cove, and establish a target
completion date.
Section 4. All actions previously taken and consistent with the provisions and
purposes of this resolution are ratified and confirmed.
Section 5. If any provision of this ordinance or its application to any person or
circumstance is held invalid, the remainder of the ordinance, or the application of the
provision to other persons or circumstances is not affected.
This ordinance shall take effect and be in force five days after the date of its
publication in the manner provided by law.
7 Ordinance 2777
Adopted by the City Council of the City of Port Townsend,
regular meeting thereof, held this/5~th day of October, 2001.
Washington, at a
'GeoffMasci, Mayor
Attest:
Approved as to Form:
15amela Kolacy, CMC, City tfjerk
John P. Watts, City Attorney
8 Ordinance 2777
UTILITY PURCHASE AND EXCHANGE AGREEMENT
THIS AGREEMENT is made and entered into to be effective as of the __ day of
October, 2001, by and between the City of Port Townsend, Washington (the "City") and Public
Utility District No. 1 of Jefferson County, Washington (the "District").
RECITALS
1. The parties are municipal corporations, duly organized and legally existing under
the laws of the State of Washington.
2. Each of the parties owns and operates a public water supply and distribution
system located in Jefferson County, Washington.
3. In order to achieve greater efficiency in the operation and maintenance of their
respective utility systems, and to better serve the public, the City and the District have
determined that the ownership and operation of the Tri-Area portion of the City's water facilities
(the "City Property") should be transferred to the District and that the ownership and operation
of the Glen Cove portion of the District's water facilities (the "District Property') should be
transferred to the City, both the City Property and the District Property being considered surplus
and excess to the needs of the present owners.
4. In furtherance of their determination that ownership and operation of the City
Property and the District Property should be transferred from one to the other in the manner
intended, the parties, acting through their legislative bodies, approved a Letter of Intent dated
May 16, 2001, providing, among other things, that arrangements for such utility system transfers
to be effective on or about December 31, 2001, should be set forth in a definitive Purchase and
Exchange Agreement to be entered into between the City and the District.
5. The Letter of Intent contemplates that since the value of the City Property exceeds
the value of the District Property, the District shall at the time of the property transfers pay to the
City the
determined by
Payment").
6.
difference between such values of the respective facilities to be transferred as
mutually acceptable and independent appraisals or valuations (the "District
On October 15, 2001, at a joint special meeting and public hearing before the Port
Townsend City Council and the Commission of the District, of which notice was given as
provided in RCW 39.33.020, information concerning the proposed transfers of the surplus City
Property and surplus District Property was presented and public comments were heard.
7. The period for accomplishing due diligence investigations provided for in the
Letter of Intent has passed, and the parties being satisfied with the facilities to be received in
each case, and the appropriateness of the proposed water facility transfers, now wish to proceed
and cooperate in establishing the terms of this definitive Utility Purchase and Exchange
Agreement in anticipation of accomplishing before yearend the intended transfers of City
Property and District Property and the making of the District Payment.
8. The transfers of City Property and District Property, and delivery of the District
Payment, shall be accomplished through an escrow at closing on the Transfer and Payment Date
as hereinafter defined.
THEREFORE, in consideration of the terms, conditions and covenants contained herein,
and the benefits to be secured, the parties mutually agree as follows:
5O277528,O3
-2-
1.0. Definitions of Terms. Wherever the following terms are used in this Agreement
they shall have the following meanings unless otherwise specifically indicated in the context in
which they appear.
· "Assessment" shall mean a charge levied in Local Improvement
Districts, Utility Local Improvement Districts or Local Utility Districts for special benefits
conferred by the construction of public water supply and distribution facilities and shall include
interest and any penalties thereon.
· "Capital Facilities Charge" or "System Charge" shall mean a charge in
addition to a Connection Charge imposed at the time of connection of property to public water
supply and distribution facilities as a contribution to the capital cost of such previously installed
facilities and the system of which they are a part.
· "City" shall mean the City of Port Townsend, Washington, a municipal
corporation and noncharter code city, acting by and through its City Council unless such
authority shall be lawfully delegated to other officials or unless other officials are expressly
indicated herein.
· "City Property" shall mean all water supply and distribution facilities
heretofore installed or acquired by the City as described in Exhibit A attached to and made a part
hereof serving a portion of the Tri-Area shown in Exhibit B, similarly made a part hereof.
· "Closing" shall mean the recording and transfers by the Escrow of
facility ownership and funds pursuant to Sections 2.0, 3.0 and 5.0 of this Agreement on the
Transfer and Payment Date when the District Payment also shall be made to the City.
· "Connection Charge" or "Meter Charge" shall mean a basic charge for
the connection of property to public water supply and distribution facilities.
-3-
50277528.03
· "District" shall mean Public Utility District No. 1 of Jefferson County,
Washington, a municipal corporation, acting by and through its Commission unless such
authority shall be lawfully delegated to other officials or unless other officials are expressly
indicated herein.
· "District Payment" shall mean the sum of approximately $2,187,000 to
be paid at Closing by the District to the City representing what the parties are satisfied is the
difference in value between the City Property and the District Property as determined by the
reports furnished to the City by R.W. Beck, and to the District by Financial Consulting Group.
· "District Property" shall mean all water supply and distribution
facilities heretofore installed or acquired by the District as described in Exhibit C attached to and
made a part hereof serving a portion of the Glen Cove Area shown in Exhibit D, similarly made
a part hereof.
· "Escrow" shall mean Transnation Title Insurance Company of Seattle,
Washington, designated to accomplish the Closing on the Transfer and Payment Date pursuant to
Sections 2.0, 3.0, 4.0 and 5.0 of this Agreement.
· "Service Charge" or "Water Service Charge" shall mean a monthly or
other periodic charge for water or the use of water facilities. Both the District and the City
currently bill their respective customers on a monthly basis.
· "Transfer and Payment Date" shall mean the date set forth in Section
2.2 of this Agreement for the transfers of facility ownership and funds in the manner prescribed
in that Section and in Sections 3.0, 4.0 and 5.0 of this Agreement.
2.0 Transfer and Payment Process.
4
50277528.03
2.1 Preparation for Transfer and Payment. The City and the District
are authorized to enter into contracts relating to the rights, powers, duties and obligations of the
City and the District, with regard to the use and ownership of City and District property and
other matters relating to the transfer of utility facilities between the City and the District.
Therefore, the City and the District hereby agree to transfer and exchange utility facilities on
substantially the terms and conditions contained herein.
2.2 Transfer and Payment Date. The Transfer and Payment Date shall
be December 17, 2001, or a date as soon thereafter as possible, when the Escrow will record the
conveyance instruments transferring ownership of the City Property to the District, and
transferring ownership of the District Property to the City. On that date the Escrow also shall
deliver the required District Payment to the City.
3.0 Transfers of City Property and District Property. On the Transfer and Payment
Date, or as otherwise provided in this Agreement, the City Property shall be transferred to the
District and the District Property shall be transferred to the City. Such transfers shall occur at
Closing as follows, and in accordance with the Escrow arrangements and instructions described
in Sections 2.0, 3.0, 4.0 and 5.0 of this Agreement.
3.1 City Transfer. Pursuant to this Agreement, all of the right, title and
interest of the City in and to all real property 'interests, contract rights, franchises, easements,
water system facilities and appurtenances constituting City Property shall be conveyed, assigned,
transferred and quit-claimed to the District by the City. It is further agreed that the assets which
the District shall acquire pursuant to this Agreement shall be subject to the existing rights of
other individuals and entities including, but not limited to, all persons residing or owning
-5-
50277528.03
property within the Tri-Area shown on Exhibit B and currently served by the facilities
constituting City Property, and parties with whom the City has existing contracts.
3.2 District Transfer. Pursuant to this Agreement, all of the right, title
and interest of the District in and to all real property interests, contract rights, franchises,
easements, water system facilities and appurtenances constituting District Property shall be
conveyed, assigned, transferred and quit-claimed to the City by the District. The District also
shall make the District Payment to the City. It is further agreed that the assets which the City
shall acquire pursuant to this Agreement shall be subject to the existing rights of other
individuals and entities including, but not limited to, all persons residing or owning property
within the Glen Cove Area shown on Exhibit D currently served by the facilities constituting
District Property, and parties with whom the District has existing contracts.
3.3 Assignment and Assumption of Contracts. Contracts of the parties
outstanding on the Transfer and Payment Date that relate specifically to the City Property and
the District Property shall be assigned and assumed respectively by the City and the District,
including but not limited to the following:
(i) Developer Extension Agreements. Each party shall assume
any and all such Developer Extension Agreements entered into by the other up to the Transfer
and Payment Date.
(ii) Connection Charge Agreements. Each party shall assume
responsibility for all such Connection Charge Agreements previously entered into by the other
up to the Transfer and Payment Date.
-6-
50277528.03
(iii) Construction Contracts. Each party shall assume the other's
rights and responsibilities with reference to any such construction contracts of the other, made up
to the Transfer and Payment Date.
(iv) Equipment Leases and Service Agreements. Each party
shall assume the other's rights and responsibilities under any such outstanding equipment leases
or service agreements.
(v) Miscellaneous Contracts. Each party shall assume the
other's rights and responsibilities under any other such contracts not otherwise specifically
provided for in this Agreement.
(vi) Future Agreements. Neither party shall enter into any new
agreement affecting the property that it is transferring before the Transfer and Payment Date,
without the other being a party to such agreement. From the date of execution of this Agreement
until the Transfer and Payment Date, the parties hereto agree to continue to cooperate fully on
matters of mutual interest affecting the City Property or the District Property including
applicable contracts.
4.0 Closing. Closing shall be accomplished as follows:
4.1 Time and Place of Closing. Closing shall occur in the office of the
Escrow located at 1200 Sixth Avenue, Suite 100, Seattle, Washington 98101, on the Transfer
and Payment Date being December 17, 2001, or on a date as soon thereafter as possible. The
City and the District shall deposit in escrow with the Escrow all instruments and documents
necessary to complete the transaction in accordance with this Agreement. As used herein,
"Closing" or "Date of Closing" shall mean the date on which all appropriate conveyance
instruments or other documents are recorded and the District Payment is disbursed to the City.
-7-
50277528.03
Escrow fees
instruments.
fees.
5.0
4.2 Closing Costs. At Closing, each party shall pay (i) one-half of the
and charges, together with one-half of the costs of recording the conveyance
Each party shall be responsible for its (ii) own legal, accounting and consultant
(i) Quit Claim Deed, in form
conveying title to all the land constituting part of the City Property.
Deliveries at Closing and Deposits with Escrow.
5.1 City Delivery. At Closing, the City shall deliver the following:
satisfactory to the District,
(ii) Bill of Sale, in form satisfactory to the District, conveying
title to tangible personal property constituting part of the City Property.
(iii) Assignment, in form satisfactory to the District,
transferring intangible personal property constituting part of the City Property.
5.2 District's Delivery. At Closing, the District shall deliver the following.
(i) Quit Claim Deed, in form satisfactory to the City,
conveying title to all the land constituting part of the District Property.
(ii) Bill of Sale, in form satisfactory to the City, conveying title
to tangible personal property constituting part of the District Property.
(iii) Assignment, in form satisfactory to the City, transferring
intangible personal property constituting part of the District Property.
5.3 Deposits with Escrow. In anticipation of Closing and to facilitate
the intended transfers, each party shall deposit with the Escrow on or before December t 2, 2001,
the conveyance instruments identified in this section in proper form for recording, together with
any other documents reasonable and necessary to accomplish the intended transfers of all the
-8-
50277528.03
City Property and District Property, and the District shall cause the transfer to the Escrow of the
District Payment at the opening of business on the Transfer and Payment Date for immediate
disbursement to the City.
6.0 Public Works Trust Fund Loan Obligation. Certain of the facilities included in
the City Property were financed by means of a Public Works Trust Fund Loan (No. PW-98-791-
047 (the "Loan")), and the District shall assume responsibility for repaying a proportionate share
of that outstanding Loan obligation, based on the ratio between the value of such facilities and
the remaining principal amount of the Loan. The parties shall petition the Department of
Community, Trade and Economic Development of the State of Washington (the "Department")
to formally divide responsibility for the repayment of the Loan between them, to be evidenced by
a new loan agreement in each case. If such petition is successful, each party shall pay its
proportionate share of the obligation directly to the Department pursuant to the new loan
agreements. If for any reason repayment responsibility is not divided proportionately between
the parties by the Department, the District shall pay to the City on or before June 30 of each year,
so long as the Loan obligation remains outstanding, its proportionate share as determined above
of the payment next coming due on July 1 of each year until the Loan is repaid.
7.0 Transfer of Personnel. The City currently has three (3) employees who work at
facilities which are a part of the City Property that the City will transfer to the District pursuant
to this Agreement. The parties intend that these employees will transfer their employment from
the City to the District. The parties intend to enter into a separate agreement, which shall include
the employees and the relevant unions, setting forth the particulars of this transfer. Upon the
execution of the separate agreement, it shall be made an Exhibit E to this Agreement, the City
9
50277528.03
Manager and District Manager, respectively, being authorized to approve, execute and deliver
such an separate agreement on behalf of the City and the District. If the separate agreement
contemplated is not concluded, then the parties may act in their own best interests as allowed by
law and contractual obligations.
8.0 Billing and Collection of Service Charges. Each party currently bills for service
charges on a monthly basis. In December, each party shall bill its present customers for regular
charges and provide billing instructions and payment envelopes addressed to their respective
offices to facilitate collection of those charges by them when due. In January, 2002, each party
will cease billing customers served by facilities that it has transferred to the other, and begin
billing customers for service charges within the area served by facilities that it has received from
the other party. Where accounts are not timely paid to a party submitting its December bills to
customers served by its transferred facilities, that party-shall be entitled to sell such accounts to
the other, and the other shall pUrchase them, at three-quarters of face value for collection.
9.0 Access to Records and Execution of Documents. From and after the effective
date of this Agreement, each party shall have reasonable access to all records of the other
pertaining to the construction, maintenance and operation of the City Property and the District
Property, respectively, schedules of Water Service Charges and Connection Charges, System
Charges, Assessments, and charges in lieu of assessments heretofore authorized and made by the
parties. Each party likewise shall furnish to the other all records of water connections which
have been made, water customers served, as-built drawings of water mains, facilities and
appurtenances, and such other documents and information as either may reasonably require to
carry out the terms of this Agreement and prepare to operate the City Property and the District
Property after transfer.
-10-
50277528.03
Each of the parties agrees to approve, execute and deliver through appropriate officials
any and all documents including bills of sale, quit claim deeds, assignments of interests and
rights, and other documents as necessary to convey, transfer or assign the City Property and the
District Property, respectively. Any such property found after the Transfer and Payment Date to
have been omitted shall be promptly transferred to the proper party.
10.0 Operation and Maintenance. From and after the Transfer and Payment Date, each
party shall operate and maintain the facilities received as a part of its water supply and
distribution system, in the manner provided by law.
11.0 Utility Rates, Charges and Regulations. The parties agree that from and after the
Transfer and Payment Date, each shall impose Service Charges, Connection Charges, Capital
Facilities Charges, or other miscellaneous fees within the area served by the facilities received, at
no higher rate than the rate charged for the same class of service rendered to its other customers
as provided in RCW 35.92.010, as now in effect or hereafter amended.
12.0 Inter-tie. It is agreed that after Closing, the parties shall cooperate in good faith to
promptly accomplish and finance a connection by adequate inter-tie between the City Property
and the District Property, and such other water supply and distribution facilities of the parties as
may be appropriate.
-11-
50277528.03
13.0 Service Areas. The parties shall cooperate to designate through the Coordinated Water
System Plan (CWSP) process water utility service areas consistent with the exchange of assets
and property in the Agreement. The parties agree the City shall serve as the water service
purveyor in the area shown in Exhibit D, and the District shall serve as the water service
purveyor for the City's current Tri-Area Water System as shown in Exhibit B.
14.0 Delegation and Authority to Act. Each of the parties shall timely authorize and
direct proper officials to act on behalf of the City and the District, respectively, to sign all
appropriate documents and do all other things reasonable and necessary to effectively and
efficiently accomplish the Closing on the Transfer and Payment Date.
15.0 Entire Agreement, Integration and Amendment. This Agreement, with exhibits,
constitutes the entire agreement of the parties with respect to the subject matter hereof, all prior
communications of the parties on such subject being integrated and merged in this document,
which may be modified only by an agreement in writing signed after due authorization by both
parties.
16.0 Binding Effect; Choice of Law. The parties agree that all provisions hereof are to
be construed as both covenants and conditions as though the words importing such covenants
and conditions were used in each separate paragraph hereof. All of the provisions hereof shall
bind and inure to the benefit of the parties hereto and their respective successors, and assigns.
This Agreement shall be construed under and be governed by laws of the State of Washington.
17.0 Disputes. In the event of any dispute with regard to this Agreement, venue shall
be in the Superior Court of the State of Washington for Jefferson County. The parties shall have
the right of specific performance of the terms hereof.
- 12-
50277528.03
18.0 Waiver. No covenant, term, or condition, or the breach thereof, shall be deemed
waived except by the express written consent of the party against whom waiver is claimed, and
any waiver or breach of any covenant, term, or condition shall not be deemed to be a waiver of
any preceding or succeeding breach of the same or any other covenant, term, or condition.
Acceptance by one party of any performance by the other after the time the same shall have
become due shall not constitute a waiver of the breach or default of any covenant, term, or
condition unless otherwise expressly agreed to in writing.
19.0 Notices. Any notice to be given, or any documents to be delivered by either party
to the other party, except documents to be filed in Escrow, shall be delivered in person or mailed
by certified mail and addressed to the respective parties at the following addresses.
To the City:
To the District:
David G. Timmons, City Manager
City of Port Townsend
181 Quincy Street, Suite 201
Port Townsend, WA 98368
James G. Parker, P.E., Manager
Public Utility District No. 1 of
Jefferson County
230 Chimacum Road
P.O. Box 929
Port Hadlock, Washington 98339
20.0 Saving Clause. If any section or provision of this Agreement is held by the final
decision of a court of competent jurisdiction to be invalid, the remainder of the Agreement shall
not be affected and shall remain in full force and effect.
21.0 Effective Date. This Agreement shall take effect upon execution and delivery as
authorized by City Ordinance No. 2777, and by District Resolution No. 2001-041, to be effective
as of the day and year first above written.
-13-
50277528.03
22.0 Counterparts. This Agreement may be signed in counterparts and, if so signed,
shall be deemed a single document.
IN WITNESS WHEREOF, the parties have duly executed this Agreement in duplicate.
CITY OF PORT TOWNSEND, WASHINGTON
By:
Its:
Dated:
APPROVED AS TO FORM:
CITY ATTORNEY
By:
Dated:
PUBLIC UTILITY DISTRICT NO. 1 OF
JEFFERSON COUNTY, WASHINGTON
By:
Its:
Dated:
APPROVED AS TO FORM:
FOSTER PEPPER & SHEFELMAN PLLC,
Special Counsel to Public Utility District
No. 1 of Jefferson County, Washington
By:
Dated:
-14-
50277528.03
EXHIBIT A
CITY PROPERTY LIST
Road use franchise from Jefferson County
Approximately 284,605 feet of distribution system pipe
As-built drawings (as available)
Fire hydrants located in Tri-area
Service connections and water meters for approximately 1700 accounts
Tri-area reservoirs
1 pumping station, including, pumps, controls, pump houses and real property
Wells in Tri-area (Sparling Wells No. 1 and 2, Kiveley Well)
Sparling Filtration Plant
Water rights permits
Customer lists
Business records, including meter reading records
Easements and real property in Tri-area
Latecomer Agreements
Customers Agreements
EXHIBIT C
DISTRICT PROPERTY LIST
ROad use franchise from Jefferson County
Approximately 27,000 feet of distribution mains
As-built drawings
Approximately 33 fire hydrants
Service connections and water meters for approximately 170 accounts
2 Pumping stations, including wells, pumps, controls, pump houses and real
property
Water rights permits
Customer lists
Business records, including meter reading records
Easements
Latecomer Agreement
Customers Agreements