05/22/2006 - Packet TIGARD WATER DISTRICT
BOARD of COMMISSIONERS MEETING
Serving the Unincorporated Area
AGENDA
Monday, May 22, 2006, 7:00 p.m.
1. Call to Order, Roll Call and Introductions
2. Approval of Minutes —April 24, 2006
3. Visitor Comments
4. Update on Bylaws and Bylaw Modifications
5. Water Supply Update —Dennis Koellermeier
• Motion to approve Portland (10-yr.) Wholesale Water Contract
6. IWB Update—Beverly Froude/Janet Zeider
7. Update on Water Related Educational Information—Marc Delphine
8. Non-Agenda Items
9. Set next meeting date—June 26, 2006, at 7:00 p.m.
10. Adjournment
Executive Session:
The Tigard Water District Board may go into Executive Session under the provisions of ORS 192.660(1)(d),(e), dam'(h)
to discuss labor relations,real properpt transactions, and current and pending litigation issues.All discussions within this
session are confidential;therefore, nothing from this meeting may be disclosed by those present. Representatives of the news
media are allowed to attend this session, but must not disclose any information discussed during this session.
TIGARD WATER DISTRICT
BOARD of COMMISSIONERS MEETING
Serving the Unincorporated Area
Monday,April 24,2006
7:00 p.m.
Members Present: George Rhine,Janet Zeider, Marc Delphine, Charles Radley and
Beverly Froude
Staff Present: Dennis Koellermeier,Michelle Wareing,Twila Willson and
Joy Koss
Visitors: Clark Balfour, Kesmira McVey, Isador Morigavi, Phil Decker,
Lisa Hamilton-Treick, Kinton Fowler, Barb Sherman and
Moriah Balingit
1. Call to Order, Roll Call and Introductions
The Tigard Water District (TWD) meeting was called to order by the Chairperson,Commissioner George
Rhine,at 7:09 p.m. and staff called roll. All board members were in attendance.
2. Approval of Minutes—January 23,2006 and Special Meeting on March 20,2006
Commissioner Beverly Froude motioned to accept the minutes of the January 23,2006 meeting,
Commissioner Janet Zeider seconded the motion and the board voted unanimously to approve the minutes
of the meeting as presented.
Following a brief discussion of the Special Meeting minutes of March 20,2006, Commissioner Delphine
motioned to approve the minutes of the meeting, Commissioner Froude seconded the motion and the board
voted unanimously to accept the minutes as presented.
3. Visitor Comments
(Commissioner Rhine revised the order of the agenda items to accommodate the finance staff and attorney.)
5. Beginning of Budget Process
Dennis Koellermeier introduced Michelle Wareing,City of Tigard Financial Analyst and tasked with helping
the board meet public budget law and prepare the budget.
• Discuss Proposed Budget
Ms.Wareing handed out a draft proposed budget to the board and asked the board for their
recommendations. The beginning balance for Total Resources is$111,836. Mr.Koellermeier and Ms.
Wareing advised the board to aim for the most flexibility by appropriating the entire amount of money. A
general discussion of fund allocations for specific line items took place. It was decided the remainder of
the funds would be placed in contingency.
• Present Budget Calendar
Ms.Wareing will complete the expenditure estimates for distribution to the board before the next meeting.
Tigard Water District Draft Copy April 24,2006
1
• Appoint Budget Committee—Commissioner Rhine invited members of the audience to use the sign-
up sheet to indicate interest in participating on the Budget Committee.
4. Legal Council Report—Clark Balfour
Board members previously received and had an opportunity to review Mr.Balfour's Opinion Letter. Mr.
Balfour introduced himself as a lawyer with Cable Huston,practicing for 26 years,specializing primarily in
local government work(in particular,water districts,wastewater districts,people's utilities districts). He
was asked to look at questions regarding the Canterbury reservoir and a portion of the property that may
be considered excess and not necessary for water system improvement. Summarized:
• The IGA creating the Intergovernmental Water Board(IWB) had provisions that defined the
two types of assets: a system asset and another asset.
• This is a single parcel of property(there are not two separate tax lots).
• This property and the assets on it are system assets (land and improvements).
• The IWB needs to make decisions as dictated by the terms of the agreement
• Disposition or transfer of assets needs to be determined by the entire IWB and requires unanimity
in that decision. (History shows the Menlor reservoir site was treated in that same fashion.)
• Each IWB entity should weigh its necessity for future operation of area water system.
• • Reasonable basis is needed if an entity were to descent from that position.
(Commissioner Marc Delphine departed at 7:44 p.m.)
Mr.Balfour was also asked what it would mean if the City of Bull Mountain is formed:
• IGA references various statutes regarding city annexation,withdrawal of district infrastructure
• Statutes cited deal with the partial annexation of a district
• Statute 222.510 applies when a city takes the entire area of a water district,the water district is
automatically extinguished with all its assets,obligations and responsibilities going to the city.
• If the City of Bull Mountain were formed and it encompassed the entire remaining territory of
the TWD,upon formation,this district would cease to exist and TWD would go through a
process as board of trustees to hand over all assets,transfer deeds and whatever else is necessary.
• IGA says obligations under the IWB cannot be transferred without their consent
• By operation of law,the new city would automatically succeed to the interests of this district and
they would become members of the water board,but that could be a matter for litigation if one
of the other three cities decided that was not a good result and wanted to contest it.
• Mr.Balfour thought the state statute would prevail.
Recap of additional discussion topics,including Mr.Balfour's comments:
• TWD would remain for any remnant not included in the City of Bull Mountain formation
• TWD committed its cooperation to manage the system as a whole and pledged to the City of
Tigard who undertook those operating functions when it signed the IGA.
• TWD may be required to sign a deed or transfer document
• IWB has to decide if all this property is needed or not
• IWB has to authorize the city and staff to partition property in order to create the unencumbered
piece for whatever those uses are.
• Under TWD's duty of cooperation,they would either convey property by deed to the City,or
because they have already designated it as not necessary for water system service,it would
automatically migrate over to the other asset category.
• Property in other asset category automatically becomes property of jurisdiction where it is located.
• If Tigard asked the TWD to sign a deed over,TWD would have to cooperate
• Mr.Koellermeier originally proposed to the board the possibility of designating a portion of the
property as surplus and with Mr.Balfour's analysis,the appropriate step would be for the city to
now formulate a plan and run that plan by this board and to the IWB.
Tigard Water District Draft Copy April 24,2006
2
• TWD's authorized IWB representative would vote on that issue based on their decision.
• Mr. Koellermeier recommended partitioning lot somewhere near the current fence lines.
• Mr.Koellermeier requested information from engineering consultants about future use of that
property and other than a potential corner to hold as an easement for future well site,the
property appears to be of no benefit for future water purposes.
• Surplus property issue arose when the Tigard City Council gave the Parks and Rec.Advisory Board
a task to identify potential park and open space improvements. Canterbury site was identified as a
large,undeveloped parcel.
• Clarification of words `transfer'and`pledge'when referring to assets: `Transfer'typically means
to hand over and often has an underlying premise of to convey title. `Pledge'is usually a right-of-
use,often appears in the context of a security,e.g.,I `pledge'this asset to you to secure the debt.
• That language was used in the agreement in several different places,talking about the ability of
the City of Tigard to act as manager of the water system.
• There have been discussions about tuning up this agreement to make it clearer.
• IWB does not have its own legal council has historically used the city's attorney,although one of
the board members is an attorney.
• A suggestion was made that the site should be leased to the city for$1 a year,but was questioned
as necessary or appropriate under this agreement
• Mr.Balfour did not look at whether the IWB wanted to obtain some return for system asset now
determined as surplus.TWD has the right to determine what the terms of the transfer are.
• Mr.Koellermeier summarized it as either a system asset or another asset. If a system asset,it is
pledged for use. If it is not necessary for that use,it is already another asset. He could not see a
third option where the board can declare it surplus to IWB and then market it. Mr.Balfour
commented that the agreement did not speak to it and the only example was the Menlor site and
is a fair item of discussion when the IWB meets.
• Concerns were expressed about revision to ORS-279 regarding the procurement authority of every
agency in the state. Mr.Balfour commented that in 2003 legislature adopted statutes that amended
the procurement law governing the rules and obligations any governmental agency has to follow
when acquiring goods and services.
• History of the TWD has been that the City of Tigard,as the managing agent,has run those types
of processes and they run according to those rules.
• TWD has been doing things through the City of Tigard who went through all of those updates. If
TWD is happy with Tigard's rules,just adopt the City of Tigard's rules by a resolution or appoint
yourselves a contract review board,adopt their rules,make whatever modifications are wanted but
generally follow that and not have to create a whole new document. It is not a difficult thing to do,
however,authority to deal with surplus property is adequately covered already.
• Mr.Koellermeier stated the real issue was whether the board needed to deal with this issue
separately from the fact that the city was their business agent.
6. Update on Bylaws and Bylaw Modifications
Commissioner Rhine commented there were underlying questions that the by-laws adopted in 1990 were not
covering well what TWD does currently and there was a need to adopt a new set of by-laws. Mr.Balfour
indicated the issue was if there could be objection about Commissioner Rhine being president too long.
Commissioner Rhine added that there were several other issues. One issue that came up was that the
chairman could only serve a one-year term. Mr.Balfour commented that the by-laws are procedural,
outline conduct of business and how to go about handling your business. Decisions are not going to be
upset by a court if TWD failed to follow a procedural issue in the by-laws. Holding a term of office is not
something that is going to void any action. Public meetings law provides that a decision of a government
agency can only be challenged for a period of 60 days after action is taken. Anything done 60 days ago
and beyond is valid and cannot be challenged at this point. The final point to consider was even if the
chair's vote was challenged and taken away,would that change the outcome of the remaining voting
Tigard Water District Draft Copy April 24,2006
3
quorum. The court would likely say TWD has followed the public meetings law and the fact that one
person may have been running the meetings instead of another would not matter because decisions are
made in accordance with law and they would not question those decisions.
Commissioner Froude commented that Greer Gaston had looked into this and said the rule had been
changed. Mr.Koellermeier commented that she referred to the ORS that governs special districts
containing a clause about term of chairmanship and in the last revision did not include any restrictions.
Mr.Balfour explained that the procedure to change the by-laws was a 28 day process. The board wants to
work on getting the by-laws in good shape as soon as the budgeting process is over.
7. Update on Friends of Bull Mountain's Request to Fund the Comprehensive
Feasibility Study Required for Incorporation
Mr.Koellermeier stated the outstanding question was the participation of this board allocating financial
resources to the Bull Mountain group for their study. Before making a decision on the request to fund
the study,he recommended that the board seek legal advice on the legality of funding such a study for a
non-profit organization,which he believes is the legal terminology of the Friends of Bull Mountain
(FoBM),and the repercussions,pro or con,of doing that.
Mr.Balfour made the following statements as to what the board could do as a water district and responded
to specific questions from the Commissioners:
• TWD is a special district in this state.
• Authorized to expend money for authorized district purposes.
• TWD has to budget and appropriate those necessary funds and spend them for the water system.
• Water and water-related issues are valid expenditures. To the extent that TWD goes outside
those authorized expenditures,they run the risk of personal liability under statute 294.100 which
says that if a public official(elected or staff member) expends money for unauthorized or illegal
purposes,those people are personally liable for repayment of that money.
• If TWD spends money to help with an incorporation study,they probably have the power to do
that if they limit it specifically to those things that are water related. It also makes the assumption
that they are going to be the water service provider. To the extent that you keep it limited to
water system service in those areas,it probably would be an authorized expenditure of funds.
Anything beyond that would be subject to personal liability risk.
• Under very narrow circumstances,TWD could fund part of the study,but should not loose sight
of the fact that this district signed an Urban Service Agreement in 2003. That agreement was with
City of Tigard,Clean Water Services,Tri-Met,County and Tualatin Valley Water District. TWD
and all those other entities agreed the City of Tigard was to be the ultimate provider of urban
services from Bull Mountain Road and Roy Rodgers Road up to Scholls Ferry Road.
• If TWD authorizes this expenditure,they essentially are saying they think the City of Bull Mountain
ought to be the provider there,they could be in a position of having violated the agreement and
that agreement provides that they go through a dispute resolution process with the city(mediation
and binding arbitration process).
• TWD has agreed that water system assets are going to be the City of Tigard's.
Commissioner Radley was concerned with the termination provision,he had not seen the SB-122 agreement,
had tried to get a copy from OSU Extension but they could not find it. Mr.Koellermeier said he could
provide Commissioner Radley with a copy of the agreement. Commissioner Radley also questioned the
board's insurance and to what extent it would defend commissioners against any kind of suing. Mr.Balfour
had not looked at the policy for awhile,but typically it was fairly broadly construed coverage,with a
recognized defense for good faith reliance under the advice of legal counsel.
Commissioner Radley commented about the gentlemen who say he has a conflict of interest because of
his association with the organization,FoBM.He knows those people,socializes with them,has
Tigard Water District Draft Copy April 24,2006
4
volunteered his time to help with some of their activities,given them a small sum of money,and he
wanted to know if that was some kind of a conflict of interest.
Mr. Balfour responded that typically conflicts of interests arise under the statutes when using your office
essentially to obtain something,to avoid a detriment or when somebody is trying to influence decision
making. The board is all involved in the community and just because you are a water commissioner,does
not mean you have to check your right to associate with other people. A conflict situation is somehow
using your position to further something that is either for your own financial benefit or someone else's
financial benefit and whether or not you are acting in what you think is the best interests of the water
district. To the extent that someone raises those kinds of issues,he doubted it would amount to a conflict
based on the facts that Mr.Radley stated. If the commissioner want to back that,then he should say
some people have raised issues about whether he has a conflict of interest,he does not believe he has a
conflict of interest,get it out on the public record and declare whether he does or not. Even if he has a
potential conflict of interest,he can still vote as long as he declares. It is only if he has an actual conflict
of interest that he is suppose to abstain from voting.
Commissioner Rhine commented there was a communication received from the FoBM after the
presentation several weeks ago concerning the study being done by ECO Northwest that was proprietary
data. The message said that although some of the information may be public,the analysis and conclusions
(including this article of concerns,etc.)would not be publicly available. It sounds like the TWD was being
asked to fund something which was not public data.
Mr.Balfour did not see how the district could publicly fund the study and then have the data be confidential;
it has got to be a public record. Once you commit your money to have that study done,at least the section
paid for by TWD must be available to the public. They have to see how the money was spent. Commissioner
Radley agreed that it should be public and thought Mr.Koellermeier made a comment in the last meeting that
if the transaction were to go ahead,there should be some kind of agreement formulated between this board
and the other organization;for example,a memorandum of understanding.
3. Visitor Comments
Commissioner Rhine opened the meeting for comments from citizens.
Kesmira McVey- 13525 SW Beef Bend Road
Ms.McVey clarified the intent of her prior e-mail and confirmed that the ECO Northwest study would
be public. The basis for it is to determine economic feasibility of creating a city. She acknowledged the
significant resources and time of the TWD in struggling with this request for funding. Regardless of
the outcome, she appreciated the effort made to put due diligence into action and evaluate the option.
Isador W.Morigavi-15145 SW 119th
Mr.Morigavi formally objected to Mr.Radley being on this commission because he was bias. His assertion
that he has mere association with the FoBM was incorrect. Mr.Morigavi knows that Mr.Radley was and
may still be a member of the Bull Mountain Residents of Incorporation. It is the board's commitment to
sit and listen to facts and make a decision they consider to be fair and honest to everyone involved. He did
not think Mr.Radley was capable of making a fair and honest decision and wanted that on the record.
Mr.Morigavi addressed the purpose of this survey,which was a requirement by Washington County to
determine the economic feasibility of the area on Bull Mountain being incorporated into a city. An
economic survey has nothing to do with water use,and any assertion that it would be of value to the water
board was without basis. Mr.Koellermeier and his staff do the planning and water services. The study
would not contribute toward the stated aim of providing TWD with information to use. If TWD decides to
go forward,he would seek legal advice.
Phil Decker- 14540 SW 148th Place,City of Tigard,unincorporated Washington County area.
Tigard Water District Draft Copy April 24,2006
5
Mr.Decker's statedFoBM dated March 10th states that one of the first steps of an incorporation process was
to prepare a comprehensive feasibility study presenting detailed income and expense data,projections of
future population growth and other data. They stated the study would be very helpful to the TWD and
requested the District fund their study.
That request appears to be in violation of public contract referred to by counsel earlier. This agency did not
opt to design its own public contracting rules. Therefore,the rules that this organization is bound by are set
forth in the public contract rules stated in the Oregon Administrative Regulation 137. It is clear that FoBM's
request in no way complies with that act. Any payment to or on behalf of FoBM would likewise not be
compliant.
If you say we are not going to fund the whole study but just going to fund a part of it which fits under water,
any subsequent action will show a diversion to disguise what the true purpose of that expenditure is. Mr.
Decker referred to the Special Meeting minutes where remarks were made that the county intends to do
planning in areas 63 and 64 and this information would be available to your district free-of-charge. It would
be a duty of this board,as part of due diligence,to explore with Mr. Coffee his belief that the study would
not be beneficial or valuable to the TWD. We would be paying for something that can either be gotten for
free or is unneeded.
Mr.Decker questioned the credibility of FoBM,a political action committee sworn in September 2002 and
discontinued a week after the Special Meeting. He reported that a notice of discontinuation of FoBM,a
political action committee,was filed with the City of Tigard on April 7,2006. In the Special Meeting,Ms.
McVey,on behalf of the FoBM,responded to a question by Mr.Delphine,stating the FoBM had over 250
active members. A PAC has no members under Oregon law,but only has committee directors. Those
committee directors are: Ms.Hamilton-Treick,Ms.McVey,Ms.Russell and Mr.Franzkc and they are the
only four people who are with FoBM Political Action Committee. On the same day that they filed notice of
discontinuation,they also filed the Articles of Incorporation of a nonprofit corporation. (Mr.Decker
distributed to the board a copy of the Articles of Incorporation of FoBM,an Oregon nonprofit corporation
filed on 9/4/2002). The FoBM that filed the request for funding was the nonprofit corporation.
FoBM has no members and that was known by Ms.McVey and Ms.Hamilton-Treick on the date of the TWD
Special Meeting,because they are the directors. The four directors of FoBM,the nonprofit corporation,are:
Ms.McVey,Ms. Hamilton-Treick,Mr.Franzkc and Ms. Russell(who is the primary candidate for mayor of the
new City of Bull Mountain should that ever occur). The same four people are the directors of FoBM,the PAC,
and the Bull Mountain Residents for Incorporation,a PAC that also has no members.
Mr.Decker suggest to the Board that:a)the application and the applicant FoBM has no credibility,b) they
have not been shown all the facts nor have all the true facts been disclosed to them,c) this Board is under
a duty to investigate and d)in the event the Board directs a$34,000 grant or partial grant to enable money
to subsidize the expenditure for which FoBM have already made a financial commitment,it will be
scrutinized most carefully.
Lisa Hamilton-Treick- 13565 SW Beef Bend Road,unincorporated area of Bull Mountain
Ms.Hamilton-Treick stated that Mr.Decker said things that were erroneous and that he did not know
anything about the FoBM or the Political Action Committee or Bull Mountain Residents of Incorporation.
She consider it unfair if the TWD were to make any decisions based on his comment without the
opportunity to have FoBM's attorney and PAC board review.
Regardless of the TWD decision,she thanked the board for the sincere effort they made to seek legal counsel
and make an informed decision. FoBM will move forward one way or the other,with or without the
assistance of the TWD. 8,000 people are trying to solve a problem they did not ask for. If FoBM are
successful in November,she hoped they would continue to work together to solve the water issues for Bull
Mountain.
There were no other speakers and Commissioner Rhine closed public comment.
Tigard Water District Draft Copy April 24,2006
6
Commissioner Rhine not necessarily as Chairman of this Board,thanked everyone for their participation at
the last two meetings and,regardless of the outcome,he thought everyone had an opportunity to help the
TWD with the decision process. He also thanked all the people that were involved in the FoBM and against
the FoBM,because of the importance of citizen participation in deciding what the future should be. It is an
emotional issue and obviously people are bias one way or the other in terms of what they decide. Our form
of government is to get people together,form a measure and get it onto the ballot to let enough people
decide if that is what they want to do or not. For all the personal effort that has gone into it on both sides,
that proves the process is working and he again thanked them for their participation.
The board continued the discussion by asking Mr.Balfour if he had more direction before a decision was
made. Mr.Balfour said he heard a lot of new things. He said some further exploration should be made
before they actually do anything. If TWD were going to go ahead on a limited basis,they would have the
ability to select a consultant like ECO Northwest and make a contract directly with them with the defined
scope of services for the money,so they were getting the kind of report they wanted. The district always
needed to have a say in what the scope of the work was and what the deliverables were going to be so that
they stay within their confined purposes. Before actually contributing money to anything TWD wants to
make sure they understand completely what this organization is all about. There is not enough known
tonight as to how to proceed. Commissioner Rhine summarized that the only thing they could decide
tonight was if they did not want to participate.
Commissioner Zeider said there were just too many variables. She was not prepared to go ahead with
giving any money in any form at this point. TWD has the City of Tigard,who has done a good job, and
advises them and can get a lot of this information they have talked about for free. She could not justify
giving out any type of money. She knows where the heart beats for the FoBM and, as much as she
would like to help them out, she would have to do that with personal donations.
Commissioner Froude commented that she did not feel this request was within the prevailing water
district's authority to do. There is not enough information about water that would come from the study.
Commissioner Radley commented that he may be the dissenting minority, but he felt TWD should
continue to process a discussion and exploration on this proposal.
Commissioner Radley made a motion that this board continue to engage in discussion with FoBM to
learn more about their proposals and more about the nature of the organization and to determine if
there were some aspects of the study that were within their statutory authority to support. No second
and the motion died.
Commissioner Froude made a motion that TWD not fund this proposal, Commissioner Zeider
seconded the motion and those who voted in favor of the motion were Commissioners Rhine,Zeider
and Froude; opposed Commissioner Radley; Commissioner Delphine was absent. Commissioner Rhine
closed the issue and said the TWD did not see a reason to participate in this study.
Commissioner Radley motioned that Mr. Balfour's letter of opinion be released to the public domain.
Commissioner Froude seconded and the motion was approved by unanimous vote.
5. Beginning of Budget Process
• Select Budget Officer
Commissioner Froude volunteered to be the budget officer and Board unanimous approved.
8. & 9. Water Supply Update and IWB Update
(Commissioner Froude asked Mr. Koellermeier to combine the IWB Update with his update.)
Engineers from the Sherwood and Tualatin Valley Water District (TVWD) made presentations to the IWB
on their projects for development of the Willamette River as a water source. The IWB discussed it and
Tigard Water District Draft Copy April 24,2006
7
authorized Mr. Koellermeier to draft a letter for the Chair's review. The draft is being edited.
Recommendation of the City Council is that participation in the Sherwood project would not be beneficial
to the Tigard service area,but participation in portions of the TVWD project that develops north/south
pipeline activities,etc.,would be beneficial. Recommendation was that we continue to explore that option.
The letter will be presented to the City Council who can accept it or modify it before sending to TVWD and
Sherwood.
Portland Contract—The City of Tigard,along with all the wholesalers,has been presented with two
potential contracts (10-or 20-year contract) that are essentially the same. The only difference is profit for
the City of Portland. The 20-year contract profit is tied to an index called the bond buyers index;the 10-
year contract profit is the bond buyer's index,plus 1 percent.The IWB will make their recommendation to
Council next month. City Council needs to take action on those contracts the night of May 23rd. Mr.
Koellermeier is recommending the 10-year contract. It is a take or pay contract;we will pay for use of that
water—about a$25m commitment for the 10-year period whether we use the water or not.
Lake Oswego Negotiations—Mr. Koellermeier will be involved in the proposal and interview process for
the two consultants in the Tigard/Lake Oswego study,making a recommendation and getting a contract
awarded. Lake Oswego will be the contracting agency and results of the study should be completed by
September or the first part of October.
Water Supply Issues—The wet spring has filled reservoirs and it is not anticipated we will have any shortage.
The ASR well is still filling to meet our demands as they come up.
10. Update on Water Related Educational Information—Marc Delphine
This topic will be covered at the next meeting.
11. Non-Agenda Items
Commissioner Zeider asked what preparations were being made for the Bird Flu pandemic. Mr.
Koellermeier indicated the City of Tigard was participating in two different groups that deal with that issue.
• Portland Area Consortium of Water Providers has an emergency services group and they are
working on the pandemic response issue
• Office of Consolidated Emergency Management (OCEM) is preparing a response plan that
would affect all the districts in the area
12. Set next meeting date—May 22,2006, at 7:00 p.m.
13. Adjournment
At 9:37 p.m. Commissioner Froude motioned to adjourn the meeting, Commissioner Zeider seconded
the motion and the board's vote was unanimous.
Joy Koss,TWD Recording Secretary
Date:
Tigard Water District Draft Copy April 24,2006
8
Tigard Water District
Citizen Budget Committee Members
Name Phone # Address Term
Expiration
Mary Stobbe 503-590-5191 14795 SW 144th Ave. 2006
Tigard, OR 97224
Charlie Stalzer 503-524-0355 14781 SW Juliet Terrace 2007
Tigard, OR 97224
Wynne Wakkila 503-521-0222 15522 SW 141st St. 2007
Tigard, OR 97224
Kathy Palmer 503-579-2126 14260 SW High Tor Dr. 2007
Tigard, OR 97224
lsador W. Morgavi 503-620-7342 15145 SW 119th Ave. 2007
Tigard, OR 97224
Tigard Water District
Alternate/Substitute
Citizen Budget Committee Members
Phil Decker 503-521-0123 14540 SW 148th Pl. n/a
Tigard, OR 97224
Norm Penner 503-579-5822 14712 SW Woodhue n/a
Tigard, OR 97224
Mrs. George Rhine 503-590-0336 15361 SW Ashley Dr. n/a
Tigard, OR 97224
FY 2006-07 Budget Message for the Tigard Water District
The FY 2006-07 Proposed Budget of$111,836 is up 5.6% from the FY 2005-06 Adopted
Budget. It should be noted that there is a significant increase in Professional/Contract
Services line item related to Meeting/Staff Support. In the past, the City of Tigard has
provided its staff as a resource to the Tigard Water District Board as the Board has no
employees. The City staff maintains the Tigard Water District's Fund,pays bills on the
District's behalf,advises the Board on state laws, and provides administrative support.
There has been an increased demand on City staff's time over the last year and it has been
discussed that the Board may want to contract with a management consultant for these types
of services instead of using staff. The FY 2006-07 Proposed Budget includes $12,000 for a
management consultant at a cost of$100.00 per hour for 120 hours of support.
The Tigard Water District's resources are from its share of the water revenues (1%)
generated within the District and interest earned on these revenues. It is anticipated that
water revenues will increase about 7%,which is directly related to the approved water rate
increase in October 2006.
Overall, the FY 2006-07 Proposed Budget continues to provide the Tigard Water District
Board with the most flexibility in accessing and using its resources.
•
11111
MEMORANDUM
T I GARD
TO: Mayor and City Councilors
IWB Commissioners
TWD Commissioners
FROM: Dennis Koellermeier, Public Works Director it
RE: Portland Wholesale Water Contract
DATE: May 9, 2006
Introduction
The Tigard Water Service Area (TWSA) purchases much of its drinking water from the City
of Portland and is one of Portland's larger wholesale water customers. The TWSA took over
a 25 year contract from the Tigard Water District (I'WD) in 1996 when the TWSA was
formed. That contract is set to expire June 30, 2007. The purpose of this memo is to explain
what was done to negotiate a new contract, to evaluate that contract and its impact on the
TWSA, and to make a recommendation on the current Portland Wholesale Water Contract.
History
The TWSA has purchased water from Portland for 24 years. Originally,water was purchased
through a contract negotiated and signed by the TWD. In 1996,when the Cities of Tigard,
King City, and Durham withdrew from the district, the contract was assumed by Tigard as
the service provider for the newly formed Intergovernmental Water Board (IWB). Both the
IWB and the Tigard City Council have expressed their dissatisfaction with the terms of the
existing agreement based on the following issues:
■ No Equity
Portland has never been willing to offer its wholesale customers equity, or ownership,
in its water system. Since system development charge (SDC) monies can only be
invested in capital improvements this non-equity position means that Tigard is forced
to pass the entire cost of wholesale water onto its customers.
■ Penalty Clauses
The TWSA is assessed a substantial financial penalty when water use has exceeded
the negotiated daily maximum.
■ No Cost Control
The existing wholesale pricing methodology does not follow water industry
standards,with several aspects of the methodology clearly slanted in Portland's favor.
Wholesale customers have no input or complaint mechanism.
I:\PW\GREER\DK Correspondence\PDX Water Contract.doc
• Minimum Purchasing Requirements
The TWSA is required to purchase a minimum of 60 percent of total water used from
Portland.
• Tigard Subsidizes Portland Water Customers
Portland subsidizes costs to its ratepayers with revenues from suburban wholesale
customers. This practice has kept water rates below the industry standard and lower
than the cost of service methodology would support for Portland ratepayers.
Alternately,rates to suburban wholesale customers, lie Tigard, are artificially high.
In the hope of securing a more workable contract,Tigard joined forces with fellow
wholesale customers and negotiated collectively with the Portland Water Bureau. This
negotiation process has taken four years, but ultimately resulted in two contract options, a
10 year or 20 year agreement.The terms of both agreements are essentially the same, other
than duration and rate of return.
Significant Contract Provisions
TWSA was an active participant in the negotiations leading to this contract proposal.As is
typical with negotiations, compromise on both sides was required in order to reach an
"acceptable" agreement.The wholesale customers retained two different financial
consultants and an attorney to assist them in the negotiation process. Major issues for the
wholesale customers were cost, rate making methodology, and predictability.Portland
sought to maintain a consistent revenue stream and retain control of the Bull Run system. I
believe each side accomplished most of these objectives.Highlights of the contract terms are
as follows:
■ Term
Two options exist, a 20-year term and a 10 year term. These agreements are identical
with the exception of the rate of return. The 20-year and 10 year contracts have a rate
of return set by the Bond Buyer Revenue Bond Index and the Bond Buyer Revenue
Bond Index plus one percent respectively.
• Nature of Service
This is a "take or pay" agreement in which the TWSA agrees to pay annually for a
specific quantity of water,whether or not it is used. In exchange, Portland is
obligated to have the water available. The existing agreement is for surplus water,
whereby Portland is not obligated to have water available and is also not obligated to
sell it. Portland was adamant about the "take or pay" condition, asserting it is
necessary to maintain a consistent revenue stream.
I:\PWAGREER\DK Correspondence\PDX Water Contract.doc
• Conservation
A conservation plan was added to the new agreement in order to comply with state
requirements.
■ Water Quantity
Under the proposed contract,wholesale customers will commit to purchase a certain
amount of water,known as the "guaranteed purchase quantity." For the TWSA, staff
is proposing this quantity be initially set at an annual average of 4 million gallons per
day (mgd). Tigard must pay for this water whether or not it is used and although the
guaranteed purchase quantity can be increased, it can not be decreased.
• Water Quality
Portland is obligated to deliver water that "meets all applicable drinking water
regulatory requirements" and be from the same source as the water provided to its
own customers.
• Interruptible Water
The new agreement allows the TWSA to purchase water above the guaranteed
purchase quantity. This water is called "interruptible." Portland is not obligated to sell
interruptible water, and may discontinue its availability with little notice.
In winter,interruptible water rates are 80 percent lower than the regular water rates.
This is critical to the TWSA's water strategy,whereby the discounted interruptible
water is used to fill or "recharge" aquifer storage and recovery(ASR) wells. Currently
we are anticipating the need to purchase approximately 200 million gallons of water
annually for ASR recharge. Tigard's water purchasing strategy is to commit to a low
guaranteed purchase quantity in order to maximize the use of inexpensive
interruptible water.
■ Rate Setting
This is unquestionably the most complicated part of the agreement. The wholesale
customers made significant headway in moving to a more traditional AWWA
sanctioned rate setting model. Other gains were made in:
• cost containment in operations and maintenance
• cost allocation between retail and wholesale customers
• capital cost allocation
• audits
• depreciation
• the methodology for return on investment
These gains will provide greater control over the cost of water throughout the life of
the contract.
1:\PW\GREER\DK Correspondence\PDX Water Contract.doc
•
• Dispute Resolution
The current agreement did not have a dispute resolution process. The new agreement
includes a traditional three step process including negotiation,mediation and
arbitration/litigation.
A comparison of the proposed and current contracts is summarized in the attached table
(Exhibit A).
Other Wholesale Customers
Portland continues to be one of the most expensive source options being considered.Not
surprisingly,Tigard and most other westside water providers are exploring the development
of alternate sources. Other large wholesale customers have either taken action or are likely to
take the following action:
Rockwood PUD sign a 20 year agreement
Gresham sign a 20 year agreement
Tualatin Valley Water District sign a 10-year agreement
Tualatin sign a 10 year agreement
West Slope sign a 20 year agreement
Side Agreement on the Washington County Supply Line (WCSL)
TWSA's rates for Portland water average about 30 percent more than Tualatin Valley Water
District (TVWD) and City of Tualatin rates. In the 1980s, both TVWD and Tualatin
participated in the construction of a gravity fed water transmission pipeline called the
Washington County Supply Line (WCSL).At the time,the TWD elected to not participate,
because most of the TWSA's water was being supplied by Lake Oswego. Later,when TWSA
needed to switch to Portland water,the City had no alternative but to take water from a
supply system which pumps the water to a useable elevation. Since there is no energy cost
associated with the gravity fed water, it is substantially cheaper than pumped water.
Staff has convinced the WCSL partners that surplus capacity existed in the line and has
inquired whether Tigard might use this excess capacity. This would involve the construction
of a TWSA connection to the WCSL. Subsequent engineering analysis has confirmed that
for the next 10 year period, surplus capacity will exist during the winter months. The current
partners in the WCSL,Portland, TVWD, Tualatin, and the Raleigh Water District, agree in
principal that Tigard should use this extra capacity to conserve energy and reduce costs.
Details of this side agreement have not been concluded as of this date. Staff estimates the
cost to build the connection at about $500,000 and the potential savings to be as high as $3
million over the life of the 10 year agreement.Additional work is needed to complete this
analysis and side agreement.
Cost
The initial cost of water from this agreement is currently anticipated to be $1 per one
hundred cubic feet (ccf). Staff estimates future cost increases at 5 percent annually.This
I:\PW\GREER\DK Correspondence\PDX Water Contract.doc
assumption is consistent with assumptions made by other westside wholesale customers.
Staff has also assumed that Tigard will continue to operate our ASR wells at maximum
capacity and plans to increase ASR volume to a total of 6 mgd within the next four years.
Based on these assumptions the total cost of this contract over a 10 year period is
approximately$26,053,359.
Process
The 1993 Intergovernmental Agreement (IGA) executed between each of the members of
the IWB has specific language relating to the approval process for "long-term" water
contracts. Section 5E of the IGA states:
"Long-term water supply contracts shall be entered into in accord with the best interests of
the water customers within the original District, ignoring city boundaries. Long-term water
supply contracts must be approved by the governing bodies of one less than the number of
jurisdictions holding an ownership interest in the water system.A governing body may not
unreasonably withhold consent to a contract if the contract is supported by sound
engineering analysis, is in the best interests of water customers within the original District
and consistent with the goal of working together to provide all the residents and property in
the original District with a clean, economical water supply. If a proposed long-term water
supply contract is not approved as provided for in this subsection,then the governing bodies
of any two jurisdictions may request mediation under the provisions of ORS Chapter 36 to
determine if approval of the contract has been unreasonably withheld."
Staff proposes, for the purposes of this issue, the 10-year contract is not a long-term
contract, and that action by the IWB and the Tigard City Council is sufficient to enter into
the 10 year contract.
Recommendation
As a result of Portland's position on ownership, both the IWB and the City Council have
consistently stated that Portland would not serve as the TWSA's long-term,primary water
source. Since long-term water sources will take years to develop, the 10-year agreement is
necessary to bridge the gap between Portland and the TWSA's ultimate long-term water
source.
Staff recommends the Intergovernmental Water Board and the City Council approve the 10-
Year Regional Water agreement and authorize the Tigard City Manager to execute this
agreement, subject to final rates falling within 10 percent of the estimated unit price of$1
ccf.
Attachments:
Exhibit A - Comparison of Current and Proposed Model Wholesale Agreement
Exhibit B - Proposed 10-Year Portland Water Contract
I:\PWWGREER\DK Correspondence\PDX Water Contract.doc
Exhibit A
Portland Water Sales Agreement
Comparison Table Between Current and Proposed Model Wholesale Agreement
September 29, 2005
Significant Provisions Current Agreement Proposed Agreement
Nature of service • Water sold by Portland to wholesalers • Water sold by Portland to wholesalers described
considered"surplus" and defined as "firm supply"
Length of agreement • 25 years with automatic 25-year renewal • 20 years with automatic 10-year renewal
• 3-year notice for non-renewal • 5-year notice for non-renewal by either party
Joint operational guidelines (how the • Determined solely by Portland • Guidelines established jointly by Portland and
wholesale customers and Portland wholesalers through Water Managers Advisory
cooperate in operating their respective Board, reviewed, amended (if necessary) and
water systems) adopted by Water Bureau Administrator
Water Managers Advisory Board • Review of budget and CIP • Establish joint operational and data guidelines
• Participate in budget and CIP
development/review processes, input to City
Council
Water quantities • Minimum purchase based on percentage of • Guaranteed purchase quantity—a specific,
overall water supply, five-year average committed volume to be purchased from
Portland
• Can buy out of agreement over five years by • May be increased but not decreased except
paying minimum purchase"penalty" under special circumstances
• No buy out
Sale of water to other entities • Prohibited unless authorized by Portland • Allowed, unless it creates undue risk to the
Portland water system
Reliability of supply • No obligation • If Portland fails to meet supply needs more than
once in 10 years, purchaser may reduce
purchase commitment by up to 10% per year
Interruptible water • No provisions • Available at Portland discretion
• Summer and Winter interruptible water priced at
45%, 20% of regular rate respectively if
available
Rates • Rate methodology not described in complete • Specific methodology based on American Water
detail Works Association M1 Manual and Cost of
Service Principles
• Costs allocated based on customers' use of
water system
• O&M cost control mechanism
Water conservation • No reference • Water management and conservation plans to
conform to State regulations
Joint funding for capital improvements • Allowed through agreement in which purchaser • Allowed for new facilities or for major
pays its portion of bonded debt for new asset improvements to existing facilities by separate
agreement
• All terms related to joint funding arrangements
determined by separate agreement
Dispute resolution • None • Three steps: 1) Negotiation, 2) Mediation, 3)
Arbitration/litigation
* The 10-year contract was not available when this
table was prepared, but all terms aside from
duration are identical to the 20-year contract.
Exhibit B
Regional Water Sales Agreement
10 Year
Presented to
City of Tigard
April 3,2006
REGIONAL WATER SALES AGREEMENT
(10 YEAR)
TABLE OF CONTENTS
Page
SECTION 1 —NATURE OF SERVICE 2
SECTION 2—WATER REGULATIONS 3
SECTION 3—DURATION OF AGREEMENT AND RENEWAL 4
SECTION 4—WATER MANAGERS ADVISORY BOARD 6
SECTION 5—GUARANTEED PURCHASE WATER QUANTITIES 10
SECTION 6-INTERRUPTIBLE WATER 19
SECTION 7—RATES AND CHARGES FOR GUARANTEED PURCHASE WATER
QUANTITY 20
SECTION 8 - RATES AND CHARGES FOR INTERRUPTIBLE WATER 31
SECTION 9- WATER SYSTEM PLANNING AND COOPERATION 32
SECTION 10- RESERVATION OF SYSTEM CAPACITY 33
SECTION 11 -CONNECTIONS AND METERING 34
SECTION 12 - PURCHASER-SUPPLIED WATER TO CITY RESIDENTS 35
SECTION 13 -WATER RESOURCE CONSERVATION 36
SECTION 14—WATER CURTAILMENT AND PROTECTION OF THE WATER SYSTEM39
SECTION 15—BILLING AND PAYMENT 41
SECTION 16—JOINT FUNDING OF CAPITAL IMPROVEMENTS 43
SECTION 17—DISPUTE RESOLUTION 44
EXHIBITS
EXHIBIT 1 -GUARANTEED PURCHASE QUANTITY, SEASONAL PEAKING FACTOR,
DAILY PEAKING FACTOR, AND PRESSURES
EXHIBIT 2-DEFINITION OF WATER SERVICE CHARACTERISTICS
EXHIBIT 3-RATE BASE ASSETS
EXHIBIT 4-FUNCTIONAL ASSET GROUPS
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 1
THIS AGREEMENT is entered into by and between City of
Tigard ,herein called"Purchaser,"and the CITY OF PORTLAND, a
municipal corporation of the State of Oregon,herein called"City."
The parties recite:
A. Purchaser is a municipal corporation of the State of Oregon and is authorized by its
charter or by state law or both to operate a municipal water system.
B. City is a municipal corporation of the State of Oregon and is authorized by Chapters 2
and 11 of the Charter of the City of Portland to maintain water works for the furnishing of water
to the city, its property, its inhabitants, and to non-inhabitants. The Council of the City is further
authorized to enter into contracts for the supply of water by the city and to sell water to persons,
public and private;outside the city,on terms and conditions the Council finds appropriate.
C. City is further authorized by Section 2-105(a)4 of its Charter to enter into agreements,
without limitation as to term,as the Council finds appropriate for cooperation, consolidation and
maintenance of services with any other public corporation or unit of government.
D. ORS 190.003 to 190.110 authorize units of local government to enter into
intergovernmental agreements for the performance of their duties or for the exercise of powers
conferred upon them.
E. The service and commodity provided by City pursuant to this Agreement are a special
contract service and are'not provided by City as a common utility service.
Regional Water Sales Agreement (10 Year)
April 3 2006
Page 2
SECTION 1 —NATURE OF SERVICE
A. Subject to the terms and conditions contained herein,City agrees to furnish and sell, and
Purchaser agrees to purchase a firm supply of potable water on an annual basis for the life
of this Agreement. The City further agrees to furnish and sell an interruptible supply of
water to be made available for purchase at the City's discretion subject to terms of this
agreement.
B. Water is to be delivered to the purchaser at the place or places, at such pressure or
pressures,and at such flow rate or flow rates as are set forth on Exhibit 1. Provided that
the City is not obligated to meet Purchaser's demands for water during any period of time
that Purchaser operates its system not in compliance with operational rules established
pursuant to Section 4.D.1.
C. The City shall deliver water to the purchaser from the same source or sources of water
that City delivers to City inhabitants. The City shall meet all applicable drinking water
regulatory requirements up to the purchaser's point of delivery.
D. Purchaser's supply of water shall be reduced or terminated only in accordance with the
terms of this agreement.
E. Purchaser recognizes and agrees that no liability for damages shall attach to the City on
account of any failure of supply or changes in pressure, flow rate,or water quality due to
circumstances beyond the reasonable control of the City acting in accordance with
standards of care common and usual in the municipal water supply industry. Examples of
such circumstances include, but are not limited to, natural events such as earthquakes,
landslides and floods, and human-caused events such as terrorism, malevolent acts,
contamination of the water supply, and acts of war.
F. The parties agree and acknowledge that the City of Portland is the owner and operator of
the water supply, storage,transmission, and treatment system, and all facilities and
infrastructure associated with the storage, treatment, transmission, and distribution
systems used in its utility operations. The purchase of water or any other commodity or
service under this agreement shall not constitute purchase of ownership rights to water or
any portion of the water system owned and operated by the City, except as may be
specified herein or may be established by separate agreement. Nothing in this agreement
shall preclude the parties from entering separate agreements involving joint ownership or
joint operation of system elements.
Regional Water Sales Agreement (10 Year) `.
April 3 2006
Page 3
SECTION 2—WATER REGULATIONS
A. Purchaser hereby agrees to abide by and be bound by the terms and provisions of Chapter
21.28 of the Code of the City of Portland,Oregon, as it presently exists or as may be
amended to comply with federal and state law,during the life of this agreement,to the
extent to which such terms and provisions do not conflict with any material provisions of
this agreement.
Regional Water Sales Agreement (10 Year)
April 3 2006
Page 4
SECTION 3—DURATION OF AGREEMENT AND RENEWAL
A. Initial Term
This agreement shall become effective on July 1 of 2006 and shall continue in effect thereafter
under the terms of this section, unless terminated as provided herein. Each"contract year"shall
run from July 1 through June 30.
B. Initial Five Year Non-Renewal Notice
At any time during the five-year period from July 1,2011,through June 30,2016, either party
may give a written notice of non-renewal. If such notice is issued,the contract will terminate on
the next June 30 at least five years but not more than six years from the date of the notice.
C. First Renewal in 2016
If neither party gives notice of non-renewal on or after July 1, 2011,and prior to July 1,2016,the
contract shall continue for another ten years,through June 30, 2026.
D. Subsequent Renewals After June 30,2026
If this contract is renewed pursuant to Subsection 3.C. above, then the contract shall also be
repeatedly renewed for ten year intervals after June 30, 2026, and every ten years thereafter,
unless one of the parties gives a notice of non-renewal under the terms of Subsection E below.
E. Five-Year Non-Renewal Notice
Either party may provide a written non-renewal notice any time during the second five years of
each ten-year renewal period. If either party gives a notice of non-renewal during the non-
renewal notice period, the contract will terminate on the next June 30 at least five years but not
more than six years from the date of the notice.
For example, if this contract is renewed through June 30,2026, pursuant to Subsection C above,
then the non-renewal notice period during that term of the contract shall run from July 1,2021,
through June 30,2026. If either party gives written notice of non-renewal during that period of
time, the contract shall terminate on the next June 30 five years or more but less than six years
from the date of the notice. If no party gives notice of non-renewal during that period,the
contract will be automatically extended through June 30, 2036. If the contract is extended to
June 30, 2036,the next non-renewal notice period would then run from July 1, 2031,through
June 30, 2036.
Regional Water Sales Agreement(10 Year)
April 3, 2006
Page 5
SECTION 3—(Continued)
F. Effect of Renewals on Cost Cap and Supply Reliability
The five-year period used to judge the City's compliance with the cost cap established by
Subsection 7.I. shall be restarted at each renewal of this contract. The ten-year period used in
calculating the City compliance with its reliability obligations described in Section 5.F.2 shall be
restarted at each renewal of this contract.
Regional Water Sales Agreement (10 Year)
April 3 2006
Page 6
SECTION 4—WATER MANAGERS ADVISORY BOARD
A. General
A Water Managers Advisory Board (WMAB)shall be established no later than thirty (30)days
after five or more Purchasers have approved a Water Sales Agreement with the City that includes
this provision,and will continue during the term of this agreement. Purchaser is eligible for
participation in the WMAB. The WMAB shall consist of two representatives of the City Bureau
of Water Works,to be named by the Administrator,and one representative of each participating
entity that has signed a contract to purchase water from the City containing a provision allowing
its participation on the WMAB. The City of Portland Water Bureau will provide staff support to
the WMAB and will be responsible for keeping the official records.
B. Meetings and Bylaws
The WMAB shall meet regularly to communicate with and make recommendations to the
Administrator regarding matters relating to the City's sale of water to participating purchasers.
The WMAB may adopt such bylaws concerning its organization and governance as a majority of
the membership shall see fit. The role of this Board is advisory in nature and,except as specified
herein, no rule, bylaw,or action of the WMAB may alter any term of this agreement.
C. Committees
The WMAB shall be responsible for establishing committees as needed to address ongoing
needs, which may include:
1. Water Resource Conservation—Possible responsibilities for such a committee are
outlined in Section 13 —Water Resource Conservation;
2. Operations Coordination—Possible responsibilities for such a committee may
include coordinating supply system routine and emergency operations among the
City and its wholesale Purchaser with the goal of providing efficient and cost-
effective
osteffective system operations; and
3. Other committees, as identified by the WMAB.
D. Creation of Operating and Information Standards
1. The WMAB shall recommend to the Administrator standard water system
operating practices necessary or advisable to enhance the efficiency, reliability,
and cost-effectiveness of the supply,transmission, and storage of water provided
under this agreement. These standard operating practices will address issues such
as, but not necessarily limited to, forecasting seasonal demands, forecasting peak
demands, managing the system to minimize the impact of peak demand periods,
Regional Water Sales Agreement(10 Year)
April 3,2006
Page 7
SECTION 4—(Continued)
security and emergency management,use of storage, and timing of deliveries of
water. Pending recommendations from the WMAB, the Administrator shall adopt
interim operating practices and upon receipt of the recommendations,the
Administrator shall adopt the recommendations,with such alterations as he or she
deems necessary or advisable. The Purchaser agrees to operate its system in a
manner consistent with such established operating practices and in keeping with
responsible use of the City's water supply system.
2. The WMAB shall recommend to the Administrator what information and data he
or she shall require each participating Purchaser to provide,in order to allow
efficient,reliable,and cost-effective provision of water under this Agreement.
The Administrator shall adopt these recommended information requirements,with
such alterations as he or she deems necessary or advisable. Such information may •
include,but is not necessarily limited to:
(a) System maps with mains,pump stations,tanks,and supply connections;
(b) Connections and usage from other supply sources;
(c) Total existing and new service connections by category;
(d) Key benchmarks to be identified by the Operations Group such as but not
limited to standards for operational norms,notification deadlines,
protocols for communication;
(e) Water quality data;
(f) Purchaser facilities' standards for operation to minimize peak and
emergency events;and
(g) Emergency contact information for each provider and any agreements that
have been signed by individual providers to address emergency response.
3. The WMAB shall periodically evaluate Purchasers' compliance with the
information requirements and standard operating procedures and shall provide the
Water Bureau Administrator with findings and recommendations to assure
ongoing compliance.
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 8
SECTION 4—(Continued)
E. Rate Review
In order to provide timely notification to Purchaser of proposed changes in rates,charges,and
rate design and an opportunity for Purchaser to evaluate such proposals and be heard before the
City Council, City agrees that the following steps shall be taken annually.
1. Capital Improvement Program.
(a) On an annual basis, Purchaser,through the WMAB,shall be invited to
participate in development of that portion of the Water Bureau's Capital
Improvement Plan addressing capital improvements used to serve
Purchaser or other participating Purchasers;
(b) Capital planning will take place in a manner sufficiently timely to ensure
Purchaser effective participation in the City's capital budget deliberations
each year;
(c) City and WMAB will identify criteria to be considered in prioritizing
capital improvement projects. City will also share its proposed ranking of
projects for funding and completion and its proposed schedule for such
capital improvements. Purchaser will be provided reasonable opportunity
to present suggestions and recommendations for changes to the proposed
Capital Improvement Plan, specific capital projects,and for improvements
in the capital planning and financing process;
(d) At a minimum, the City will host at least one meeting a year to discuss the
Water Bureau's Capital Improvement Plan on a schedule sufficient to
allow Purchaser participation in the City's capital budget deliberations
each year.
2. Operation&Maintenance Budget
(a) On an annual basis,Purchaser,through the WMAB, shall participate in
review of the Water Bureau's Operations and Maintenance budget for the
water supply system used to serve Purchaser or other participating
Purchasers; •
(b) Water Bureau 0& M budget development and review will take place in a
manner sufficiently timely to ensure Purchaser effective participation in
the budget deliberations each year;
(c) The WMAB will be provided the opportunity to participate in the budget
development and review process, including steps such as:
•
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 9
SECTION 4—(Continued)
(i)The Administrator will report to WMAB at the commencement of annual
financial plan and budget preparation,and report each month to the WMAB on
progress in the budget preparation and any particular budgetary issues or concerns
related to that part of the water supply system used to serve the Purchaser and
other members of the WMAB. Reports may be in writing or at WMAB meetings.
(ii)A reasonable time,but no less than two weeks, prior to submission of the
Water Bureau budget to the Mayor,the Administrator shall report to.the WMAB
on the current state of budget and financial plan preparation and provide his or her
best estimate of the final budget for submission to the Mayor related to that part of
the water supply system used to serve the Purchaser and other members of the
WMAB and shall consult with the WMAB about the budget to be proposed to the
Mayor.
(iii)The Administrator will provide WMAB a presentation concerning the Water
Bureau budget request to the Mayor and the Water Bureau financial plan fo the
following fiscal year and provide copies of the budget request and financial plan
for review and comment. The budget request and the financial plan will be made
available to WMAB on or as soon as reasonably possible after the date they are
submitted to the Mayor.
(iv)The City will advise Purchaser in writing of significant changes in the
proposed Water Bureau Budget after its submission to the Mayor.
(v)When the City Bureau of Water Works files its annual rate ordinance with the
City Council Clerk,a copy of said ordinance will be forwarded to Purchaser,
accompanied by a letter giving the dates on which the City Council is scheduled to
consider rates.
3. Purchaser,through the WMAB,may offer comments on the annual rate ordinance
in writing or in personal testimony before the City Council.
F. Protection of Confidential Information
Information submitted to or produced by the WMAB or otherwise exchanged by the
parties to this Agreement and similar wholesale water agreements may include documents related
to the vulnerability or security of water supply systems. The parties agree that if either receives a
public document request for such information,the party receiving that request shall,prior to
release of any documents, expeditiously notify the entity about whose system information is
sought and shall,in addition,assert all applicable exemptions to release of the documents
available under the Oregon Public Records Law.
Regional Water Sales Agreement(10 Year)
April 3,2006
Page 10
•
SECTION 5—GUARANTEED PURCHASE WATER QUANTITIES
A. General Guaranteed Purchase Payment Obligations
Unless excused by some other provision of this Contract, Purchaser agrees to pay City each year
a sum of money(its"guaranteed purchase payment")equal to the annual water rate applicable to
Purchaser for that year times the Purchaser's"guaranteed purchase"quantity of water. Payments
shall be made as provided in Section 15, Billing and Payment.
B. Guaranteed Purchase Quantities And Peaking Factors
1. Guaranteed Purchase Quantity. For purposes of calculating annual rates and
determining Purchaser's minimum payment,Purchaser's guaranteed purchase
quantity(expressed in annual average daily demand and in total monthly
demands)shall be the quantity identified in Exhibit 1 to this contract,unless
changed pursuant to the terms of this contract.
2. Seasonal Peaking Factor.
a.Except as otherwise provided in this agreement, for purposes of calculating
monthly demands and annual rates and determining Purchaser's minimum
payment, Purchaser's"seasonal peaking factor"shall be the seasonal peaking
factor identified in Exhibit 1 to this contract unless changed pursuant to the terms
of this contract. "Seasonal peaking factor"is the ratio of the Purchaser's
guaranteed purchase average daily demand placed on the City system during the
"peak season"to the Purchaser's guaranteed purchase annual average daily
demand. For this calculation"peak season"is the period of time from July 1
through September 30. For purposes of ratemaking and calculating monthly
demands,the seasonal peaking factor excludes purchases of interruptible water.
b. For purposes of Section 5 of this agreement,the Purchaser's"actual seasonal
peaking factor"shall be the ratio of the Purchaser's actual average daily demand
placed on the City system during the peak season(as'determined from City water
supply data)to the Purchaser's guaranteed purchase annual average daily demand.
3. Daily Peaking Factor.
a.Except as otherwise provided in this agreement, for purposes of calculating
annual rates and determining Purchaser's minimum payment, Purchaser's"daily
peaking factor"shall be the daily peaking factor identified in Exhibit 1 to this
contract unless changed pursuant to the terms of this contract. "Daily peaking
factor" is the ratio of the daily average derived from the Purchaser's highest three
consecutive days of purchases to its annual average daily demand for the contract
Regional Water Sales Agreement(10 Year)
April 3,2006
Page 11
. SECTION 5—(Continued)
year. For purposes of ratemaking and calculating monthly demands,the daily
peaking factor excludes purchases of interruptible water.
b. For purposes of Section 5 of this agreement, the Purchaser's"actual daily
peaking factor"shall be ratio of the daily average derived from the Purchaser's
actual highest three consecutive days of purchases(based on City data)to its
guaranteed purchase annual average daily demand for the contract year.
C. Changes.In Guaranteed Purchase Quantities
1. Reductions In Guaranteed Purchase Quantities
Except as specifically provided for in this contract, Purchaser's guaranteed purchase quantity
may not be reduced during the term of this contract except by a contract amendment.
2. Increases in Guaranteed Purchase Quantities
On any March 15 during the term of this contract, Purchaser may request that its guaranteed
purchase quantity be increased. The Administrator may accept or reject such request, in whole or
in part. The Administrator shall respond to any request for an increase in guaranteed purchase by
May 1 of the same year the request is made. Unless otherwise agreed by Purchaser and the City,
any increases in guaranteed purchase agreed to under this provision shall be effective for the
remaining term of the contract.
If on any March 15,more than one Purchaser under a similar wholesale water agreement requests
an increase in guaranteed purchase and the Administrator determines that he or she can prudently
approve some increase in guaranteed purchases,but cannot approve all pending requests in total,
then the Administrator may grant such overall increase in guaranteed purchase as he or she
deems prudent,provided that when granting partial approvals of more than one request,the
Administrator shall grant such approvals in proportion to the then existing guaranteed purchase
quantity of each requesting Purchaser compared to the total of then existing guaranteed purchase
quantities of all requesting Purchasers. If the Administrator cannot grant Purchaser's original
request in total,the Purchaser may elect to withdraw its requested increase in guaranteed
purchase quantity. All increases in guaranteed purchase quantities shall be confirmed in writing
and signed by both parties.
3. Transfers of Guaranteed Purchase Quantities
With approval of the Administrator,which shall not be unreasonably withheld, Purchaser may
alter its guaranteed purchase quantity(and its guaranteed purchase obligation)by transferring all
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 12
SECTION 5—(Continued)
or some of its guaranteed purchase quantity to another municipal entity with a valid similar
wholesale water agreement with the City. Withholding approval shall be deemed reasonable in
the following circumstances only: the Administrator determines that the transfer would require
changes in the City water system infrastructure or reduce the reliability of the water supply
system. In these two circumstances,nonetheless, the Administrator shall endeavor to approve
transfers with such conditions as he or she deems necessary or advisable to avoid the need to
make changes in the City water system infrastructure or reduction in the reliability of the water
supply system.
4. Sale of Guaranteed Purchase Water
Purchaser may sell water purchased from the City as part of its guaranteed purchase quantity to
other water suppliers,upon approval of the Administrator,which will not be unreasonably
withheld. Withholding approval shall be deemed reasonable in the following circumstances
only: the Administrator determines that the transfer would require changes in the City water
system infrastructure,or reduce the reliability of the water supply system. In these two
circumstances,nonetheless,the Administrator shall endeavor to approve sales of water with such
conditions as he or she deems necessary or advisable to avoid the need to make changes in the
City water system infrastructure,or reduction in the reliability of the water supply system.
D. Changes in Seasonal Peaking Factor •
•
1. Requested Changes to Seasonal Peaking Factor
Subject to limitations of Section 5.D.2(a)below, at any time prior to December 1 of each year of
the second through fifth year of this contract, Purchaser may request in writing that its seasonal
peaking factor for Years 3 through 6 of this Contract be changed from that identified for Year 1,
as set out in Section 5.B.1(b)above. Purchaser's requested seasonal peaking factor shall be no
less than the average of the Purchaser's actual seasonal peaking factor for the previous years
under this contract.
Prior to December 1 of Contract Year 6 and every year thereafter,Purchaser may request in
writing a change in Purchaser's seasonal peaking factor. Any requested change shall take effect
on the first day of the next contract year and shall continue as Purchaser's seasonal peaking
factor thereafter unless changed pursuant to the terms of this contract. Purchaser's requested
seasonal peaking factor shall be no less than the average of the Purchaser's actual seasonal
peaking factor for the five previous years under this contract.
Upon receiving such a request,the City shall adjust the Purchaser's seasonal peaking factor
unless the Administrator determines that to do so would reduce the reliability of the water supply
system.
Regional Water Sales Agreement(10 Year)
April 3,2006
Page 13
SECTION 5—(Continued)
2. Excess Seasonal peaking factors
(a) Except as provided in Section 5.D.2(b)below, if in any year Purchaser's
actual seasonal peaking factor exceeds by more than 10%the seasonal
peaking factor set by the terms of this contract for the purposes of
• calculating rates in that year,the Administrator shall recalculate the year's
rates and in the next available contract year shall impose on the Purchaser
a surcharge equal to the difference in the Purchaser's guaranteed purchase
payment under the original rates and the Purchaser's guaranteed purchase
payment under the rates a_s recalculated using the Purchaser's actual
• seasonal peaking factors. When calculating rates for the year in which the
surcharge is to be collected,the City shall treat the surcharge as an offset
to the otherwise estimated annual revenue requirements for all wholesale
and retail customers of the system. The Administrator may also increase
the Purchaser's seasonal peaking factor to the actual excessive seasonal
peaking factor for the purpose of calculating rates for a period ofivc-years
and the Purchaser shall not be entitled to reduce its seasonal peakir g factor
as described in Section 5.D.1 during this same five year period. If the
Administrator determines that honoring Purchaser's actual excessive
seasonal peaking factor for the five year period would reduce the reliability
of the system or threaten the water supply of any other wholesale
purchaser of water from the City,he or she may refuse to honor the
increased seasonal peaking factor and take steps he or she deems necessary
or advisable to protect the system and other Purchasers, as provided in
Section 5.F,Excess Demand.
•
(b) The provisions of Section 5D.2(a)shall not apply if the excess seasonal
peaking factor resulted from the direct result of Acts of God, malevolent
acts,contamination of the water supply,or events beyond the Purchaser's
control if the consequences of any such circumstance or event could not
have been avoided through the exercise of the standards of care common
and usual in the municipal water supply industry.
E. Changes In Daily Peaking Factor
1. Daily Peaking Factors For Contract Years 2 Through 5
(a)Except as it is changed upon Purchaser's request as provided in Section 5.E.1(b), for
rate-making purposes in the second through fifth contract year,Purchaser's peaking factor shall
be the average of its actual daily peaking factor for all previous contract years,based on demand
data collected by the City.
Regional Water Sales Agreement (10 Year) -
April 3,2006
Page 14
SECTION 5—(Continued)
(b) At any time prior to December 1 of the first through fourth contract years, Purchaser
may request that its daily peaking factor for the next year,as calculated in Section 5.E.1.(a), be
altered up or down by no more than 20 percent. Except as provided in Section 5.E.3, for
ratemaking purposes in the next year,the City shall use the daily peaking factor identified by the
Purchaser consistent with this section,unless the Administrator determines that honoring the
requested peaking factor would reduce the reliability of the system or threaten the water supply
of any other wholesale purchaser of water from the City.
2. Daily Peaking Factors For Contract Years 6 And Thereafter
(a)Except as it is changed upon Purchaser's request as provided in Section 5.E.2.(b), for
rate-making purposes in the sixth and subsequent contract years,Purchaser's peaking factor shall
be the average of its actual daily peaking factor for the five preceding years,based on demand
data collected by the City.
(b)By December 1 of the fifth contract year and each year thereafter,Purchaser may
request that its daily peaking factor for the next year,-as calculated in.Section 5.E.2.(a),be
altered up or down by no more than 10 percent. Except as provided in Section 5.E.3.,for
ratemaking purposes in the next year,the City shall use the daily peaking factor identified by the
Purchaser consistent with this section,unless the Administrator determines that honoring the
requested peaking factor would reduce the reliability of the system or threaten the water supply
of any other wholesale purchaser of water from the City.
3. Excess Daily Peaking Factors
(a) Beginning in contract year 3, and for each year thereafter,except as
provided in Section 5.E.3(b)below, if in any year Purchaser's actual daily peaking
factor exceeds by more than 20%the daily peaking factor set by the terms of this
contract for purposes of calculating rates in that year,the Administrator shall
recalculate the year's rates and in the next available contract year shall impose on
the Purchaser a surcharge equal to the difference in the Purchaser's guaranteed
purchase payment under the original rates and the Purchaser's guaranteed
purchase payment under the rates as recalculated using the Purchaser's actual
daily peaking factors. When calculating rates for the year in which the surcharge
is to be collected,the City shall treat the surcharge as an offset to the otherwise
estimated annual revenue requirements for all wholesale and retail customers of
the system. In addition, for five years after the year in which the Purchaser's
actual daily peaking factor exceeds by more than 20%the daily peaking factor set
by the terms of this contract for purposes of calculating rates in that year,the
Administrator need not honor any request by Purchaser to alter the Purchaser's
calculated daily peaking factor pursuant to Sections 5.E.1(b)or 5.E.2(b).
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 15
SECTION 5—(Continued)
(b) The provisions of Section 5E.3(a)shall not apply if the excess daily
peaking factor resulted from the direct result of Acts of God, malevolent acts,
contamination of the water supply,or events beyond the Purchaser's control if the
consequences of any such circumstance or event could not have been avoided
through the exercise of the standards of care common and usual in the municipal
water supply industry.
F. Release Of Purchaser From Guaranteed Purchase Obligations
1. Changes in Guaranteed Purchase Quantities In Case Of Short-Term Curtailment
(a) Reduction or Shift of Guaranteed Purchase Quantity
Purchaser's guaranteed purchase quantity(and,as appropriate,its
guaranteed purchase annual payment)shall be altered, at Purchaser's
request, for any year in which the Purchaser acts on a request by the City
to reduce or curtail demand below its established guaranteed purclfi '
quantity for more than five consecutive days. Any request must be made
in writing to the City within 30 days after the Purchaser is no longer
reducing or curtailing demand upon the City's request. At Purchaser's
option,the quantity of water it did not purchase during a reduction or
curtailment period of more than 5 consecutive days shall either: (a)be
excluded from that year's guaranteed purchase quantity or(b)be shifted to
another time of the year when curtailment is not in effect. Provided,
however,that the Administrator need not honor a request to shift
quantities to other times if he or she determines that to do so would
threaten the reliability of the water system.
(b). Quantification of Reduction or Shift in Guaranteed Purchase Quantity
For purposes of Section 5.F.1,the Administrator shall calculate the
reduction in water used by the Purchaser(and,therefore,the amount of the
guaranteed purchase quantity reduction or shift)by considering the
difference between the Purchaser's actual water usage during the period of
curtailment or water use reductions and the Purchaser's guaranteed
purchase demand projections for the same period and such other
information available to the Administrator that he or she determines can be
used to assist in making the calculations.
(c) Seasonal Peaking Factor Effects
Regional Water Sales Agreement (10 Year)
April 3, 2006
Page 16
SECTION 5—(Continued)
Reductions or shifts of guaranteed purchase quantities pursuant to Section
5.F.1 shall not alter the Purchaser's seasonal or daily peaking factors for
purposes of future ratemaking.
2. Changes in Guaranteed Purchase Quantities In Case of Failure of Supply
(a) Except as provided in Section 5.F.2(d)below, if the City fails to supply
Purchaser's guaranteed purchase demand for more than 30 consecutive
days more than one time in any period of ten consecutive years,the
Purchaser may declare its intention to reduce its guaranteed purchase
quantity pursuant to this Subsection.
(b) For purposes of Section 5.F.2,the Administrator shall determine if there
has been a failure to meet guaranteed purchase obligations by considering
the difference between the Purchaser's actual water usage during the
period of curtailment or reduced water supply and the Purchaser's
guaranteed purchase demand projections and such other information
available to the Administrator that he or she believes can be used to assist
in making the determination.
(c) Procedure to Reduce Guaranteed Purchase Quantities
i. To reduce its guaranteed purchase quantity under this Subsection,
Purchaser must give written notice to the City of its intent to do so.
The notice must be given any time after the 31st day of the failure
of supply,but not more than 60 days after supply has been fully
reestablished.
ii. Having given notice under Subsection 5.F.2(c)i, Purchaser may
thereafter reduce its guaranteed purchase from the City by up to
10%of the guaranteed purchase quantity in effect the day before
the failure of supply each year for the remaining years of the then
current contract term and the next ten year term if the contract is
renewed. To reduce its guaranteed purchase for any contract year,
Purchaser must provide written notice of the reduction to the City
no later than December 31 of the preceding contract year.
Provided that to continue reducing its minimum quantity after any
contract renewal,Purchaser must give written notice to the City of
its intent on or before the date of renewal.
•
•
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 17
SECTION 5—(Continued)
iii. If Purchaser elects to reduce its guaranteed purchase quantities
pursuant to the terms of this Subsection,all other terms of the
contract shall continue in effect.
(d) Purchaser shall not have the option to reduce its guaranteed purchase
obligation under this Subsection if the City's failure to supply Purchaser's
guaranteed purchase was caused by Acts of God,malevolent icts,
contamination of the water supply,or events beyond the City's control if •
the consequences of any such circumstance or event could not have been
avoided through the exercise of the standards of care common and usual in
the municipal water supply industry.
(e) The ten year period for judging this obligation shall restart at each renewal
of this contract. (See Section 3.F.)
G. Excess Demands
1. Reduction in Supply
Should Purchaser place demands on the system in excess of that agreed to between City and
Purchaser or not in compliance with the Operating Standards adopted pursuant to Section 4,
WMAB, in a manner that jeopardizes the reliability and safety of the Portland water system or
compromises the City's ability to meet its obligations to other customers,the Administrator may
take such steps as are necessary or advisable to protect the system. Such actions may include,but
are not limited to reducing the supply of water flowing to the Purchaser. If the water system
infrastructure does not allow the Administrator to make such supply reductions,the
Administrator may construct control devices as may be needed to suitably control Purchaser's
demands. The cost of such improvements shall be fully recovered through a surcharge billed to
Purchaser and added in equal installments to the Purchaser's monthly invoices during the four
months following completion of construction.
2. Calculation of Excess Demands
For purposes of Section 5.G,the Administrator shall determine whether Purchaser has imposed
excess demands on the system using any information available to the Administrator that he or she
determines can be used to assist in making the determination. The Administrator's determination
shall be subject to review and comment by the WMAB.
H. Increased System Capacity To Meet Increased Guaranteed Purchase Quantities
1. If Purchaser requests an increase in its guaranteed purchase quantity pursuant to
Section 5.C.2 that, in the judgment of the Administrator, cannot prudently be granted
•
Regional Water Sales Agreement (10 Year)
April 3, 2006
Page 18
SECTION 5—(Continued)
because it exceeds the capacity of the system to deliver water to Purchaser, the Purchaser
may request that the City undertake a study to determine what,if any, enhancements or
alterations to the system, would produce sufficient system capacity to meet the increased
guaranteed purchase quantity.
2. Upon Purchaser's written agreement to fund such a study of system enhancements
or alterations,the City shall undertake the study. Provided that the City's obligation shall
be contingent on the negotiation of a mutually satisfactory intergovernmental agreement
between the City and Purchaser establishing the nature,timing,and funding of the study.
• 3. Upon completion of any system study provided for in this subsection, the
Purchaser funding the study may request the City to undertake system enhancements or
alterations sufficient to meet the increased Purchaser's proposed increased guaranteed
purchase quantity.
4. Upon request for system enhancements or alterations,the City may agree to
undertake the enhancements or alterations requested,under such terms and conditions as
the City and Purchaser(or others) in writing mutually agree. The parties may utilize joint
funding agreements,as provided for under Section 16 of this Agreement,or such other
arrangements as are determined to be mutually beneficial at the time.
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 19
SECTION 6-INTERRUPTIBLE WATER
A. In General
Purchaser may purchase water over and above its guaranteed purchase quantities under the terms
and conditions set forth herein. Such water shall be termed interruptible water. Except as
provided herein,the City is not obligated to sell interruptible water to Purchaser. Further, City
may cease providing interruptible water at any time under procedures of Section 6.F below,even
after the Administrator has accepted an offer to purchase interruptible water under procedures of
Sections 6.B, 6.0 and 6.D below.
B. Winter Interruptible Water
From October 1 through May 31,Purchaser may offer to purchase winter interruptible water on
one day's verbal or written notice to the City. The City may provide interruptible water to
Purchaser if the Administrator determines it is prudent to do so and if the Administrator accepts
the Purchaser's offer either verbally or in writing. -w
C. Summer Interruptible Water
1. From June 1 through September 30,Purchaser may request to purchase summer
interruptible water using the procedures established in this Section 6.C.
2. No later than March 15 of each year,Purchaser may submit to the City, in writing,
its offer to purchase summer interruptible water supplies. The offer must identify
the quantities of water to be purchased, by month, for the next June through
September period.
3. No later than April 15,City of each year shall respond in writing to Purchaser's
request for interruptible water, based on the Administrator's prudent estimates of
system capacity and operational requirements. If the Administrator accepts
Purchaser's offer without changes,then the Purchaser is obligated to purchase and
the City is obligated to sell the designated quantity of summer interruptible water
under the terms of this contract.
4. If the Administrator determines that it would not be prudent to agree to meet all
timely requests for summer interruptible water from all Purchasers,he or she shall
offer the total quantity of interruptible water he or she deems to be prudent to all
requesting Purchasers as follows: each Purchaser Shall be offered a quantity of
interruptible water proportional to its guaranteed purchase quantity in comparison
to the total of the guaranteed purchase quantities of all requesting Purchasers.
Regional Water Sales Agreement (10 Year)
April 3, 2006
Page 20
SECTION 6—(Continued)
5. If the Administrator offers to supply Purchaser less than the full amount of
summer interruptible water requested by the Purchaser,Purchaser must,within 15
days of the Administrator's offer,accept or reject the offer. If Purchaser accepts
•
the offer,then Purchaser is obligated to purchase and the City is obligated to sell
that quantity of summer interruptible water under the terms of this contract.
D. Additional Sales of Interruptible Water
Notwithstanding the other provisions of Section 6,each contract year after the Administrator has
confirmed sales of summer interruptible water under Subsection 6.C. above, the Purchaser may
buy and the City, acting through the Administrator,may sell additional interruptible water at that
year's summer season interruptible rate and on such other terms as are mutually agreeable.
E. Confirmed Summer Interruptible Water Payment
1. Purchaser's Obligation to Make Payment
Once Purchaser and the City have agreed on a quantity of interruptible water
under the terms of this section, and subject to the billing provisions of Section 15
of this Contract,except as provided in Section 6.E. 2 below,the Purchaser shall
pay the City for that quantity of water agreed to at the price established by Section
8 of this Contract. The amount due shall be termed the confirmed interruptible
water payment.
2. Reduction in Confirmed Interruptible Water Payment
If the City fails to deliver any of the confirmed quantity of interruptible water,the
Purchaser shall be excused from paying a portion of its confirmed interruptible
water payment equal to the quantity of water not delivered times the price of
interruptible water.
F. Reduction or Elimination of Interruptible Water •
In the event of an emergency or other condition under which continued supply of
interruptible water jeopardizes the reliability of the water system, the City may cease
providing interruptible water at any time on one day's written or verbal notice to the
, Purchaser. Under all other circumstances,the City may cease providing interruptible
water at any time on 21 days written or verbal notice to the Purchaser.
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 21
SECTION 7—RATES AND CHARGES FOR GUARANTEED PURCHASE WATER
QUANTITY
A. Rate Making In General
1. The rate structure for Purchaser's guaranteed purchase quantity of water shall
consist of(a)a fixed monthly charge calculated using the cost of service of typical
non-volumetric services such as,but not limited to,meter reading,billing,meter
purchases,meter maintenance,and relevant overhead and(b)a volume charge
calculated using volumetric rates established as provided herein times the
Purchaser's guaranteed purchase quantity.
2. The City shall annually establish rates and charges for the Purchaser's fixed
monthly charge and guaranteed purchase quantities that do not exceed charges
calculated using the principles and standards of this Section 7.
(a) Determination of revenue requirements using the utility basis of revenue
requirements and cost of service principles as described in Manual of
Water Supply Practices—Ml. Principles of Water Rates, Fees and
Charges. Fifth Edition. Denver:2000 published by the American Water
Works Association(hereafter"AWWA Manual Ml")or in such updates
as may occur from time to time,except for such deviations from AWWA
Manual M1 as are described or permitted by this contract. A cost of
service computer model will be used to calculate the revenue
requirements,cost allocations,and resulting rates.
(b) The components used to determine the revenue requirements under the
utility basis shall be:
1. Operation and Maintenance(hereafter"0&M")costs;
2. Return on Investment;and
3. Depreciation.
(c) Purchaser shall not be charged for the costs incurred by the City that are
incurred for the sole purpose of serving the City's retail customers. For
the costs incurred serving both the Purchaser and the City's retail
customers,Purchaser shall be charged an amount that equals its
proportionate share of the cost,using standard cost-of-service principles,
as generally described in AWWA Manual M1,unless stated otherwise
herein.
(d) The parties understand that the City may enter into similar wholesale water
sale agreements with other water utilities. If the City does so,the charges
to Purchaser shall continue to be based on the Purchaser's proportionate
Regional Water Sales Agreement (10 Year)
April 3, 2006
Page 22
SECTION 7–(Continued)
share of the cost to serve the Purchaser,based on the Purchaser's
proportionate share of total demand on the system, including demand of
other purchasers under similar wholesale water agreements and the City's
retail customers.
(e) The City shall treat surcharges collected under Section 5.D.2 of this
agreement as an offset to the otherwise estimated annual revenue
requirements for all wholesale and retail customers of the system.
B. Cost Allocations—In General
1. Costs shall be allocated to the Purchaser in accordance with generally accepted
ratemaking practices and procedures,as described in AWWA Manual Ml,as it
may be updated from time to time,except to the extent that the procedures
specified herein may deviate from the practices and procedures of AWWA
Manual Ml. In general,unless specified otherwise in the agreement,costs shall
be allocated based on the proportionate share of costs of the assets and other
revenue requirements,as provided in AWWA Manual M1.
2. Cost allocation for purposes of this contract shall be based on the"commodity
demand"methodology, as defined in AWWA Manual M1,unless otherwise
agreed to by Purchaser and the Administrator.
C. 0&M Cost Allocation
1. Definition
For purposes of this agreement 0& M expenses include the operations,maintenance,and
associated overhead expenses of the City's water supply system as adopted in the City's annual
budget process for the year for which the rate will be in effect except that costs for water
planning studies that are expensed rather than capitalized shall be included in the 0&M
expenses at their actual cost rather than budgeted or anticipated costs. When use of actual costs
for such studies results in a delay of recovery of costs associated with such studies,Purchaser
shall also be charged interest on the funds expended from the time the costs were incurred by the
City until the start of the following contract year. The interest rate shall be equivalent to the rate
earned on the City's internal investment pool managed by the City Treasurer.
2. Allocations
The City shall allocate 0 & M costs to cost functions applied in accepted cost of service rate-
making contemplated by AWWA M-1,such as commodity,peak season demand(referred to as
the seasonal peaking factor under this contract),peak three days system-wide demand(referred to
as the daily peaking factor under this contract),customer,and equivalent meter service based on
•
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 23
SECTION 7—(Continued)
the City's best professional engineering judgment. The City shall then allocate 0& M costs
allocated to these respective cost functions to the Purchaser based on the Purchaser's
proportionate share of retail demand and non-retail guaranteed purchase quantities for annual
average demand,peak season demand,total annual non-retail bills, meters,and size of meters
respectively. Allocations may also be based on peak day or peak three day demands, but for
those purposes the City may include Purchaser's total demands on the Portland water system,
including guaranteed purchase quantities and actual purchases of interruptible water. Definitions
of allocation factors are found in Exhibit 2,which is hereby incorporated and made part of this
Agreement.
3. Special Allocation to Avoid Cost Cap
In any year that the Administrator determines that standard allocation of the 0&M expenses
contained in the City Budget will cause specified 0&M expenses to exceed the 0&M cost cap
as defined in Section 7.1.,the Administrator may alter the 0&M component of Purchaser's rates
in a manner that avoids that result.
D. Capital Cost Allocations
1. Capital costs are those expenditures that result in the acquisition of or addition of
fixed assets that become part of the rate base.
2. Except as specifically provided herein,capital costs shall be allocated based on
Purchaser's guaranteed purchase quantity in a five-step process using best
professional judgment. First, system assets included in the rate base shall be
allocated to functional asset groups. Second,the resulting system assets by
functional asset group shall be allocated to water service characteristics. Third,
the assets allocated to each water service characteristic shall be allocated to
customer classes based on their respective percentages of the water demands
related to each water service characteristic. The City shall classify customer
classes as retail and wholesale and shall treat each wholesale customer that serves
more than 200 service connections as an individual customer class. Fourth,the
asset costs allocated to each customer shall be multiplied by the rate of return to
determine the return on investment for each customer class. Fifth,the working
capital component of the rate base shall be allocated to customer classes in
proportion to the allocation of all other rate base assets.
3. In performing these allocations,items that solely serve the City's retail customers
shall be allocated to retail customers. Items that solely serve the Purchaser and
other wholesale customers shall be allocated to wholesale customers. Items that
serve the City and any wholesale customers shall be allocated proportionately to
Regional Water Sales Agreement(10 Year)
April 3, 2006
Page 24
SECTION 7—(Continued)
the City,based upon its retail water demand,and the respective wholesale
customers,based upon each customer's guaranteed purchase amount.
•
4. For the purposes of these allocations, functional asset groups are collections of
common water system assets or facilities that are used to provide water service to
customers. The City's functional asset group designations shall be specific
enough that customer classes are not allocated costs to support assets or facilities
that do not provide service or benefit to them. Definitions of functional asset
groups and their allocations to customers shall be consistent with the findings
contained in a document entitled Functional Asset Groups unless circumstances
change, in which case the allocations will also be changed to reflect the use or
benefit of assets and facilities under normal operating conditions. Any changes in
definitions of functional asset groups shall be presented to the WMAB for review
and comment. The Administrator shall provide a written explanation if WMAB
recommendations are not implemented and consult with WMAB regarding his
determination.
5. For the purposes of these allocations,water service characteristics may include
such things as commodity, peak season demand,peak three days demand,
customer,equivalent meter,and fire. For purposes of peak day and peak three day
analysis,the City may include Purchaser's total demands on the Portland water
system, including guaranteed purchase quantities and Purchaser's actual purchases
of interruptible water. Definitions of these water service characteristics are
• provided in Exhibit 2.
6. The allocations of assets to functional asset groups and subsequently to water
service characteristics may vary from time to time as changes to the system and its
operation may occur. The revised allocations, if any such revisions occur, shall be
used in the annual rate setting process,and if no revisions occur,then the
previously adopted allocations shall be used for annual rate setting. The entire set
of these allocations,including the initial allocations and any subsequent changes,
shall be reviewed in the Cost Allocation Audits,as described in Section 7.E.
below.
E. Cost Allocation Audits
1. In Contract Year 5 and every five years thereafter during the term of this contract
and any extensions,an independent third party shall be retained to conduct an
audit of all steps of the then-currently employed process to allocate assets and 0
&M to customer classes. The expert shall be instructed, as the result of its audit,
to recommend any changes necessary to ensure the continued accuracy of the cost
allocations consistent with the terms of this contract and the AWWA M-1 manual.
Regional Water Sales Agreement(10 Year)
April 3, 2006
Page 25
SECTION 7—(Continued)
The expert shall be selected by a majority vote of the WMAB and the auditor
expense shall be included in 0 & M expenses and allocated accordingly. The
expert's report shall be completed by December 1 of the contract year in which
the expert is hired.
2. Expert recommendations for cost allocations shall be reviewed by the WMAB and
shall be implemented by the Administrator in the contract year following receipt
of the recommendations unless: (1)a majority of the WMAB and the
Administrator concur that the recommendations should not be implemented or(2)
the Administrator determines that it would be imprudent to adopt any or all of the
recommendations. In case the Administrator reaches a determination of
imprudence,he or she shall explain his or her determination in writing to the
WMAB and consult with WMAB concerning his or her determination.
F. Depreciation of Capital Assets
1. Depreciation expense shall be the annual depreciation expense on assets that are
used,in total or in part,to serve the Purchaser, either directly or indirectly.
Depreciation shall be calculated on the original cost of the assets and on a
straight-line basis,using City accounting estimates of the useful lives of the assets
in accordance with Generally Accepted Accounting Principles, which may differ
from the actual useful lives of those assets.
2. The parties understand and agree that the assets being depreciated for these
purposes may include backup facilities and other redundant facilities that may be
idle for long periods of time,but which the City has determined still provide a
service function to the system and the Purchaser by virtue of their backup and
redundancy functions.
3. Depreciation shall not be charged for assets that are no longer able to provide
service to the Purchaser or whose accounting life has expired, unless otherwise
agreed to by the parties.
G. Return On Investment
Return on investment shall equal the rate of return multiplied by the value of system assets(the
rate base)that serve the Purchaser.
1. Rate of Return
The rate of return for each year shall be the percentage rate of the Bond Buyer Revenue Bond
Index as published by the newspaper The Bond Buyer on the previous December 1 or the City
Water Bureau's embedded cost of debt on the previous December 1,whichever is higher,plus
Regional Water Sales Agreement (10 Year)
April 3,2006 •
Page 26
SECTION 7—(Continued)
one percentage point(1.0%). If the Bond Buyer Revenue Bond Index ceases to be available, the
Administrator shall notify the Purchaser and consult with WMAB regarding identification of a
substitute index. The substitute index shall be selected by the Administrator, in consultation with
the WMAB,and shall be widely available to dealers in municipal securities,and measure the
interest rate of high quality, long-term, fixed rate municipal securities. If available, an index
measuring the interest rates on high quality, long-term, fixed rate municipal revenue bonds will
be selected by the Administrator over a comparable general obligation bond index. Upon
identification of a substitute index,the rate of return on this contract shall be the percentage rate
of a substitute index plus one percentage point(1.0%).
2. Rate Base
The rate base shall equal:
(a) Working capital, consisting of an amount equal to an average of 45 days of
operation and maintenance costs for the water system supply,
transmission,storage and pumping facilities that are incurred to provide
service directly or indirectly to non-retail customers.
(b) The remaining un-depreciated value,i.e.,book value,of all assets that
provide service,directly or indirectly,in whole or in part,to the Purchaser,
including water system supply,transmission,storage,and pumping
facilities,equipment,and appurtenances and any other water system assets
that provide service directly or indirectly to the general water supply and
transmission portion of the water system,thereby providing water supply
to non-retail water customers of the City. These assets may include
backup facilities and other redundant facilities that may be idle for long
periods of time,but which the City has determined still provide a service
to the system and Purchaser. For such assets providing water supply
benefit to both retail and non-retail customers,the assets included in the
rate base shall be allocated proportionately as previously described herein.
(c) The assets initially included in the Rate Base,as of the date of this
agreement,are listed in Exhibit 3. Each year,the City shall produce a new
Rate Base asset list and provide it to Purchaser during the rate-making
process as provided in Section 4, WMAB.
(d) After the first year of this contract,the assets included in the Rate Base
assets shall be updated each year to include all water system capital assets
listed and valued in Water Bureau documents used to produce the City's
most recent Comprehensive Annual Financial Report and its supporting
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 27
SECTION 7—(Continued)
documentation,which may include capitalized interest on some or all of
the relevant assets.
3. Rate Base Exclusions
The Rate Base shall exclude the following items:
(a) Construction work in progress.
(b) Assets that are fully depreciated, even though such assets may be still in
service.
H. Prepayment of Capital Cost Share
The Purchaser may elect to pay its share of capital cost allocations for new water system assets in
a lump sum cash payment or other mutually agreed upon payment terms in lieu of paying
annualized rates for depreciation and rate of return for the new facilities. If Purchaser names
such cash payment,the portion of the asset cost being prepaid by the Purchaser shall be deducted
from the value of the specified assets in the rate base used to calculate the Purchaser's rates. By
making such cash payment, Purchaser does not obtain an ownership interest in the specified
assets unless Purchaser and the City have entered into a supplemental joint ownership agreement
as specified in Section 16,Joint Funding of Capital Improvements.
I. Operations And Maintenance Cost Control
To help ensure stability and predictability of wholesale rates and to permit recovery of costs of
service, increases in specified 0&M expenses shall be subject to limitations described below.
These limits do not apply to capital costs, recovery on investment,or 0 &M expenses that are
not specified 0&M expenses.
1. O&MCostCap
The 0&M Cost cap is the prior year's specified 0&M expense any portion of which was
allocated to Purchaser or any other wholesale purchasers under similar water sale agreements
increased by the sum of two percentage points(2%)plus the annual rate of change of the selected
CPI.
(a) Selected CPI shall mean the CPI-Urban,West Urban(ref
CUUR0400SAO) for January 1 of the year new rates are calculated, e.g.,
CPI of January 1,2006,will be used to assess 0& M increases in rates for
July 1,2006. If this referenced index ceases to be available, the
Administrator shall notify the Purchaser and consult with WMAB
regarding identification of a substitute index.
Regional Water Sales Agreement(10 Year)
April 3,2006
Page 28
SECTION 7—(Continued)
(b) Specified 0&M expenses are those City 0& M expenses defined in
Subsection I.3 below, Specified 0&M Expenses and Exclusions.
2. Cost Cap Limitation
The City may not more than once in any consecutive five year period include in the calculation of
Purchaser's rates,specified 0&M expenses that exceed the 0 &M cost cap. If,however,the
City's actual 0&M spending(including,but not limited to specified 0& M expenses)is 90%
or less than the City's budgeted 0&M expenses for each of the prior four years,the increase in
the fifth year shall be limited to the formula of 7.I.1 above. A new five year period shall
commence at each renewal of this contract.
3. Specified 0 &M Expenses And Exclusions
Specified 0&M expenses shall be those 0&M expenses, including associated overhead,
incurred by the City's water system to serve directly or indirectly, in whole or in part,the
Purchaser and other purchasers under similar wholesale water agreements and any portion of
which is properly allocated to Purchaser or any other purchasers under similar wholesale water
agreements underthe terms of their contracts,except for expenses or classes of expenses
excluded by this Section 7.1. The Administrator shall make a determination of specified 0&M
expenses and exclusions in consultation with the WMAB each year during the ratemaking
processes.
4. Specified 0 & M expenses shall not include and shall therefore,exclude,the
following expenses or classes of expenses:
(a) Pass-Through Costs. These are costs that the parties agree are generally
beyond the reasonable control of the City water system to influence. For
purposes of this contract, pass through costs are those listed here.
i. Utilities,including electricity,water, sewer,natural gas, garbage
and telephone.
ii. Equipment rental, such as hoists,excavators,tools and other
miscellaneous equipment not included in the City's fleet.
iii. Operating supplies, such as treatment chemicals, lubricants and
consumables related to system operation and maintenance.
iv. Communication Services, including but not limited to telephone,
radio,microwave and fiber-optic transmission of data,voice,video
and related information.
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 29
SECTION 7—(Continued)
v. Insurance or the expenses of self-insurance, other than workers
compensation, including but not limited to costs for general
liability,property,casualty and fleet coverage.
vi. Additional costs identified by the Administrator from time to time
that are beyond the control of the City to influence in a manner
similar to the specific costs listed in this subsection. Provided that
the City may not exempt any such additional costs from the cost
cap without first presenting proposed additions to the WMAB for
review and comment.
(b) The costs of PERS Pension Obligation Bonds (POBs)paid by the City of
Portland Water Bureau.
(c) Costs In Response to Unexpected Events or Circumstances
i. These are costs that arise unexpectedly or as the result ofActs of
God,malevolent acts,contamination of the water supply,or:events
• beyond the City's control,the consequences of which event's or
circumstances could not have been avoided through the exercise of
the standards of care common and usual in the municipal water
supply industry.
ii. The City and Purchaser shall, within 120 days of the onset of such
unexpected costs commence good faith negotiations to determine
what, if any, of the costs of responding to the event or
circumstances,which are otherwise excluded, should be included
within the Specified 0& M expense.
(d) Costs Associated With Planning Studies
These are costs to pay for City planning studies related to the
Water Supply System including those studies in the City's Water
Bureau Capital Improvement Program that are expensed rather
than capitalized.
(e) Costs Associated With New Facilities Or Programs
i. These are first time or initial increases to 0& M expenses(which
may affect more than one fiscal year)associated with operation and
maintenance of new facilities or the functioning of new programs.
New programs may include such things as responses to new state
or federal mandates or regulations,or activities to improve the
Regional Water Sales Agreement (10 Year)
April 3, 2006
Page 30
•
SECTION 7—(Continued)
efficiency,reliability, security or quality of the water supply. The
WMAB will be consulted regarding initial 0&M costs of new
facilities and new programs. The parties understand and agree that
O& M costs may increase in any given year in order to implement
new programs or to operate or maintain new facilities without
exceeding the cost cap.
ii. Once 0& M expenses for new programs or facilities are
established and have become a routine part of the City's water
system budget,however,those of the expenses that are not
otherwise excluded from"specified 0&M costs,"(pass through
costs, PERS expenses listed in Subsection 2 above,costs in
response to unexpected events or circumstances,or costs
associated with planning studies)shall be included in future
calculations of the increase in specified 0&M expenses.
iii. AsO&M expenses for new facilities or new programs arise,the
Administrator shall consult with WMAB concerning the expenses
and then determine which of those expenses should be excluded
from cost cap calculations as"new 0&M"and which expenses
should be included within the cost cap on what schedule. The
Administrator shall advise Purchaser and WMAB of his
determination.
(f) Costs Incurred on Behalf of the Purchaser or WMAB
These are costs to be paid by the City by mutual agreement of the
City and Purchaser or the City and the WMAB.
• Regional Water Sales Agreement(10 Year)
April 3,2006
Page 31
SECTION 8-RATES AND CHARGES FOR INTERRUPTIBLE WATER
A. Winter Interruptible Water
The price of winter interruptible water shall be twenty percent(20%)of the Purchaser's rate for
that year for its guaranteed purchase water quantity,plus any extra delivery costs(such as extra
pumping)incurred by the City to deliver the water that are not included within the rate for the
guaranteed purchase quantity.
B. Summer Interruptible Water
The price of summer interruptible water shall be forty-five percent(45%)of the Purchaser's rate
for that year for its guaranteed purchase water quantity,plus any extra delivery costs(such as
extra pumping)incurred by the City to deliver the water that are not included within the rate for
the guaranteed purchase quantity.
Regional Water Sales Agreement (10 Year)
April 3, 2006
Page 32
SECTION 9-WATER SYSTEM PLANNING AND COOPERATION
To facilitate regional water'planning and resource development, Purchaser and the City agree as
follows:
A. Purchaser Projected Water Usage
1. Each five years,at a minimum, starting on July 1 of Contract Year 5, Purchaser
shall provide to the City estimates of the Purchaser's water demand to be
purchased from the City by year, annual seasonal peaking factor,and daily
peaking factor for a period of ten years including any anticipated increases in
guaranteed purchase quantity.
2. In addition,in any other Contract Year in which unforeseen developments have
significantly altered Purchaser's five year estimates, Purchaser shall provide the
City with its revised estimates of it preferred use of Portland water for a ten year
period.
3. The estimates provided for in this provision are for planning purposes only and do
not commit the City or the Purchaser to either buy or supply any particular
quantities of water.
4. The City shall provide WMAB a summary of the City's projected demands for all
wholesale and retail demands by no later than May 1 of each year.
B. City Evaluation of Capacity of Portland Water System
1. Whenever it receives revised demand and peaking factor estimates from the
Purchaser,the City shall provide the Purchaser with estimates of the capacity of
the Portland water system to meet all projected system loads over the ten year
planning horizon.
2. If the City determines that the Portland water system cannot meet the projected
demands Purchaser and others have proposed to place on it over the ten year
planning horizon,the City and Purchaser(together with other Purchasers who may
wish to join the discussions)may initiate negotiations to determine if and how the
Portland water system could meet the projected loads,either through reduction in
demand or development of additional water system capacity.
3. In no case,however, does this contract obligate the City to sell, or Purchaser to
pay for,water beyond the guaranteed purchase quantities established herein.
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 33
SECTION 10-RESERVATION OF SYSTEM CAPACITY
At any time during the term of this contract,Purchaser and the City may enter a separate reserve
capacity agreement. A reserve capacity agreement would enable Purchaser to take a specified
amount of additional water from the system at a specified future time. At a time to be specified
in the reserve capacity agreement,the quantity of water reserved will be added to the Purchaser's
guaranteed purchase quantity under this contract and will be used to calculate the Purchaser's
guaranteed purchase payment thereafter.
Unless specified otherwise in the reserve capacity agreement,costs for reserve capacity shall be
charged at a rate equivalent to the rate of return on the proportionate share of the capital assets
that would be used to make such capacity available, and shall be billed to the Purchaser in equal
monthly installments.
Purchaser will possess no right to use the additional capacity identified in its reserve agreement
until the specified future time. The City may use any or all of the reserve capacity prior to the
specified future time.
Unless specified otherwise in the reserve capacity agreement,Purchaser shall provide the City
written notice at least 90 days prior to the specified future time identifying if the Purchaser will
(a)exercise its option to use the additional system capacity after the specified future time, (b)
allow the reserve capacity agreement to expire without further action,or(c)request a new or
amended reserve capacity agreement with a new specified future time.
If a request for reserve capacity can only be met by adding new assets to the system,the City will
not reserve capacity for the Purchaser until the parties have reached an agreement on the method
for financing and the schedule for adding the assets to the system.
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 34
SECTION 11 -CONNECTIONS AND METERING
A. Meter Ownership and Responsibility
Upon execution of this agreement,all existing water meters used to measure the water
supplied by the City to the Purchaser, and associated facilities such as vaults,shall become
the property of the City. In addition, when a new meter or meters are required,the City shall
install on Purchaser's main, at a point near the connection with the City's main,a water meter
or meters that will at all times measure the water supplied by City to Purchaser. City shall
maintain the meter or meters in proper working condition, including periodic testing,
calibration,maintenance and replacement of the meter(s)based on generally accepted
industry standards. City agrees to notify Purchaser prior to repairing the meter.
B. Meter Costs
The cost of replacing the meter or meters and their operations and maintenance shall be
included by the City in calculating Purchaser's rates.
C. Meter Access
The Purchaser shall be allowed reasonable access to meters and facilities for purposes of
installing and maintaining telemetry equipment or other equipment related to the metering
function. •
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 35
SECTION 12-PURCHASER-SUPPLIED WATER TO CITY RESIDENTS
A. Water Supplies To City Residents
To the extent permitted by law, Purchaser agrees,when requested by the Administrator, to
provide water supply to City residents in areas adjacent to Purchaser's water mains subject to
limitations of the available capacity of Purchaser's water distribution system. Water so
delivered shall be metered by the City at its residents' individual services.
B. Master Metering
The City and Purchaser shall review each situation where such arrangements exist and
attempt to reach agreement on the need and feasibility of installing a master meter or master
meters to register the volume of water delivered to City residents. The Purchaser agrees the
water delivered to City residents will be from the same source or sources as water that
Purchaser delivers to its customers and shall meet all applicable drinking water regulatory
requirements. The Purchaser may request the City install a master meter if the local
distribution system is shown to have demonstrated leakage or unaccounted water losses in
excess of 10%of the average day demand of the City residents served by system or by mutual
agreement of the parties. Improvements to the local distribution system shall be made by
mutual agreement of the parties.
C. Charges For Water
1. The Purchaser may charge the City up to one hundred twenty-five percent(125%)of the
guaranteed purchase wholesale water rate the City charges the Purchaser. The City will
credit this amount to Purchaser. Such water will not be included in the calculation of total
water purchases made by the Purchaser from the City.
2.Notwithstanding the foregoing,the Purchaser may conduct a cost-of-service study to
determine the cost of serving City residents. If the cost-of-service exceeds the 125%of the
wholesale water rate,Purchaser may adjust the charge to the City accordingly,but not above
the actual cost of service.
Regional Water Sales Agreement(10 Year)
April 3, 2006
Page 36
SECTION 13-WATER RESOURCE CONSERVATION
A. General
1. The obligations in this Section will`apply to both the City and Purchaser. Both .
parties to this agreement intend that water to which the City holds water rights
shall be used beneficially,efficiently,and without waste.
2. The parties encourage the development of joint conservation programs where such
partnerships are of mutual benefit and produce increased efficiencies in program
costs or water savings. Provided,however,that funding for joint conservation
programs will be established by separate agreement between the interested parties.
B. Water Managers Advisory Board
The WMAB will foster and promote efficient use of water and best management practices as
outlined further in this Section. It will also be the role of the WMAB to implement the
provisions of this Section. In doing so, WMAB may assign tasks to a WMAB committee or to
staff of participating purchasers' subject in all cases to WMAB review and approval.
C. Water Conservation Obligations and Submission of a Water Conservation Plan
1. The Purchaser must operate water systems that are fully metered at the individual
customer level or have an implementation program to complete installation of
such meters by the end of the fifth contract year.
2. Unless Purchaser serves a population of 1,000 or less, Purchaser shall,on or
before the end of the second contract year,and every five years thereafter, submit
a Water Conservation Plan for its water system to the WMAB.
3. If Purchaser is a participant in the ORS 190 Agreement for the Regional Water
Providers Consortium;it may submit the regional conservation programs as part
of its Conservation Plan,but the Consortium programs,by themselves, do not
constitute a Conservation Plan for the individual Purchaser.
4. Each Conservation Plan submitted must include programs specified in State of
Oregon Water Resource Department Water Management and Conservation Plan
Rules,as they are from time to time amended.
D. Review of Conservation Plan
1. The WMAB may,if it deems it advisable, adopt guidelines for the submission of
water Conservation Plans.
Regional Water Sales Agreement(10 Year)
April 3,2006
Page 37
SECTION 13—(Continued)
2. Upon receipt of a Purchaser Conservation Plan,the WMAB will review the plan
pursuant to the standards of this Section. In reviewing a Conservation Plan, the
WMAB shall consider,at a minimum,the following factors:
(a) Whether the program contains the following mandatory programs
i. Leak detection and repair programs, if required by State Rule, that
meet Oregon Administrative Rule(OAR)690-86-150(4)(e)and, if
applicable, Subsection(6)(a).
ii. Education and outreach programs required under OAR 690-86-
150(4Xf).
iii. Rate structures based on the quantity of water metered at the
service connection as required by OAR 690-86-150(4)(d).
iv. A meter testing and maintenance program as required by OAR
690-86-150(4Xc).
v. An annual water audit as required by OAR 690-86-150(4)(a).
(b) Whether the Plan includes the following discretionary programs or a
showing that a particular discretionary program is neither feasible nor
appropriate to the Purchaser's service area.
i. Technical and financial assistance programs to encourage and aid
residential,commercial and industrial customers.
ii. Supplier financed retrofitting or replacement of existing inefficient
water using fixtures,including distribution of residential
conservation kits and rebates for customer investments in water
conservation.
iii. Adoption of rate structures, billing schedules,and other associated
programs that support and encourage water conservation.
iv. Water reuse,recycling,and non-potable water opportunities.
v. Other measures identified by the water supplier that would
improve water use efficiency.
vi. Operation measures to reduce peak event impacts on the Portland
system.
Regional Water Sales Agreement(10 Year)
April 3, 2006
Page 38
SECTION 13—(Continued)
3. Within 180 days of receipt of the Purchaser's Conservation Plan,the WMAB
shall approve or disapprove the Plan and advise the Purchaser in writing of its
decision.
(a) A Water Management and Conservation Plan approved by and updated as
required by the State of Oregon pursuant to the Department of Water
Resources Water Management and Conservation Plan Rules will in all
cases be deemed sufficient to meet the requirements for a Conservation
Plan under this agreement.
(b) If the WMAB disapproves the Purchaser's Water Conservation Plan, it
shall notify the Purchaser and provide the Purchaser with comments on the
Plan's deficiencies. Within 180 days thereafter, Purchaser shall submit a
revised Plan for review by the WMAB.
E. Periodic Conservation Plan Reporting
1. Purchaser shall report annually to the WMAB regarding the implementation of
its Conservation Plan.
2. Each five years after approval of its Conservation Plan, Purchaser shall report
to the WMAB the estimated actual water savings from its Conservation Plan.
•
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 39
SECTION 14—WATER CURTAILMENT AND PROTECTION OF THE WATER
SYSTEM
A. During times when water supplies are not adequate to meet the aggregate of all demands
placed upon the Portland water system,the City and participating Purchasers need to have
a plan in place to reduce or curtail demands so that fire,life, safety and other high priority
needs are met. It is to the benefit of all of the users of the Portland water system that
plans for curtailment be agreed upon in advance and that plans for curtailments be
coordinated among water providers.
B. By signing this agreement, Purchaser and City acknowledge that unforeseen or
unavoidable circumstances may limit the amount of water available to City for sale and
distribution,whether temporarily or permanently. Should the available supply fall below
the aggregate of all demands placed on the City system,or should it be reasonably
predicted that supply will fall below demands before other supplies are available,the
Administrator of the Bureau of Water Works may declare that a water shortage is in
effect.
C. WMAB shall develop and recommend to the Administrator a Curtailment Plan. The
Administrator shall adopt the recommended Curtailment Plan with such alterations as he
or she deems necessary or advisable. The Curtailment Plan shall be designed to
accomplish reductions in demand necessary, in the event of a water shortage, to protect
the system's capacity to supply water for fire, life,safety,and other high priority needs.
The curtailment plan shall establish procedures,as well,whereby two or more
participating Purchasers may coordinate their demand reductions to accomplish,jointly,
total necessary system demand reductions imposed on them, even if one or more
Purchasers individually do not meet the reductions required of its separate system.
D. Whenever the Administrator has declared a water shortage, any adopted Curtailment Plan
shall be in effect. If there is no adopted Curtailment plan,the Administrator shall require
implementation of measures he or she deems necessary or advisable to reduce all
demands,retail and wholesale, proportionally based on annual retail usage for the
previous contract year and on annual guaranteed purchase quantities(excluding
interruptible water)furnished under this agreement for the previous contract year.
E. If the Administrator declares a water shortage,Purchaser shall implement measures
sufficient to meet the requirements of the Curtailment Plan(or other requirements of the
Administrator for proportional reduction in demand if no Curtailment Plan has been
adopted). Purchaser may do this through implementation of measures contained in the
Curtailment Plan, similarly effective measures found in Purchaser's own plan adopted •
under OAR Division 86 or required as part of a State declared drought under ORS
536.720-740,or through agreements with other Purchasers of water under similar
wholesale water agreements that result,jointly among the agreeing Purchasers, in a total
4
•
Regional Water Sales Agreement (10 Year) �}
April 3,2006
Page 40
SECTION 14—(Continued)
reduction in system demand equivalent to that required in the Curtailment Plan or, if there
is no Plan,the Administrator's order for proportional reductions.
F. The City shall monitor compliance with Curtailment Plan on a schedule established in the
Plan or at least every two weeks throughout the duration of the declared water shortage.
G. If,after the Administrator declares a water shortage, Purchaser is unable individually,or
in cooperation with other purchasers as contemplated by Subsection E. above,to achieve
the required reductions in the use of water supplied under this contract,the Administrator
may act to reduce the amount of water supplied to the purchaser so that it does not exceed
that amount specified under curtailment measures.
•
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 41
SECTION 15—BILLING AND PAYMENT
A. Guaranteed Purchase Payment
1. Monthly Billing
The City shall bill Purchaser its fixed monthly service charge plus a portion of its annual
guaranteed purchase volumetric payment obligation each month. The monthly volumetric charge
shall be the product of the monthly usage estimates,as determined in Sections 15.A.2(a)or(b)
below,times that year's rate per unit of water.
2. Monthly Usage Estimates
(a)No later than March 15 of each year, Purchaser shall submit to the City a projection of
its demands for the next year, by month, which demands must total to the Purchaser's guaranteed
purchase quantity and must be consistent with the Purchaser's seasonal peaking factor. It is
recognized these demand projections will be estimates and actual demands may vary from.
projected demands but such departures from estimates do not relieve the Purchaser from
obligations such as guaranteed purchase quantity and adherence to seasonal peaking factor,as
specified elsewhere in this agreement.
(b)If the Purchaser has not by March 15 of each year submitted its projected demands for
the next year or if a timely submission is inconsistent with the Purchaser's then current
contractual guaranteed purchase quantity and seasonal peaking factor,the Administrator shall
consult with Purchaser to obtain new or revised projected demands. If thereafter the Purchaser
does not submit projected demands that are consistent with its then current contractual
guaranteed purchase quantity and seasonal peaking factors,the Administrator may use the
previous year's demand projections or other projections that are consistent with Purchaser's
contractual guaranteed purchase quantity and seasonal peaking factors,to make rates and to
operate the system.
B. Summer Interruptible Water
If the Purchaser and City have agreed to the sale of summer interruptible water, the City shall bill
the Purchaser for the total confirmed interruptible water payment in four equal amounts for the
months of June,July, August,and September. Provided,that if the City fails to deliver
interruptible water requested by the Purchaser,the Purchaser shall be excused from paying the
portion of its confirmed interruptible water payment equal to the quantity of water not delivered
times the price of interruptible water.
t
Regional Water Sales Agreement(10 Year)
April 3, 2006
Page 42
SECTION 15-(Continued)
C. Billing for Water Purchases Above Guaranteed Purchase Amounts and Above Confirmed
Peak Season Interruptible Water Quantities
Within 62 days of the end of each contract year(that is, by September 1),the City shall review
the Purchaser's meter records for the previous contract year under this agreement. If the
Purchaser has taken water above either its guaranteed purchase amount or its confirmed peak
season interruptible water quantities,the City shall bill Purchaser for those water deliveries no
later than September 30. Charges shall be calculated as follows:
If the Purchaser has taken at least its annual guaranteed purchase quantity over the full contract
year,then water supplied to Purchaser from October 1 to May 31 in excess of its estimated
monthly guaranteed purchase quantity for those same months shall be charged the appropriate
rate for winter interruptible water times the quantity of excess water taken.
If the Purchaser has taken at least its annual guaranteed purchase quantity over the full contract
year,then water supplied to Purchaser from July 1 through September 30 and from the
subsequent June 1 through June 30 in excess of the total of its estimated monthly guaranteed
purchase quantity for those same months and its confirmed summer interruptible water quantities
(if any)for those same months shall be charged the appropriate standard rate applicable to its
guaranteed purchase quantity times the quantity of excess water taken.
D. Payment Schedule
Bills are due upon receipt,and subject to a collection fee if not paid on or before the thirtieth day
following the billing date. Collection fees shall be established each year in the annual City
ordinance establishing rates.
E. Charges In Case of Meter Failure
Should any meter fail to measure accurately the water passing through said meter,the charge for
water used during the time the meter is out of service shall be based on the City's estimates of the
volume of water supplied based on usage patterns and statistics for prior periods.
F. Disputes
In the case of disputes over billings for water, Purchaser shall pay the undisputed amount when
due and the disputed amount shall be resolved through Dispute Resolution. The Purchaser shall
pay interest at a rate equivalent to the rate earned on the City's internal investment pool managed
by the City Treasurer on any disputed amounts found through dispute resolution or litigation to
be due the City.
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 43
SECTION 16—JOINT FUNDING OF CAPITAL IMPROVEMENTS
The City and Purchaser or group of Purchasers may enter into separate agreements for the
purpose of mutually funding capital improvements where such improvements are determined to
be in their mutual interest. The City and Purchasers or others involved in mutually funding
capital improvements may also enter into separate agreements for the conditions and pricing of
sale for water supplies derived from such mutually funded improvements. Such separate
agreements may include provisions for acquisition of ownership of assets and/or capacity by
Purchaser. If provided in the joint funding agreement, Purchaser may include its proportionate
ownership share of such assets in its calculation of system develop charges and rates.
•
Regional Water Sales Agreement(10 Year)
April 3,2006
Page 44
SECTION 17—DISPUTE RESOLUTION
In case of disputes arising out of this agreement, including disputes regarding the interpretation
of any provision of the agreement,subject to the terms of this Section,either party may seek all
remedies available at law or in equity. The parties agree,however, prior to commencement of
any suit, they shall first engage in dispute resolution as provided in the Section.
Step 1. Notice of Dispute
Prior to commencement of litigation of a dispute,either party must first provide the other with a
written notice describing the dispute and submitting the dispute to resolution under this Section.
Such notice shall commence the dispute resolution process.
Step 2. Negotiation
Each party shall designate a person or persons to negotiate the dispute on its behalf, shall make a
good faith effort to exchange information and data related to the dispute, and shall meet to
negotiate a dispute resolution. If the dispute is resolved at this step, the parties will memorialize
the agreement by a written determination of such resolution,signed by the designated
representatives of the parties. •
Step 3. Mediation
If the dispute has not been resolved within 45 days of the date of the notice of dispute,or such
longer time as is mutually agreed by the parties,the parties shall submit the matter to mediation.
The parties shall attempt in good faith to agree on a mediator. If they cannot agree,they shall
request a list of five mediators from an entity or firm providing mediation services. The parties
shall attempt in good faith mutually to agree on a mediator from the list provided, but if they
cannot agree,each party shall select one name. The two selected shall select a third person and
the dispute shall be heard by a panel of three mediators.
Any common costs of mediation, including the cost of mediation, shall be borne equally by the
parties. Each party shall bear its own individual costs therefore. Mediation shall not continue
more than 105 days past the initial notice of dispute unless mutually agreed by the parties. If the
dispute is resolved at this step,a written determination of such resolution shall be signed by the
designated representatives of the parties.
Step 4. Arbitration
If the dispute has not been resolved through negotiation or mediation with the time set by this
agreement,within 15 days of the end of mediation, or such other time as is mutually agreed,the
parties may submit the dispute to arbitration under mutually agreeable terms. In the absence of
Regional Water Sales Agreement(10 Year)
April3 2006
Page 45
SECTION 17—(Continued)
such an agreement,the dispute resolution process under this agreement shall be deemed ended
and the parties shall be free to pursue other remedies.
Any litigation between the parties arising under or regarding this agreement shall be conducted in
the Multnomah County Circuit Court of Oregon. In any litigation, each party shall bear its own
costs and attorney's fees.
l
Regional Water Sales Agreement (10 Year)
April 3,2006
IN WITNESS WHEREOF, Purchaser has, pursuant to official action of its governing body on
the day of , 20 ,duly authorizing the same,caused its proper
officers to execute this instrument on its behalf and its corporate seal to be affixed hereto, and
City has caused this instrument to be signed by its Mayor and Commissioner-in-Charge of the
Bureau of Water Works, all of which is in triplicate.
PURCHASER:
• Purchaser
By
Approved as to form:
(Title)
Attest
Purchaser's Attorney (Title)
Date
CITY OF PORTLAND:
By
Mayor
Approved as to form:
By
Commissioner-in-Charge
City Attorney
Date
Regional Water Sales Agreement
Exhibits
City of Tigard
April 3,2006
Exhibit 1
Water District Usage Characteristics
City of Tigard
Guaranteed Purchase Quantity 4.5 MGD
Peak Season Purchase 6.5 MGD
Seasonal Peaking Factor 1.44
Highest Three Consecutive Days 9.1 MGD
Daily Peaking Factor 2.02
Purchase Quantities by Month by Fiscal Year
Monthly demand data Illustrative only will be refined by purchaser
City of Tigard
Average — Month Total— A Daily - Month Total
Month MGD MG Month MGD — MG
July 6.5 200.9 January 3.5 108.5
August 6.5 200.9 February 3.5 98.0
September 6.5 194.4 March 3.5 108.5
October 4.0 124.0 April 3.5 105.0
November 3.5 105.0 May 3.5 108.5
December 3.5 108.5 June 6.0 180.0
Meter data will be available prior to signing contract
Existing Meter Connections
Location Size Meter# Pressure
Regional Water Sales Agreement (20 Year)
April 3, 2006
Exhibit 2.
Definitions of allocation factors
Allocation to Water Service Parameters
The functionalized items shall be allocated to the water service parameters listed below by the
retail customer,wholesale customer and specific groups following the CommodityDemand
method described in the AWWA's Manual MI.
Commodity Items
Commodity items shall be identified as described in the AWWA Manual MI. These are items
whose cost varies almost entirely directly with the amount of water supplied.
Peak-Season Demand
Items that are designed to meet the peak-season needs of the system shall be albcated as Peak
Season Demand.
Peak Day or Peak Three-Day Demand
Items that are designed to meet the peak day or peak three-day needs of the system shall be
allocated as Peak Day or Peak Three-Day Demand.
Customer
Items allocated to customer shall be allocated based on the number of accounts for each customer class.
Equivalent Meter
Items allocated to equivalent meter shall be allocated based on the number of equivalent meters.
The equivalent meter ratios used to relate meters by size to the number of equivalent meters shall
relate to the City's estimated costs of owning and maintaining the meters. Whenever possible,the
values listed in the AWWA Manual MI shall be used.
•
Fire
Any cost related to fire(either direct fire or indirect fire)shall be allocated to the parameter of fire.
Since fife-related costs are incurred solely for the City,no fire related costs,except for the cost of
water passing through the purchaser's meter,shall be included in the cost of water for the
purchaser.
•
Jrifi
Regional Water Sales Agreement (20 Year)
April 3,2006
Exhibit 3
Fixed Assets as of June 30,2005
Fixed Asset Cost Pools Rate Base Value Annual Depreciation
Arlington Heights 329,363 22,258
Arnold 1,510,800 52,514
Burlingame 643 1,081,402 72,778
Burlingame Regulated 117,331 9,180
Calvary 278,239 9,125
Council Crest 240,711 16,391
Indirect 7,633,800 1,039,261
Joint 117,679,576 5,555,781
Mt.Tabor 411 3,229,474 229,372
Parkrose 261 912,239 32,239
Pipe 176,262,331 4,893,188
Portland Heights 195,271 10,503
Portland Retail 103,610,826 4,277,385
Sam Jackson PS 107,265 6,679
Washington Park 229 763,432 31,804
Washington Park 299 1,911,795 98,048
Washington Park Common 2,229,103 192,106
Washington Park PS 585,406 57,830
Totals 418,678,362 16,606,439
Jrafi
Regional Water Sales Agreement (20 Year)
April 3,2006
Exhibit 4
Functional asset groups include the following general categories(see also Cost Pool Table below):
• Source of Supply
• Terminal Storage and Conduits
• Treatment
• Treatment Chemicals and Power
• Burlingame 643 Pumping and Storage/Power
• Arnold Pumping and Storage/Power
• Arlington Heights Pumping and Storage/Power
• Tabor 411 Storage
• Parkrose 261 Storage
• Portland Heights Pumping and Storage/Power
• Washington Park 229 Storage,Pumping,and Treatment/Power&Chemicals
• Council Crest Pumping and Storage/Power
• Calvary Pumping and Storage/Power
• Burlingame Regulated Pumping and Storage/Power
• Washington Park 299 Pumping and Storage/Power
• Joint Equivalent Meters
• Washington County Supply Line—Portland Only
• Retail Direct and Indirect
• Indirect Storage/Pipe
• Indirect
Dft
Regional Water Sales Agreement (20 Year)
April 3, 2006
Exhibit 4-continued
City of Portland-Wholesale Rate Model
CastChar 7-Percentage of Customer's Demand Through Cost Pools(old Table 14)
Mt.
Arlington Burlingame Burlingame Council Tabor
Customer Heights Arnold 643 Regulated Calvary Crest Joint 411
Service Area 1 Water Cos. 100%
City of Gresham 100%
Lusted Water District 100%.
Pleasant Home Water
District 100%
Rockwood Water PUD 100% 3%
Palatine Hill Water District 100% 100%
Burlington Water District 100% 100%
Lake Grove Water District 100% 100% 1000/o 100%
City of Tigard 100% 100% 100%
Valley View 22% 22% 78% 100% 100%
West Slope Water District 100% 100% 100%
TVWD 6% 100% 6%
Raleigh Water District 2% 100% 2%
City of Tualatin 2% 100% 2%
City of Portland 3.800/o 1% 8% 2% 3% 0% 100% 95%
Parkrose Portland Portland Sam Jackson Washington Washington Washington
Customer 261 Heights Retail PS Park 229 Park 299 Park PS WCSL
Service Area I Water Cos.
City of Gresham 3%
Lusted Water District •
Pleasant Home Water
District
Rockwood Water PUD
Palatine Hill Water District 100'/e 100%
Burlington Water District 100% 100%
Lake Grove Water District 2%
City of Tigard 2%
Valley View 78% 700!0 100% 30%
West Slope Water District 100% 100%
TVWD 96%
Raleigh Water District 100%
City of Tualatin - 100%
City of Portland 3% 1% 49% 4% 10% 21% 5% 1%
•
Jrfi