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01/09/2002 - Minutes r Intergovernmental Water Board Meeting Minutes Januaty 9, 2002 Members Present: Jan Drangsholt, Patrick Carroll, Joyce Patton, and Norm Penner Staff Present. Ed Wegner, Dennis Koellermeier, Craig Prosser and Kathy Kaatz Visitors: Phil Smith and Chris Uber 1. Call to Order, Roll Call and Introductions Staff called the role. Bill Scheiderich was out of town and excused. Craig Prosser, Finance Director, reported to the Intergovernmental Water Board that last night the Tigard City Council updated the investment policy used as a guide for handling excess funds. There was a change in the policy. Previously invested funds could only be invested for terms less than 18 months. The new term period will be 36 months. Since a portion of investments come from Water funds, the Council wanted the IWB to be aware and feel comfortable with the proposed policy change. He distributed copies of the proposed policy changes, asked them to review and let him know of any concerns. Commissioner Patton added that only a portion of the portfolio can be invested (no more than 20%). The change is an attempt to get the highest interest rates and best returns on the investment. 2. Approval of Minutes— November 14, 2001 Commissioner Jan Drangsholt motioned to accept the minutes of the November 14, 2001, meeting. Commissioner Joyce Patton seconded the motion. The vote to accept the minutes was unanimous. 3. Long Term Water Update— Ed Wegner Joint Water Commission — Integrated Water Resources Management Study— Summary: ■ Hired Montgomery Watson Harza to be the consultant to work with the Department of Reclamation. ■ Same figures to use for Regional Water Supply Plan and Bull Run. ■ 180-day peak season figure will be used. ■ Discussion on alternatives: Intergovernmental Water Board 1 January 9,2002 DRAFT COPY -� How to bring water to the Tualatin Basin, if Scoggins Dam is not raised? --> Criteria for the consultant and Bureau of Reclamation to evaluate, i.e., water quality, cost, efficient use of water. -+ Scoping meetings required by federal law for continuation of the feasibility study. Several public meetings being held in Hillsboro over an 18 month period. Commissioner Carroll asked if much resistance was expected. Mr. Wegner indicated that the Audubon Society, Oregon Environmental Council, Oregon Natural Resources Council, Citizens for Safe Water and Sierra Club would ask what would be done to conserve water. Tigard has done a good job conserving water and that would be explained in the alternative study. Commissioner Patton said the federal government would want to see documentation on the conservation plan as part of the Feasibility Study for Hagg Lake. 4. Utility Manager Report- Dennis Koellermeier Water Main Break- Nearing the end of repairs from November's water main break. Cost to date is just over $75,000. ASR Update -As of this morning, water is being injected. The injection rate is not what was expected and currently is between 850-900 gpm. The hope was for 1000+ gpm. Other spots in the aquifer will be analyzed. Beaverton Intertie -All agreements have been signed. Contract will be awarded in early March and construction completed in late May. 5. Discussion of Regional Drinking Water Supply Initiative- Ed Wegner/Joyce Patton Mr. Wegner distributed a handout and led an in-depth discussion on the Portland Plan for the Bull Run. He reviewed the schedule and encouraged all board members to attend the Tigard City Council work session on Tuesday, January 15tH at 6:30 p.m., where these draft recommendations would again be reviewed. At the January 22nd formal meeting, recommendations would be delivered in the form of a resolution or motion for Commissioner Patton to take to the meeting on January 20 with the other agencies wishing to proceed with the next phase in negotiations. The handout included seven conditions that were important to bring up in order to progress to the next phase. Condition #1 - The Scope of Work for the upcoming Implementation Phase shall include as a deliverable, the final cost each partner will be expected to pay. This shall include buy-in costs and future projected water costs for each member. Intergovernmental Water Board 2 January 9,2002 DRAFT COPY What is the bottom line? What will it cost? What does it mean as a customer? Portland needs to work on what is being offered. Things need to be defined. Commissioner Carroll questioned if the scope would look at what would be required to get water from the east side of Portland to the west side. Mr. Wegner and Commissioner Patton responded in the affirmative. Commissioner Patton stated that was why this condition uses the wording "final costs each partner will be expected to pay". This condition is critical. Every partner would be different in terms of their projected costs. Condition # 2 The new agency will not abandon the concept of regionalization. We understand the logic that has refocused the current effort to the Bull Run/Columbia Southshore well#e/d. We also understand the financial benefits to the region of inter-tieing the principal sources. While it is clear that including the Willamette River as a potential regional source will not be accepted by the public, we believe that the Clackamas and Trask/Tualatin systems should be considered for inclusion at some future time. In order to move forward, are we willing to give up the Willamette River? It is not prudent for the Willamette River to kill the deal at this point. The cost factor is important. If not now, somewhere in the future we may be forced in the direction of the Willamette River. Tualatin Valley Water District is sitting on 50 mgd from the Willamette River with no environmental impact. Commissioner Drangsholt did not want regionalization shut out. Condition # 3 Our current efforts to develop equitable wholesale contracts must be completed in a parallel process to this project. The wholesale contracts will be needed by the suburban partners to compare to the costs that will be identified in Condition #1. The wholesale contracts must be completed by August 1, 2002. Ed said that three answers are needed within the next year (by January 2003): • What will this Regional Drinking Water Supply Initiative cost us? • How much will a wholesale contract cost us? • How much will the Joint Water Commission cost us? This would force Portland to finish working on the wholesale contract if they want participants to join them in the regional agency. Phil Smith is the engineering liaison on the wholesale negotiating committee. He said he has been surprised at the aggressiveness of Portland's staff, Dave Hasson and Anne Conway, who have been pushing to set up meetings. They are making a lot of progress quickly. The goal is that the rate consultant and City agree on a rate model. Intergovernmental Water Board 3 January 9,2002 DRAFT COPY A discussion about the Portland wholesale contract as an option took place. Mr. Koellermeier stated that the new agency document (IGA) would have to contain similar wording as a wholesale contract and would be necessary as a transition into the new regional agency. Condition # 4 The Scope of Work for the next phase should list as a deliverable, a working draft of the Intergovernmental Agreement (IGA) that will form the new agency. The IGA should be complete in that it will address governance, costs, operational rules, etc. (point is this work will answer all questions needed to make a decision, not lead to another study). The IGA should spell out everything, including a transition plan. Condition # 5 The new agency will provide for equity of supply and cost of sale amongst all members. Just because Tigard is the farthest south, that should make no difference. The rate model should use a specific formula with no additional costs for water for its members. The only additional costs would be to build a pipeline directly to Tigard as compared to Rockwood or Gresham. Water costs should be the same. Equity for all members (conservation, etc). Commissioner Patton said that the City of Portland could not benefit from all the wholesale contracts. Also, Portland cannot take their water from off the top and leave what was left to divide between the other members. There is equity to all. Condition # 6 The new agency will keep individual options open for local decisions. Tigard could go with the Joint Water Commission, the Willamette River, ASR, etc., as options without getting an approval from the new agency. Condition # 7 The new agency should not consider including distribution or other water delivery functions at this time. To include these issues now will only confuse the issues of equity, ownership costs, etc. Supply and transmission only. Portland wants the new agency to take over everything. This concept would mean all water bureau employees would be employed by the new agency. We want Tigard to continue to have local control of maintenance, reservoirs, distribution and collection of revenues. The program would cost each agency between $15,000 and $25,000, depending on how many agencies decide to participate (12-14 members staying in), for the Intergovernmental Water Board 4 7anuary 9,2002 DRAFT COPY implementation plan. The IWB and staff would ask the Tigard City Council to authorize a figure not to exceed a certain amount. Some agencies would most likely drop off during the process. Other agencies are making conditional lists as well. How will their conditions line up with our conditions? Who might have a "deal killer"? This will be a difficult negotiation process. Many are intent on a Bull Run only system and do not want to consider the wellfields, the Trask or Clackamas Rivers. There is not a lot of logic in that viewpoint. It is an emotional issue and rationality does not apply. Commissioner Carroll stated this list of Conditions was a good list. He thought it would be good to see what other agencies come forward with on their lists. Comments on Condition #6 included: ➢ Chris Uber pointed out that#6 should definitely be kept. ➢ It is one of the most important conditions. ➢ It could be a deal killer. ➢ That flexibility is needed. ➢ Giving up that condition would be giving up our responsibility to the citizens. ➢ If we gave up regionalization, we would not be giving it up entirely at least on our local level. ➢ We would be able to do what we need to do in order not to be stuck. ➢ Regionalization may take care of itself down the line. It could become a forced issue. Comments on Condition #2 included: ➢ At some point environmental and political realities have to come together to provide a basic service like water. ➢ Maybe regionalization is the compromise. Perhaps it needs to be put on the back burner. ➢ Agency would need to eventually address environmental, political and cost issues. ➢ Keep regionalization in some form or that the language is not so specific that it excludes regionalization. Comments on Condition #7 included: ➢ It could be a deal killer-if distribution must be separate model. ➢ Sub-sets that want to include distribution are segregated from those who want to do supply and transmission only. ➢ The model would become more complex, but information could be gathered to track costs. ➢ Liability issues —Who is responsible? ➢ Distribution should be a separate entity. Comments on Condition #5 included: ➢ This condition will be on everyone's list. Intergovernmental Water Board 5 January 9,2002 DRAFT COPY Mr. Wegner said that at this point he was hearing that only#6 would be a real deal killer. Commissioner Carroll asked about the composition of the Board. If Portland has the majority of their members on the Board, would that be a deal killer? Comments on Condition #4 included: ➢ This could be a deal killer-if the 190 model agreement as IGA was not followed. Comments on Condition #3 included: ➢ What if Portland states they cannot do #3 by that date? ➢ If Portland wants the agency to go forward, they would have to have the information needed for the wholesale contract. Mr. Wegner stated that, at this point, Tigard has three options: 1. Wholesale contract agreement 2. Bull Run Authority 3. Continue with the JWC Mr. Wegner thought that one of these options would be dropped in a year and Tigard would move to pick up on the other two. We cannot have numbers 1 and 2 only as they are the same source. A combination of supply sources is needed. The cost impact was a major concern. It was discussed that between options #1 and #2, cost differences would be cheaper for option #2 because depreciation and rate of return would not be paid. With option #1 there would be continual increases. Summary of the upcoming meeting: January 15 - City Council work session (same type of discussion), 6:30 pm January 22 - City Council to give recommendations January 24 - Commissioner Patton to meet with other regional agencies 6. Informational Items • Bull Run Treatment article from City of Portland, Bureau of Water Works • Charter change about water more about trust, 11/15/01 article in Tigard Times • Hopes rise for vote on Willamette water plant, 11/19/01 Oregonian article • Burst water main floods Tigard streets, 11/20/01 article in Oregonian • Memo to Water Managers Group dated 11/21/01, Water Supply Feasibility Study Progress Report • Early-morning 'river'surprises residents article in Tigard Times on 11/22101 • Plan for single water agency is abandoned in 11/25/01 Oregonian article • Cooperation can keep Bull Run as water resource article in 11/27/01 Oregonian • Don't abandon talks on regional water plan, 11/29/01 article in Tigard Times • Regional Drinking Water Initiative article from City of Portland, Bureau of Water Works Intergovernmental Water Board 6 January 9,2002 DRAFT COPY • Water board reviews compensation, 12/19/01 Oregonian article • Silver lining looks like a full reservoir, 12/21/01 article in Oregonian • Tigard considers ideas for drinking water supply article in Oregonian on 12/21/01 Informational items were distributed for review by the Board Members. 7. Public Comments - None 8. Non-Agenda Items Next IWB meeting is scheduled for February 13, 2002. Commissioner Patton will report on the results of her meeting with the other regional agencies. A report on the ASR project was also requested for the February meeting. 9. Adjournment Commissioner Penner motioned to adjourn the meeting and Commissioner Patton seconded the motion. The regular meeting of the Intergovernmental Water Board adjourned at 7:10 p.m. Intergovernmental Water Board 7 January 9,2002 DRAFT COPY