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City Council Packet - 07/17/2007 ' r TCITY,COUNCIL spe(iAL- MEETING July 17, 2007 COUNCIL MEETING WILL BE TELEVISED I:1Ofs%Donna"s\ccpkf2 TIGARD CITY COUNCIL SPECIAL MEETING i JOINT MEETING WITH THE LAKE OSWEGO CITY COUNCIL AND THE j INTERGOVERNMENTAL WATER BOARD JULY 17, 2007 7 p.m. TIGARD CITY HALL 13125 SW HALL BLVD TIGARD, OR 97223 PUBLIC NOTICE: Assistive Listening Devices are available for persons with impaired hearing and should be scheduled for Council meetings by noon on the Monday prior to the Council meeting. Please call 503-639-4171, ext. 2410 (voice) or 503-684-2772 (TDD - Telecommunications Devices for the Deaf). Upon request, the City will also endeavor to arrange for the following services: • Qualified sign language interpreters for persons with speech or hearing impairments; and • Qualified bilingual interpreters. Since these services must be scheduled with outside service providers, it is important to allow as much lead time as possible. Please notify the City of your need by 5:00 p.m. on the Thursday preceding the meeting by calling: 503-639-4171, ext. 2410 (voice) or 503-684-2772 (TDD - Telecommunications Devices for the Deaf). SEE ATTACHED AGENDA COUNCIL AGENDA -JULY 17, 2007 page 1 AGENDA TIGARD CITY COUNCIL SPECIAL MEETING JULY 17, 2007 JOINT MEETING WITH THE LAKE OSWEGO CITY COUNCIL, AND THE INTERGOVERNMENTAL WATER BOARD 7 I'M 1. SPECIAL MEETING 1.1 Call to Order by Mayor Dirksen: Tigard City Council, Lake Oswego City Council, Intergovernmental Water Board 1.2 Roll Call: Tigard City Council, Lake Oswego City Council, Intergovernmental Water Board 1.3 Pledge of Allegiance 1.4 Tigard Council Communications & Liaison Reports 1.5 Call to Tigard Council and Staff for Non-Agenda Items 2. JOINT MEETING WITH THE LAKE OSWEGO CITY COUNCIL, AND THE INTERGOVERNMENTAL WATER BOARD TO DISCUSS THE LAKE OSWEGO WATER RESOURCES EXPANSION AND WATER PARTNERSHIP a. Staff Introduction: Public Works Department b. Presentation C. Discussion: Tigard City Council, Lake Oswego City Council and Intergovernmental Water Board 3. NON AGENDA 4. EXECUTIVE SESSION: The Tigard City Council may go into Executive Session. If an Executive Session is called to order, the appropriate ORS citation will be announced identifying the applicable statute. All discussions are confidential and those present may disclose nothing from the Session. Representatives of the news media are allowed to attend Executive Sessions, as provided by ORS 192.660(4), but must not disclose any information discussed. No Executive Session may be held for the purpose of taking any final action or making any final decision. Executive Sessions are closed to the public. 5. ADJOURNMENT 1 Aadm\cathylcca120071070717.doc COUNCIL AGENDA -JULY 17, 2007 page 2 Agenda Item No. ,J , For Agenda of q. l I o-l w TIGARD CITY COUNCIL MEETING Meeting Minutes July 17, 2007 Mayor Dirksen called the meeting to order at 7:01 p.m. Roll Call Tigard City Council present: Name Present Absent Mayor Dirksen ✓ Council President Sherwood ✓ Councilor Buehner ✓ Councilor Wilson ✓ Councilor Woodruff ✓ Lake Oswego City Council present: Name Present Absent Mayor Hammerstad ✓ Council President McPeak ✓ Councilor Groznik ✓ Councilor Hennagin ✓ Councilor Jordan ✓ Councilor Johnson ✓ Councilor Turchi ✓ Tigard Intergovernmental Water Board present: Name Present Absent Chair Scheiderich ✓ Vice Chair Carroll ✓ Board Member Winn ✓ Board Alternate Henschel ✓ Tigard staff present: City Manager Prosser, Public Works Director Koellermeier, Water Quality Supervisor Goodrich, City Recorder Wheatley. Lake Oswego staff present: City Manager Schmitz, City Engineer Komarek, Community Development Director Lashbook, City Attorney Powell. Special City Council Meeting Minutes -July 17, 2007 page 1 Also present: Consultant Knudson of Carollo Engineers Staff introduction: Public Works Director Koellermeier overviewed the purpose of this special meeting, which was to hear a presentation from Consultant Knudson regarding the Lake Oswego Expansion and Water Partnership. The staff report outlining key facts and an information summary is on file in the City Recorder's office. In June 2006, the Cities of Tigard and Lake Oswego funded a study to determine the technical, financial, and political feasibility of a water partnership. The focus of the discussion at this special meeting was on the Lake Oswego Expansion and Water Partnership. However, the City of Tigard and the Intergovernmental Water Board are also evaluating other potential water supplies including the Tualatin Basin Water Supply Project and development of Tigard-owned water rights associated with the Willamette River Treatment and Transmission Improvement Project. City Engineer Komarek also made some introductory remarks and advised that Consultant Knudson would be reviewing the project objectives for the study. Consultant Knudson reviewed a PowerPoint presentation; copies of the slides are on file in the City Recorder's office. Consultant Knudson, in response to an observation and inquiry from Council President McPeak during a review of capital costs and timing of the initial supply scenarios, explained how financial estimates were calculated to reflect future cost escalation and the resultant affect to water rates. During the review of the influence of conservation on cost and timing of a Lake Oswego only expansion Consultant Knudson responded to a question from Councilor Johnson and advised conservation measures must be ramped up over time. Other points reviewed included: - How the study considered population growth. - The study did not consider the possibility of adjusting the Tigard Water District or the Tualatin Valley Water District boundaries - The study pointed to the importance of determining the tuning of when and how much improvements should be made to the water system - Consultant Knudson affirmed that conservation does help delay the need for expansion, but there is a need to start conservation efforts now. There is the potential to "buy about an extra eight years" to plan and make financial decisions on a system expansion. - The overall cost scenarios are based on the amount of water used over the course of a year (not just peak water use time periods). - A review of water rights shows that Lake Oswego is ranked 6`h among jurisdictions for senior water rights of 32 mgd since 1967. Lake Oswego also is ranked 12`h for 6 Special City Council Meeting Minutes - July 17, 2007 page 2 mgd in a junior water right. Water rights under House Bill 3038 shifted significantly. This Bill sets a new standard requiring "persistence" of fish species and applies to undeveloped portions of existing permits to satisfy new instream flows. Extensions of water rights must satisfy new criteria. The City of Lake Oswego along with other Clackamas Basin Water users contracted with Portland State University to create an extensive modeling to estimate what would happen under different demand and supply scenarios. Lake Oswego's existing water rights are of relatively high priority as compared to other municipal users. Financial questions were reviewed. Consultant Knudson, in response to the question of "What is the best deal for Lake Oswego?" concluded it would be a partnership with Tigard for 38 mgd. The best deal for Tigard is dependant on how the Portland and Willamette options proceed; however, a partnership with Lake Oswego would result in lower future rates as compared to any other option. - Financial benefits were reviewed: Lake Oswego would realize reduced capital cost, reduced equivalent annual cost, lower future rate increases, and reduced financial risk from consideration. Tigard would gain ownership of a long-term water supply and realize lower rates. The next steps recommended were to: o Proceed with development of the draft partnership agreement for the joint Water Supply project. o Initiate a public outreach program. After the PowerPoint presentation by the consultant, Tigard Mayor Dirksen opened the floor to discussion. Lake Oswego Mayor Hammerstad posed the question that based on the information available at this time, are we comfortable in taking the next step? Or, should the assumptions be questioned to the point where the process should be started again? Lake Oswego Council President McPeak responded that a fair amount of study has been done on this issue and she hoped to keep moving. The assumptions have brought her to a fairly clear choice among the alternatives; however, this is not the whole story. She pointed out there is a timing issue as well a lot of things that need to be discussed in a smaller sub- group. Lake Oswego Councilor Johnson noted her concerns with regard to population projections including unincorporated areas. Lake Oswego City Engineer Komarek clarified assumptions for this study, which includes property in Lake Oswego's southern service area boundary. If, in the future, this area is served by another water provider, then there would be additional water for other uses in the region. A partnership would provide a larger rate base to share capital costs. Lake Oswego Councilor Hennagin noted earlier discussion about the benefit of an alternate water supply. He asked if this meant there would be a second line from the pump station to the water treatment or a second line parallel with the existing line. Lake Oswego City Special City Council Meeting Minutes -July 17, 2007 page 3 Engineer Komarek replied: In this partnership scenario there is an opportunity to look at regional inter-connections not only between Lake Oswego and Tigard but for Lake Oswego and the Clackamas system, the Portland system, and the Willamette system - all of these sources could potentially be accessed through a transmission connection between Lake Oswego and Tigard. Therefore, those sources would literally be connected depending on other institutional arrangements or other interested parties who might be willing to participate in costs and even larger transmission mains could serve to bring water from alternate sources. Lake Oswego Councilor Hennagin said he had already sat through the essence of tonight's presentation and based on the assumptions presented by Consultant Knudson, the clear-cut financial choice was to proceed with the partnership. He said he had not changed his mind; however, he agreed with Lake Oswego Mayor Hammerstad's statement that we are not in the position to challenge Consultant Knudson's assumptions. To challenge the assumptions would necessitate hiring another consultant to go through another year of study, which might reveal a different opinion. However, he doesn't think "we can afford the time." He said he came to this meeting with questions that were different than financial and some of those questions have been allayed with reference to water rights and whether other agencies (i.e., Damascus and Boring) have prior rights. In the future, water will become an increasingly rare resource accompanied by moral and philosophical implications, but these cannot be addressed at this point. Based on the presentation of the situation to date, he advised he would be shirking his responsibility as an elected official if he didn't agree to move ahead with the next steps based on what he has seen so far. Lake Oswego Councilor Jordan noted there has been discussion that perhaps Lake Oswego's needs are not as urgent as Tigard's and to find ways to mitigate the need for Lake Oswego. It was also questioned whether we are pushing ahead just because Tigard's timeline is so tight. She said she thought there are definitely enough benefits for both cities, given the assumptions (if the assumptions are correct) that we need to explore this further. We want to put into effect conservation measures, which may actually impact the size of the system or the way that the system can affect Tigard. We won't know how much that conservation effort will reap for Lake Oswego until we get into it. There are definite reasons to move forward; it is a very positive step to share the water rights Lake Oswego has. She said she thinks they can do a good job in managing their current rights and while sharing with others responsibly. Lake Oswego Councilor Turchi said an economy of scale has been demonstrated as well as an economy of sharing, which would be beneficial for both communities. He noted an obligation to continue to explore the partnership. He added he would be interested to find out how costs would be covered for additional capacity. Intergovernmental Water Board Member Henschel advised he has been on the Tigard Water District Board for only two weeks. He said he would need a lot more background information. He has looked at the study and said it was interesting. He advised that many Special City Council Meeting Minutes - July 17, 2007 page 4 of the other Tigard Water District board members are new and will need to be trained very quickly. Tigard Public Works Director Koellermeier responded that conservation in the Tigard water service area would not impact the Tualatin River flows in Lake Oswego. Intergovernmental Water Board Member Winn said he was very interested in retaining a relationship with Lake Oswego and the studies have confirmed his feelings. Intergovernmental Water Board Member Carroll noted we are at the same point we were at ten years ago with the difference being that we now have the opportunity for an economically and politically feasible partnership. He said he supported continuing the process, noting that this is the closest we've gotten for a water source. Intergovernmental Water Board Chair Scheiderich referred to a government study about to be undertaken for the future of Hagg Lake as well as the Wilsonville/Tualatin Valley Water District water situation. He said he thought the timeline for the Lake Oswego/Tigard option was too aggressive. Tigard Councilor Wilson said he was uncomfortable with attempting to precisely predict demand 40 years from now. He said it was safe to say that Tigard and Lake Oswego will need more capacity fairly soon. He said he was also uncomfortable with attempting to predict capital improvements precisely since costs always seem to be higher than estimated. In response to his question about whether some of the capital construction could be done incrementally as needed, Consultant Knudson said some construction (i.e., underground pipes) cannot be done incrementally, but the treatment plant could be constructed in a modular fashion. Tigard Councilor Woodruff said he has been a fan of this option since it first came on the table. While Tigard won't run out of water next year (we have a contract with Portland until 2016), he would feel better if additional water sources were identified. He said he was pleased that, so far, Lake Oswego in interested in proceeding with the next steps on this option. Tigard Council President Sherwood noted this is the same option that was on the table 16 years ago and then it fell apart. She noted concern about legislative changes with reference to water rights that are not used. She supported coming together with work groups and establishing a timeline. Tigard Councilor Buehner referred to her service on the Tigard Water Board and reviewed options that had been explored in the past. She urged addressing this issue as quickly as possible with a final decision made within the next 18 months on the Tigard/Lake Oswego partnership. She stated it would be foolish for either city not to go ahead as this is a good proposal. She said that Tigard needs to make a decision on Hagg Lake. Tigard cannot wait. Special City Council Meeting Minutes - July 17, 2007 page 5 Lake Oswego Mayor Hammerstad suggested the formation of a subcommittee to look at a number of things including governance structure. She said she was uncomfortable with the timeline because the City of Lake Oswego has issues on an upcoming election that are unfriendly to the city. The timeline is almost overwhelming for Lake Oswego because of other issues they are addressing. She said it appears that this partnership would not be controversial since it looks as if it could be of benefit in the long run and represents a rational way to move forward. She said Lake Oswego would like more time to digest the material presented. Tigard Mayor Dirksen said he was encouraged by what he heard tonight from the consultants, staff, and the representatives of the other jurisdictions. He said there is time to work through the issues and advised that additional time would give the opportunity to work some more on conservation efforts. Tigard does not need to have a water resource until 2016; therefore, the only thing that needs to move forward quickly is the political decision to commit to this path and then develop the partnership agreement. He agreed a task force should be appointed to discuss any "sticking points." The task force will report its findings to the City Councils. Tigard Public Works Director Koellermeier said the working group needs to address decisions about how to guide the public outreach process. In response to a question from Tigard Public Works Director Koellermeier, Lake Oswego Councilor Hennagin and Tigard Mayor Dirksen agreed it would be a good idea for each City Council to jointly form the "charge" statement for the task force. There was agreement to create a task force with membership as follows: Lake Oswego Councilor Turchi Lake Oswego Council President McPeak Tigard Councilor Woodruff *Tigard Councilor Sherwood Intergovernmental Water Board Chair Scheiderich *Intergovernmental Water Board Member Buchner *Recorder's Note: At the July 24, 2007, Tigard City Council meeting, Mayor Dirksen noted that three of the above individuals are Tigard City Council members: Voodruff, Sherwood and Buehner. This represents a quorum of the Tigard City Council and would also need to be noticed also as a Tigard City Council meeting. Councilor Sherwood has agreed that she mould not serve on this Task Force. Councilor Woodruff requested that staff review the timeline to determine if there is some flexibility to move the deadline out a few months. Public Works Director Koellermeier advised that the staff members would review the timeline; as requested. Special City Council Meeting Minutes -July 17, 2007 page 6 i Meeting adjourned at 9:12 p.m. Catherine Wheatley, City Recorder Attest: 6 ~ Zff Mayor, (ty of Tigard Date: "l • E 1, y Special City Council Meeting Minutes - July 17, 2007 page 7 Agenda Item # Meeting Date July 17, 2007 COUNCIL AGENDA ITEM SUMMARY City Of Tigard, Oregon Issue/Agenda Title Joint Meeting with the Lake Oswego City Council and the Intergovernmental Water Board to Discuss the Lake Oswego Expansion and Water Partnership ~K Prepared By: Dennis Koellermeier Dept Head Approval: City Mgr Approval: C ISSUE BEFORE THE COUNCIL The Council is being asked to hear a presentation and participate in a discussion. STAFF RECOMMENDATION Provide direction to staff regarding a future water partnership with Lake Oswego. KEY FACTS AND INFORMATION SUMMARY In June 2006 the Cities of Tigard and Lake Oswego funded a study to determine the technical, financial, and political feasibility of a water partnership. This partnership, referred to as the Lake Oswego Expansion and Water Partnership, calls for Tigard and Lake Oswego to jointly develop Lake Oswego's surplus water resources. These cities, along with the Intergovernmental Water Board, met in November 2006 to discuss the partnership and to provide input for the study. At this meeting, Tigard and Lake Oswego staff, along with the consulting team preparing the study, will present a draft of the study. Major topics are as follows: • Water Supply System Evaluation ■ Evaluation of Supply Alternatives • Water Rights and Permitting Strategy ■ Significance of Conservation ■ Interim Supplies ■ Financial and Rate Impacts ■ Organizational and Governance Options ■ Public Involvement Strategies A facilitated discussion of the partnership and the study will follow the presentation. OTHER ALTERNATIVES CONSIDERED At this meeting, the Council's focus will be on the Lake Oswego Expansion and Water Partnership. However, the City of Tigard and the Intergovernmental Water Board are in the process of evaluating other potential water supplies including the Tualatin Basin Water Supply Project and development of Tigard-owned water rights associated with the Willamette River Treatment and Transmission Improvement Project. CITY COUNCIL GOALS None ATTACHMENT LIST No attachments are included with this packet; however, a compact disc of the study will be delivered to the Council no later than Friday, July 13, 2007. Members of the public interested in viewing or obtaining the study should contact City Recorder Cathy Wheatley at 503-639-4171, extension 2410. FISCAL NOTES The Lake Oswego Expansion and Water Partnership, if pursued, could cost the Tigard Water Service Area between $120 million and $140 million over a 25-year period. The five lowest cost options (net present value, 25-year outlook with a 5 percent discount rate) range from $99-197 million. It is anticipated the costs will be financed and repaid with water rate revenues. t:\edm\pecket'07\070717Uwb to & cot jt mtq eis.doc July 17, 2007 - City Council Meeting: Tigard City Council: Consultant: . Mayor Craig Dirksen Mark Knudson, Carollo Engineers Council President Sydney Sherwood Councilor Gretchen Buehner Councilor Tom Woodruff Councilor Nick Wilson Tigard Staff: Tigard Intergovernmental Water Board City Manager Craig Prosser Chair Bill Scheiderich (Member at Large) Public Works Director Dennis Koellermeier Vice Chair Patrick Carroll Water Quality Supervisor John Goodrich Board Member Dick Winn (King City) City Recorder Cathy Wheatley Board Member Ken Henschel (Tigard Water District, Alternate) Lake Oswego City Council: Mayor Judie Hammerstad Council President Ellie McPeak Councilor John Groznik Councilor Roger Hennagin Councilor Donna Jordan Councilor Kristin Johnson Councilor John Turchi Lake Oswego City Staff: City Manager Doug Schmitz City Engineer Joel Komarek Community Development Director Stephan Lashbrook City Attorney David Powell Intergovernmental Water Board Members July 16, 2007 NAME ADDRESS PHONE - FAX - E-MAIL TERM EXPIRATION Patrick Carroll-Vice Chair 8223 Wilderland Ct 503-620-5778 (home) December 2007 Durham Representative Durham, 97224 503-705-4287 (cell) patrick.suzycarroll verizon.net Chris Hadfield 8253 SW Woody End 503-620-1877 (home) Durham Alternate Durham, 97224 Gretchen Buehner 13249 SW 136 Place 503-684-1031(home) December 2008 Tigard Representative Tigard OR 97223 503-684-1031 (work) 971-506-2096 (cell) gebuehner(&-yahoo.com Sydney Sherwood 13125 SW Hall Blvd. 503-293-0902 (home) Tigard Alternate Tigard, 97223 503-443-6084 (work) Dick Winn 16270 SW King Charles 503-620-2097 (home) December 2008 King City Representative King City, 97224 503-639-3771 (fax) thermw(D-webty. net Brenda Wilkinson 16653 SW Jordan Way 503-598-3955 (home) King City Alternate King City, 97224-1846 971-533-9842 (cell) mrs.pdq(D-verizon.net Julie Russell 12662 SW Terraview Drive (503) 603-9152 (home) June 2008 TWD Representative Tigard, OR 97224 (503) 312-9163 (cell) iarussell5KD-comcast. net Ken Henschel 14530 SW 144 Avenue (503) 579-8375 (home) TWD Alternate Tigard, OR 97224 Ken. HenscheVD.comcast.net Bill Scheiderich - Chair 13655 SW Steven Ct 503-639-7624 (home) Member at Large Tigard, 97223 503-526-2215 (work) December 2007 503-526-2479 (fax) bscheiderich(aD-ci. beaverton. or. us iwb\phone\term expirations - 7/16/2007 MEMORANDUM TO: The Honorable Mayor and City Councilors FROM: Public Works Director Dennis Koellermeier RE: Materials for July 17, 2007 Joint Work Session with the Lake Oswego City Council and the Intergovernmental Water Board DATE: July 13, 2007 Attached please find a hard copy of the PowerPoint presentation on the joint Water System Supply Analysis. This presentation will be given at your July 17 meeting. I also intended to provide you with a compact disc of the draft study today, but due to last minute edits this was not possible. Fortunately, the draft study will not be needed for our discussion. Our consultant will distribute the draft study at Tuesdays meeting. The document is quite extensive and will be provided on compact disc unless you request a hard copy. To request a hard copy, please contact Joanne Bengtson at 503.718.2476. c: City Manager Craig Prosser City Recorder Cathy Wheatley Executive Assistant Joanne Bengtson ~ i. s • c • . and Findi: S, 11 Meeting Objective & Overview Meeting Objective - to identify general direction for possible partnership *Presentation Overview Project Drivers & Objectives - Status - Review of Supply Scenarios Responses to Questions from Workshop 1 Recommendations & Next Steps Discussion Project Drivers Lake Oswego Identify and plan for future capacity requirements Rate stability during • expansion Protect Establish ownership • long-term supply Address schedule requirements 1 Portland agreement Use • • to fund capital improvements Region Reliability through interconnection of multiple sources Momentum for increased regional cooperation 1 Project Objectives Develop and evaluate options for possible formation of a joint water supply system Long-term supply for Lake Oswego & Tigard • - Preferred supply scenario and costs . joint system - Feasibility arrangements improvements - Facility - Institutional Status * Lake Oswego peak day demands are approaching capacity of existing supply systern - Starting implementation of conservation program - Reliability improvements to intake & WTP * Tigard intends to decide on supply option by the end of this calendar year Supply - Options for Willamette. AYC, Portland, LO at 38 mgd * Draft report on LO-Tigard Joint Water System complete and is being distributed today Supply Scenarios 2 Water Supply Scenarios • Lake Oswego Only D• Nothing - Scenario 1: - 16 Reliability Upgrades Need to purchase water above 16 Scenario • Ultimate Demand - 24 • Lake Oswego & Tigard Joint Supply Senior Water Rights Only - 32 Scenario Tigard concern for cost effectiveness •4 Senior & Junior Water Rights - 38 u:rm I- • • • - Stafford Triangle is _ -o- LOWaA.Tlywd Incorporated lydo Lake Oswego Water DLO, Wtobubn, rd Service Arne 8a d OWaA) 1 11 1 1 1 1• Capital Costs and Timing of Initial Supply Scenarios Meets Demands Capital Until Year Supply Scenario Cost' LO Tigard • Only $5 2009 2 - 24 • Only ® 2045+ 3 - 32 mgd LO & Tigard $117 2045+ 2031 4 - 38 mgd LO & Tigard $135 2045+ 2041 J All costs in millions, November 2006 dollars 3 Additional Supply Scenarios pipeline Scenario 5: Interim supply to defer expansion needs -Supply from SFVVB New from SFkfVB intake to LO intake Wheal water through West Linn intertie -Supply from Portland Bonita Options not cost-effective or inadequate capacity Scenario 6 (Tigard • Continue to purchase water from Portland Questions Posed in Workshop 1 . Influence of Conservation . Water Rights . Financial Analysis Influence of Conservation 4 Conservation Questions 1 . Is conservation being considered as a water supply source? 2. Can we defer expansion by implementing further conservation? 3. What are the financial consequences of conservation? Conservation could defer l0 +Eanroco 1. supply expansion by 8 to 28 ' e 0.6%C ft.f r 1i K. years - but it does not eliminate the need for expansion. -A-t%caroma6onfm7f Y. 2x CDMer4d ntu 11 ■n li ~I 11114k • • • 1• 5 9 . - • . . SpUeW@p . . • - • • . • lueliodwi • U01leAJ@SUOO e se • 5upq • • • • • • • • • • ION '9 • Ll5nOJLII • - • • • • • • slso:) • UOIICAJ@SUOO -E Al!unwwoo • • • luawl!wwoD • SbUlAeS 5UIAOILIOV 'Z SIL15IJ • • - • • • • spjauaq • • • •o %99 BE . %09 BE uo!lz)npe) %(j %E9 BE ® • • • wle-I • • PBW BE • • • • eouanijul Conservation Questions 2. Can we defer expansion by implementing further conservation? Yes. Lake • • • defer its supply system • L years, depending on actual water • • reduction. • improvements are needed immediately to increase reliability of the existing system. savings by • results in schedule for LO expansion consistent with Tigard's needs. Conservation Questions 3. What are the financial consequences of conservation? Capital • • • be reduced only if Lake Oswego achieves 25% reduction in demand Savings by Lake Oswego results in increased capacity and cost shares for Tigard Partnership minimizes Lake Oswego's financial risk of conservation Water Rights 7 Water • Questions position 1 . What is the of LO's water rights'? 2. Will "up-basin" development use . LO's water rights? 3. Will . would use in the future? 4. How partnering impact water rights? Should some of LO's water rights be preserved Oregon Rights 1 Oregon on prior appropriation doctrine "First in lime is first in line" - First to obtain water right is last to be shut off .obtain water right is first to be shut off Granted - Last by Oregon Water Resources Dept Specifies quantity (cfs) and location (river mile) • for environmental benefits • iohnso Ci Clackamas ~Ne ~erH S River Water umnraan waer t>E ~I "~0. Ran North Crackemas Count ` KgMq py5~; t585 mpt waieccommiaaion~ ` G t South Fork coRSVrRe ~Vyater Board City. oJ. Lake Oswago~ b Fr9 Hoy~o?0i Estacada) City of c;y JE tae da 8 [ 1 L SFWB _ 56 _ al 36 _ 1914-1931 I . _ _NCCWC 4._ 2.6 _L 1951 3 _SFWB _BO ,L -39 L 1953-~ [ _ 4 --L- Estacada J[-- 2 - --1 _3 a~ 1955 [ 5 L_ CRW 15 10 1962 6 Lake Oswego 50 32 1967 Cr RW - ' - 25 18 - ' -1968 _j 8 OWRD 1 400-640 256-413 j 1968 [ 65 [ 4 r 1969 _ [ - i_o yccwc 6z-- ( _44.-- L__~97o -l -11 -r Estacada- ,r-_-_2 - 1.3 1973- ' 12 Lake Oswego L~ 9 6 1973 -_--13_;1 NCCWC 19.7_3 _ 1978-1994 , L 14 CRS _~L 148.9 <_?6 1995 Water • • HB-3038 New "standard" requiring "persistence" of Oregon Water Resource Department Department fish species (WRD) required to consult with Oregon of Fish : Wildlife (ODFW) in granting extensions -Applies A ehowdowv looro• on the CI•ckeroo• :River over drinking water to undeveloped cnnhed.me. wervmcyprt fh opt, ~de~ portion • existing permits VA E - Must satisfy new in- mn ei,~.S.r..,v • plwe 4wr rrtW ~^IafuLanN ,m Water Rights Under HB-3038 Regional evaluation by Clackamas Basin Water Users Mndel ticenario Ranlts - 3005 Extensive modeling by Portland State 9 Water Rights Questions 1. What is the position of LO'S water rights? - existing water rights are of municipal relatively high priority as compared to other • . largest senior veater right rngd) on the Clackamas Junior veater right rngd) has priority over 109 rngd of other junior Tights Water Rights Questions future use of LO'S water rights? No. Under the prior appropriation doctrine, water • • based • priority date of the water right, • by location on the river. Upstream users cannot increase their water use to the detriment of downstream rights. Water Rights Questions 3. Will • junior water • •-available • Yes. • junior water right has priority over 109 mgd of otherjunior water rights in basin Must • to perfect junior right • proposed HB-3038 criteria: • no impact • availability Worst-case conditions and 38 mgd, reduction of 2-4 may be • • • to 41 10 Water Rights Questions • would partnering impact water rights? Benefits: . -.perfection of LO's remaining rights - Perfection eliminates risk of future loss of rights Opportunity provide reliability subordinate domestic rights - In-stream rights are Risks: .development - In worst-case weather year existino water rights (313 m9d), • need be reduced by 2 - 4 mgd for up to 1 Water Rights Questions • • • of LO's water rights be • ^s for fish and the environment? Benefits are • through in-stream water rights Existino in-stream rights: •11 September 41 cfs /4113 Under 3038, in-stream rights increase by 20-60%: Labor Day+1 - May 31: :11 Financial Analysis 11 Financial Questions 1. What is the best deal for Lake Oswego? 2. What is the deal for Tigard? 3. What are the financial benefits and consequences of partnering? Assumptions Financial evaluation by equivalent annual cost and resulting water rates * Demands assume no additional conservation • • existing conservation) • escalation: Construction costs SDCs: 6% - General costs: 3.5% - Discount rates: 5% • only supply system improvements * Revenues (rate & SDCs) increase with growth and will • to pay costs and debt • • LakeOswe o- 5% Discount Rate $10,000,000 18,159,150 $6,318A75 U,00'-O" $4000.000 g !7,000,000 $6,11•A12 {6,7 - 35,911 cT - $5A97A32i6P26,321 $6.000.000 SS,000,OOa ~ 3.,004000 $,.000,000 $2000,000 31.000,000 s 8-b2. Oeka 0-p S-b3-6udv WY ftM 5-11.3-C ai6IWAMi. 'CMMW (23 Md( Cep.* (32 mod( mM 8M. W..r RW cap.* (3a m•d( 12 Financial Analysis - Lake Oswego Impacts Rate Rate Increases • years* Scenario Cumulative Average Impact Customer Bill 2 148% $53.54 3 66% $35.93 A 56% t Based on existing rates, includes only supply system improvements and monthly billing fl ard- 5% Discount Rate ■ zsr.e as x e a>rm annt n;maaao h 011 s,aaua000 ry;A;M s,lm0.ero ~ „!4 1113 ,m11,aa 11i;SSa,000 r10f'69s ~ 11,,111,1;,a s,a0m.a11 s+aam,aoo ' a A sao0oam psisa nn,, i 11asea 11,1000.000 a.OMODD 1 SZOCQ a ; $ S-2A Sm 013 SmnbM Smnb4 Smwb,1l Sm 63 • Financial Analysis - Tigard Rate Impacts Rate Increases over 25 years* Scenario ® Average • Based and monthly billing 13 Financial Questions 1. What is the best Oswego? Partnership with Tigard for 38 savings Initial capital cost of $23 million Lowest equivalent annual costs: - Savings of $2.5 million per year x 25 years ($62.51A) L Savings of - owest rate impacts: Financial Questions 2. What is the best deal • Tigard? depends... Portland and Willamette options have lower equivalent annual costs as compared to LO Option (Scenario 4) No initial capital cost Equivalent annual savings of up to $3.0 million I yr Y. 25 yrs (575M) No ownership and significantly higher 50-year costs Partnership with Lake Oswego results in lower future rates as compared to Portland or Willamette options Ownership position allows investment of SDCs savings of - $15 / mo in everage bill as compared to Portland option Financial Questions 3. What are the financial benefits & consequences of partnering? Significant financial benefits for both Tigard & LO • Lake Oswego: Reduced capital • Reduced equivalent annual cost - Lower future rate increases Reduced financial risk from conservation For Tigard: • • • long-term supply - Lower rates 14 Aecommendations and Next Steps Staff Recommendation . Proceed with development of the draft .agreement for the Supply Joint Water project . Initiate public outreach program Joird Council Meeting Irdividual Council Meellrgs m Develop Draft Ped-Hp Agn mnm► Public Oubeech Public Hearings Final Agn mners Irdividual Council Meetings Sign Final Agreement AfN 15 Discussion Discussion Topics 1. Consensus . general direction 2. If direction is .developing a. Willinoness to develop draft agreement Tiaa~d's schedule for decision in Initial agreement may not require financial commitment Direction . public process through Process and schedule for individual agency follow-up and decision-making 3. What additional information is needed? 16 a t City of Tigard, Oregon Affidavit of Notification In the Matter of a Special City Council Meeting Replacing the July 17, 2007, Regularly Scheduled Council Workshop Meeting STATE OF OREGON ) County of Washington ) ss. City of Tigard ) I, -l a-) , being first duly sworn (or affirmed), by oath (or affirmation), depose and say: That I notified the following people/ organizations by fax of. ■ Special City Council Meeting Replacing the July 17, 2007, Regularly Scheduled Council Workshop Meeting. Barbara Sherman, Newsroom, Tigard Times (Fax No. 503-546-0724) LO' Newsroom, The Oregonian (Fax No. 503-968-6061) Editor, The Regal Courier (Fax No. 503-968-7397) A//copy of said Notice being hereto attached and by reference made a part hereof, on the (1~ tM day of )204. Signature of Person who Performed Notifica on Subscribed and sworn (or affirmed) before me this X1'7 day of ~v{ ~u 320 o-7 SEAL JILL Ad BYARS *NOTARY PUBLIC-OREGON COMMISSION NO. 381793 Sign ture of Notary ublic for Oregon MY COMMISSION EXPIRES JUNE 14,20M i:tadmXcathykounciNneeting notices\2007\city of tigard - notice of special meeting -july 17, 2007.doc Revised Notice - 7/6/07 CITY OF TIGARD NOTICE OF SPECIAL TIGARD CITY COUNCIL JOINT MEETING WITH LAKE OSWEGO CITY COUNCIL AND THE INTERGOVERNMENTAL WATER BOARD TOWN HALL -13125 SW HALL BOULEVARD JULY 17, 2007 - 7 p.m. Forward to: Barbara Sherman, Newsroom, Tigard Times (Fax No. 503-546-0724) Newsroom, The Oregonian (Fax No. 503-968-6061) Editor, The Regal Courier (Fax No. 503-968-7397) Notice is hereby given that the regularly scheduled July 17, 2007, Tigard City Council Workshop Meeting has been replaced with a Special Tigard City Council Meeting. The Tigard City Council will be meeting with the City of Lake Oswego City Council, and the Intergovernmental Water Board. Background information and major discussion topics follow: In June 2006 the Cities of Tigard and Lake Oswego funded a study to determine the technical, financial, and political feasibility of a water partnership. This partnership, referred to as the Lake Oswego Expansion and Water Partnership, calls for Tigard and Lake Oswego to jointly develop Lake Oswego's surplus water resources. These cities, along with the Intergovernmental Water Board, met in November 2006 to discuss the partnership and to provide input for the study. At this meeting, Tigard and Lake Oswego staff, along with the consulting team preparing the study, will present a draft of the study. Major topics are as follows: ■ Water Supply System Evaluation ■ Evaluation of Supply Alternatives ■ Water Rights and Permitting Strategy ■ Significance of Conservation ■ Interim Supplies ■ Financial and Rate Impacts ■ Organizational and Governance Options ■ Public Involvement Strategies A facilitated discussion of the partnership and the study will follow the presentation. For further information, please contact City Recorder Cathy Wheatley by calling 503-639-4171, Ext 2410. r\A 1W (mil City Recorder Date: Post: Tigard City Hall Tigard Permit Center Tigard Public Library t:\adm\calhy\counciNneeting notices12007\070717 notice of special meeting - to and iwb.doc 07/06/2007 08:25 FAX 5036847297 City of Tigard Q1001 MULTI TX/RX REPORT TX/RX NO 2756 PGS. 1 TX/RX INCOMPLETE [ 1115039687397 Regal Courier TRANSACTION OK [ 0615035460724 TT Newsroom 1 0915039686061 Oregonian [ 1315036203433 TT Legal ERROR INFORMATION OW5 Cm (Uv-1-i. e _ s- 1 ~ Revised Notice 7/6/07 - CITY OF TIGARD NOTICE OF SPECIAL TIGARD CITY COUNCIL JOINT MEETING WITH LAKE OSWEGO CITY COUNCIL AND THE INTERGOVERNMENTAL WATER BOARD TOWN HALL -13125 SW HALL BOULEVARD JULY 17, 2007 - 7 p.m. Forward to: Barbara Sherman, Newsroom, Tigard Times (Fax No. 503-546-0724) Newsroom, The Oregonian (Fax No. 503-968-6061) Editor, The Regal Courier (Fax No. 503-968-7397) Notice is hereby given that the regularly scheduled July 17, 2007, Tigard City Council Workshop Meeting 'has been replaced with a Special Tigard City Council Meeting. The Tigard City Council will be meeting with the city of Lake Oswego City Council, and the Intergovernmental Water Board. Background information and major discussion topics follow: 7 n June 2006 the Cities of Tigard and Lake Oswego funded a study to determine the technical, I inancial, and political feasibility of a water partnership. This partnership, referred to as the Lake Oswego Expansion and Water Partnership, calls for Tigard and Lake Oswego to jointly develop Lake Oswego's surplus water resources. These cities, along with the Intergovernmental Water Board, met in November 2006 to discuss the partnership and to provide input for the study. %t this meeting, Tigard and Lake Oswego staff, along with the consulting team preparing the study, will present a draft of the study. Major topics are as follows: ■ Water Supply System Evaluation ■ Evaluation of Supply Alternatives • Water Rights and Permitting Strategy Significance of Conservation Interim Supplies ■ Financial and Rate Impacts ■ Organizational and Governance Options • Public Involvement Strategies A facilitated discussion of the partnership and the study will follow the presentation. For furtlier information, please contact City Recorder Cathy Wheatley by calling 503-639-4171, Ext 2410. ~•,,l City of Tigard, Oregon Affidavit of Posting In the Matter of a Special Tigard City Council Meeting Replacing the July 17, 2007, Regularly Scheduled Council Workshop Meeting STATE OF OREGON ) County of Washington ) ss. City of Tigard ) I, being first duly sworn (or affirmed), by oath (or affirmation), depose and say: That I posted in ➢ Tigard City Hall, 13125 SW Hall Boulevard, Tigard, Oregon ➢ Tigard Public Library, 13500 SW Hall Boulevard, Tigard, Oregon ➢ Tigard Permit Center, 13125 SW Hall Boulevard, Tigard, Oregon A copy of Notice of a Special Tigard City Council Meeting Replacing the July 17, 2007, Regularly Scheduled Council Workshop Meeting. A copy of said Notice being hereto attached and by reference made a part hereof, on the day of , 204. Signature of Person who Performed Posting Subscribed and sworn (e€f) before me this day of J LA 20 Q- . Signa e of Notary ublic for Oregon postingaff OFFICIAL SEAL JILL M BYAM i1adm\cathytcouncifteeting notices\2007\070717 affidavit of posting - special to iwb meegng.doc *NOTARY PUBLIC-OREGON COMMISSION NO. 381793 MY COMMISSION EXPIRES JUNE 14, 2008 Revised Notice - 7/6/07 CITY OF TIGARD NOTICE OF SPECIAL TIGARD CITY COUNCIL JOINT MEETING WITH LAKE OSWEGO CITY COUNCIL AND THE INTERGOVERNMENTAL WATER BOARD TOWN HALL -13125 SW HALL BOULEVARD JULY 17, 2007 - 7 p.m. Forward to: Barbara Sherman, Newsroom, Tigard Times (Fax No. 503-546-0724) Newsroom, The Oregonian (Fax No. 503-968-6061) Editor, The Regal Courier (Fax No. 503-968-7397) Notice is hereby given that the regularly scheduled July 17, 2007, Tigard City Council Workshop Meeting has been replaced with a Special Tigard City Council Meeting. The Tigard City Council will be meeting with the City of Lake Oswego City Council, and the Intergovernmental Water Board. Background information and major discussion topics follow: In June 2006 the Cities of Tigard and Lake Oswego funded a study to determine the technical, financial, and political feasibility of a water partnership. This partnership, referred to as the Lake Oswego Expansion and Water Partnership, calls for Tigard and Lake Oswego to jointly develop Lake Oswego's surplus water resources. These cities, along with the Intergovernmental Water Board, met in November 2006 to discuss the partnership and to provide input for the study. At this meeting, Tigard and Lake Oswego staff, along with the consulting team preparing the study, will present a draft of the study. Major topics are as follows: ■ Water Supply System Evaluation ■ Evaluation of Supply Alternatives ■ Water Rights and Permitting Strategy ■ Significance of Conservation ■ Interim Supplies ■ Financial and Rate Impacts ■ Organizational and Governance Options ■ Public Involvement Strategies A facilitated discussion of the partnership and the study will follow the presentation. For further information, please contact City Recorder Cathy Wheatley by calling 503-639-4171, Ext 2410. -.1 _A 1 ~ City Recorder / 1 Date: Post: Tigard City Hall , Tigard Permit Center Tigard Public Library i:Udm%athytcouncilVneeting noticesV0071070717 notice of special meeting - to and iwb.doc ~-.V~.w-....:M. ~".+.-r%~.w"r •~-~an++r,,.,.G.,,oS~~ ~~~-w°I+T`'~ '"''"'"if"".. ~-syKy-N/~w'~' "~y"Mr_tiK. w~ 5; no N 4 LMIL ~...~.w=1 -~,.a+n~`zs,.w~~v~~'„+..,.w+,a~•~:.ew... '"'~-.~ra~.~w~' + .-,.,wow: ...av`w+`. '+~r+~"'.'.`'..~~w".''~'~^'_"'.,~.y~..+w~~w.'~~-'^""' "w.'~ .s...esw:w.v+~ '..w.a...•t+-"„ . ..ro.+x..r,..r• } z a=•! u w _ _=^r X. Sam M_ I • • • • • • • • • • • • • • • • • • • • • • • City of Lake Oswego and Tigard Water Service Area • DRAFT SUMMARY REPORT • • JOINT WATER SUPPLY SYSTEM ANALYSIS July 2007 • • • • Engineers... Working Wonders With Water- • • • • • 4380 SOUTHWEST MACADAM AVENUE SUITE 350 • PORTLAND, OREGON 97239-6406 • (503) 227-1885 • FAX (503) 227-1747 H:\Ciient\Lake Oswego_POR\7525A.00\Delive rables\Dratt Report\Master TOC.doc • • City of Lake Oswego and Tigard Water Service Area SUMMARY REPORT • JOINT WATER SUPPLY SYSTEM ANALYSIS • TABLE OF CONTENTS Page No. EXECUTIVE SUMMARY - JOINT WATER SUPPLY SYSTEM ANALYSIS ES.1 BACKGROUND ES-1 ES.2 SUPPLY SCENARIOS ES-1 • ES.2.1 Capital Cost of Infrastructure Improvements ES-1 • ES.2.2 Implementation Timing ES-1 ES.2.3 Financial Evaluation ES-2 ES.3 CONSERVATION IMPACTS ES-4 ESA INTERIM WATER SUPPLY ES-4 ES.5 WATER RIGHTS ES-5 • ES.6 ORGANIZATION AND GOVERNANCE OPTIONS ES-6 • ES.7 BENEFITS OF JOINT SUPPLY ES-7 CHAPTER 1 - WATER SUPPLY SYSTEM EVALUATION 1.1 BACKGROUND ....................................................................................................1-1 1.1.1 Joint Water Supply System Analysis 1-1 1.2 PURPOSE ............................................................................................................1-1 • 1.3 SUPPLY INFRASTRUCTURE 1-2 • 1.3.1 Existing 1-2 • 1.3.2 Anticipated Improvements 1-6 1.4 DEMAND PROJECTIONS 1-8 1.4.1 Service Areas 1-9 1.4.2 Population 1-11 1.4.3 Historical Water Demand Data 1-14 1.4.4 Per Capita Demands 1-16 • 1.4.5 Demands Projections 1-18 • 1.5 SUPPLY SCENARIOS .......................................................................................1-22 CHAPTER 2 - EVALUATION OF WATER SUPPLY FACILITY ALTERNATIVES 2.1 INTRODUCTION 2-1 • 2.1.1 Demand Scenarios 2-1 • 2.1.2 Cost Estimates 2-1 • 2.2 RIVER INTAKE 2-2 2.2.1 Existing Intake Structure and Pumping Facility 2-2 2.2.2 Intake Alternatives 2-12 DRAFT - July 13, 2007 i • HAClient\Lake Oswego_POR\7525A.00\Deliverables\Draft ReportWaster TOC.doc • • 2.3 RAW WATER TRANSMISSION ALTERNATIVES 2.3.1 Existing Transmission Main Alignment 2-24 2.3.2 Transmission Main Hydraulics 2-24 2.3.3 Proposed Transmission Main Improvements 2-26 2.4 WATER TREATMENT ALTERNATIVES 2-31 • 2.4.1 Water Treatment Plant Sites 2-31 • 2.4.2 Process Requirements 2-32 • 2.4.3 Treatment Alternatives 2-38 2.4.4 General Facilities 2-68 2.4.5 Treatment Summary and Recommendations 2-79 2.5 FINISHED WATER TRANSMISSION ALTERNATIVES 2-85 2.5.1 Existing Alignment 2-85 • 2.5.2 Proposed Alignment 2-86 • 2.5.3 Finished Water Transmission Main Improvements Summary 2-86 2.5.4 Waluga Reservoir 2-89 2.5.5 Bonita Pump Station 2-90 2.6 PROJECT COST SUMMARY & IMPLEMENTATION PLAN 2-92 2.6.1 Capital Costs 2-92 2.6.2 Operation & Maintenance Costs 2-93 • 2.6.3 Implementation Plan 2-93 CHAPTER 3 - WATER RIGHTS AND PERMITTING STRATEGY 3.1 BACKGROUND ....................................................................................................3-1 3. 1.1 Review of Water Rights 3-2 • 3.1.2 Local Land Use Permits 3-2 • 3.1.3 State and Federal Permits 3-2 3.2 WATER RIGHTS 3-3 3.2.1 City of Lake Oswego Water Rights Review 3-3 3.2.2 City of Tigard - Review of Willamette Application S-80341 3-4 3.2.3 Clackamas River Municipal Water Rights 3-5 3.2.4 Regulatory and Legislative Requirements 3-7 • 3.2.5 Opportunities for Additional Water Rights 3-14 • 3.2.6 Proposed Course of Action 3-15 3.2.7 Alternative Options 3-15 3.3 LOCAL LAND USE PERMITTING STRATEGY 3-16 3.3.1 City of Gladstone 3-16 3.3.2 City of West Linn 3-17 3.3.3 City of Lake Oswego 3-20 • 3.3.4 City of Tigard 3-22 • 3.3.5 Overall Permitting Strategy 3-23 3.4 STATE AND FEDERAL PERMITTING STRATEGY 3-24 3.4.1 Federal Permits 3-24 3.4.2 State Permits 3-28 3.4.3 Overall Permitting Strategy 3-34 • DRAFT - July 13, 2007 ii • H:\Clienftake Oswego_POR\7525A.00\Deliverables\Draft Report\Master TOC.doc • • CHAPTER 4 - SIGNIFICANCE OF CONSERVATION ON SUPPLY IMPROVEMENTS 4.1 BACKGROUND ....................................................................................................4-1 4.2 PURPOSE ............................................................................................................4-1 4.3 DEMAND PROJECTIONS ....................................................................................4-1 4.4 CONSERVATION STRATEGIES 4-2 • 4.4.1 Impacts of Conservation on Demand 4-2 • 4.4.2 Impacts of Conservation on Timing of Supply Improvements 4-4 • 4.4.3 Impacts of Conservation on Supply Scenarios 4-4 4.4.4 Impacts of Conservation on Capital Costs 4-5 4.5 CONCLUSIONS 4-6 • CHAPTER 5 - EVALUATION OF INTERIM SUPPLY TO LAKE OSWEGO • 5.1 BACKGROUND 5.2 PURPOSE ............................................................................................................5-1 5.3 INTERIM SUPPLY ALTERNATIVES 5-1 5.3.1 Description of Interim Supply Alternatives 5-2 5.3.2 Factors to Consider in Evaluating the Interim Supply Alternative 5-3 • 5.3.3 Implications of Interim Supply on Timing of Future Expansion Needs.......... 5-4 • 5.3.4 Conceptual Capital and Operations Costs for Interim Supply 5-4 • 5.4 ALTERNATIVE RAW WATER SUPPLY ...............................................................5-5 5.4.1 Cost to Obtain Intake Capacity from the SFWB 5-6 5.5 CONCLUSIONS 5-7 • CHAPTER 6 - FINANCIAL EVALUATION AND RATE IMPACTS • 6.1 FINANCIAL EVALUATION 6-2 6.1.1 Methodology ................................................................................................6-2 6.1.2 Cost Allocation 6-5 6.1.3 Total Scenario Costs 6-6 6.1.4 Equivalent Annual Cost Comparison 6-6 • 6.2 RATE IMPACTS 6-7 • 6.2.1 Summary of Rate Impact Analysis 6-11 6.2.2 Conclusions ...............................................................................................6-11 CHAPTER 7 - STRATEGIC OUTREACH & COMMUNICATION 7.1 INTRODUCTION 7-2 • 7.2 STRATEGIC OUTREACH & COMMUNICATIONS PLAN 7-2 • 7.2.1 Goals ......................................................................................................7-2 • 7.2.2 Objectives . 7-2 7.2.3 Target Audiences 7-3 7.2.4 Outreach and Communications Activities 7-3 7.3 STAKEHOLDER INTERVIEWS 7-5 7.3.1 Summary of Findings 7-5 7.3.2 Values and Principles 7-8 • DRAFT - July 13, 2007 iii • HAClient\Lake Oswego_POR\7525A.00\Dellverables\Draft ReporWaster TOC.doc • • 7.4 SCHEDULE AND STAFFING 7-9 7.4.1 Schedule 7-9 7.4.2 Preliminary Staff Assignments 7-9 CHAPTER 8 - EVALUATION OF ORGANIZATIONAL AND GOVERNANCE OPTIONS • 8.1 INTRODUCTION 8-1 8.2 GOVERNANCE OPTIONS 8-1 8.2.1 Methods of Formation 8-1 8.2.2 Governing Bodies 8-3 8.2.3 Operating Characteristics ............................................................................8-4 8.2.4 Capital Financing and Rates 8-6 8.2.5 Additional Issues 8-6 • 8.3 ORGANIZATIONAL & GOVERNANCE FRAMEWORK 8-7 • 8.4 RECOMMENDATIONS 8-7 LIST OF APPENDICES APPENDIX A - Existing and Proposed Raw and Finished Water Transmission Main Alignment APPENDIX B - Proposed Finished Water Transmission Main Sizing APPENDIX C - Water Rights and Demands on the Clackamas River APPENDIX D - Financial Evaluation Technical Memoranda APPENDIX E - Stakeholder Interviews • APPENDIX F - Limitations of Organizational and Governance Information APPENDIX G - Utility Service Delivery Models APPENDIX H - Organizational and Governance Framework APPENDIX I - Organizational and Governance Issues Between IGA and IGA Entity LIST OF TABLES Table ES.1 Conceptual Cost Estimate - Capital Cost1 Table ES.2 Implementation Capital Costs by Scenario 2 Table ES.3 Net Present Value of Lake Oswego's Supply Options (25 Year Outlook) 3 Table ESA Net Present Value of Tigard's Supply Options (25 Year Outlook) 3 Table ES.5 Summary of Conservation on Supply Expansion Costs and Timing 4 • Table 1.1 Required Supply Improvements ..................................................................1-7 • Table 1.2 Basis for Per Capita Demands and Historical and Projected Population 1-9 Table 1.3 Lake Oswego City Only Population Estimates from 2000-2005 1-13 Table 1.4 Tigard Population Estimates from 2000-2005 1-13 Table 1.5 Summary of Population Forecasts 1-14 Table 1.6 Summary of Lake Oswego City Only Demands and Peaking Factorsl 1-16 Table 1.7 Summary of Tigard Demands and Peaking Factors ..................................1-16 • Table 1.8 Summary of Per Capita Demands for Lake Oswego City Only 1-17 • Table 1.9 Summary of Per Capita Demands for Tigard .............................................1-17 DRAFT - July 13, 2007 iv • HAClient\Lake Oswego_POR\7525A.00\Deliverables\Draft ReporWaster TOC.doc • • Table 1.10 Summary of Historical Per Capita Demands for Lake Oswego and Tigard 1-18 Table 1.11 Current and Projected Demands for Lake Oswego and Tigard ..................1-19 Table 1.12 Summary of Supply Scenarios ..................................................................1-23 Table 2.1 Intake Pump Expansion 2-21 Table 2.2 Raw Water Intake Capital Costsl 2-22 • Table 2.3 Raw Water Intake O&M Costs 2-22 • Table 2.4 Comparison of Intake Options 2-23 • Table 2.5 Raw Water Transmission Line Supply Sizing and Hydraulic Data 2-26 Table 2.6 Conceptual Project Cost Estimate - Raw Water Transmission Main.......... 2-31 Table 2.7 Alternative Site Assessment 2-32 Table 2.8 Clackamas River Raw Water Quality 2-34 Table 2.9 Operator Shiftsl 2-37 • Table 2.10 Operations Labor Breakdown Per Activityl 2-38 • Table 2.11 Process Selection Criteria 2-39 Table 2.12 Design Criteria - Conventional Treatment Alternative 2-46 Table 2.13 Design Criteria - High Rate Conventional Treatment Alternative (Actiflo®) 2-57 Table 2.14 Design Criteria - Membrane Treatment Alternative 2-64 Table 2.15 CT Requirementsl 2-70 Table 2.16 Disinfection CT Requirementsl 2-71 • Table 2.17 Clearwell Capacity Requirements 2-71 • Table 2.18 Existing Clearwell Capacity Versus Plant Flowrate 2-72 Table 2.19 Proposed Clearwell Capacity 2-72 Table 2.20 Alum Storage Summary 2-74 Table 2.21 Sodium Hypochlorite Storage Summary 2-75 Table 2.22 Lime Storage Summary 2-77 • Table 2.23 Carbon Dioxide Storage Summary 2-78 • Table 2.24 Process Alternative Ranking Summary 2-79 • Table 2.25 Conceptual Capital Cost Estimate - Conventional 2-80 Table 2.26 Conceptual Capital Cost Estimate - High Rate Conventional 2-81 Table 2.27 Conceptual Capital Cost Estimate - Membrane 2-82 Table 2.28 Conceptual O&M Cost Estimate - Conventional 2-83 Table 2.29 Conceptual O&M Cost Estimate - High Rate 2-83 • Table 2.30 Conceptual O&M Cost Estimate - Membranes 2-84 • Table 2.31 Conceptual Cost Estimate Summary 2-85 Table 2.32 Conceptual Project Cost Estimate Summary - Finished Water Main......... 2-89 Table 2.33 Conceptual Project Cost Estimate Summary - Waluga Reservoir Addition 2-90 Table 2.34 Conceptual Project Cost Estimate - Bonita Pump Station 2-92 Table 2.35 Conceptual Cost Estimate Summary - Bonita Pump Station 2-92 Table 2.36 Conceptual Cost Estimate - Capital Cost 2-93 • Table 2.37 Conceptual Cost Estimate - Operations & Maintenance 2-93 • Table 2.38 Implementation Plan - Scenario 2 2-94 Table 2.39 Implementation Plan - Scenario 3 2-95 Table 2.40 Implementation Plan - Scenario 4 2-96 • DRAFT - July 13, 2007 v • HAClient\Lake Oswego_POR\7525A.00\Deliverables\Draft ReporWaster TOC.doc • Table 3.1 City of Lake Oswego Surface Water Rights - Clackamas River 3-3 Table 3.2 City of Lake Oswego Surface Water Rights - Willamette River 3-4 Table 3.3 City of Lake Tigard Surface Water Rights 3-4 Table 3.4 Clackamas River Municipal Water Rights 3-6 Table 3.5 Applicable Gladstone Zoning Districts 3-17 • Table 3.6 Applicable West Linn Zoning Districts 3-19 • Table 3.7 Applicable Lake Oswego Zoning Districts 3-21 Table 3.8 Applicable Tigard Zoning Districts 3-23 Table 4.1 Build-out Demands for Lake Oswego and Tigard 4-1 Table 4.2 Conservation Impacts on Lake Oswego Service Area Demands 4-2 S Table 4.3 Conservation Impacts on Supply Allocation per Scenario at Build-out......... 4-5 Table 4.4 Conservation Impacts on Scenario 2 Capital Costs 4-6 • Table 4.5 Summary of Conservation on Infrastructure Costs and Timing 4-6 • Table 5.1 Supply Improvement Implementation Timing 5-4 Table 5.2 Conceptual Capital Costs for Interim Supply from WCSL 5-5 Table 5.3 Conceptual Costs to Purchase Raw Water Capacity from the SFWB Intake 5-6 Table 6.1 Interest Rates Used in Financial and Rate Analysis 6-5 Table 6.2 Net Present Value of Lake Oswego's Supply Options 6-6 • Table 6.3 Net Present Value of Lowest Cost Supply Options for the City of Tigard 6-6 Table 6.4 Equivalent Annual Costsl 6-8 Table 6.5 Lake Oswego Summary of Rate Impacts 6-9 Table 6.6 Tigard Summa of Rate Impacts 6-10 Table 7.1 Target Audiences 7-3 Table 7.2 Benefits of Merger 7-7 Table 7.3 Schedule 7-9 • Table 7.4 Preliminary Staff Assignments 7-10 LIST OF FIGURES • Figure 1.1 Lake Oswego Water Service Area .............................................................1-10 • Figure 1.2 Tigard Water Service Area 1-12 Figure 1.3 Lake Oswego Population and Demand .....................................................1-20 Figure 1.4 Tigard Population and Demand Projections ...............................................1-21 Figure 1.5 Proposed Scenario Capacities vs. Service Area 3 Day Peak Demands ....1-25 Figure 2.1 Location Plan 2-5 Figure 2.2 Daily Mean Discharge Record 1964 -1982 Clackamas River • Near Clackamas 2-6 • Figure 2.3 Existing Intake and Scour Hole Locations 2-8 Figure 2.4 Intake Structure Plan View 2-11 Figure 2.5 Proposed New Riverbank Intake Location 2-15 Figure 2.6 Proposed New Riverbank Intake Cross-Section 2-16 Figure 2.7 Proposed New River Bottom Unfiltration Intake .........................................2-18 • Figure 2.8 Proposed New Riverbank Infiltration Intake Location 2-19 • Figure 2.9 Proposed New Riverbank Infiltration Intake Cross-Section 2-20 • Figure 2.10 Raw Water Transmission Main System and Pump Curve 2-25 • DRAFT - July 13, 2007 vi HAClienftake Oswego_POR\7525A.00\Deliverables\Draft ReportWaster TOC.doc • • Figure 2.11 Reach Descriptions Raw Water Transmission Main 2-27 Figure 2.12 Reach Class Descriptions For Transmission Main 2-29 Figure 2.13 Raw Water Turbidity Frequency Distribution 2-35 Figure 2.14 Raw Water Color Frequency Distribution 2-36 • Figure 2.15 Finished Water Turbidity Frequency Distribution 2-41 • Figure 2.16 Conventional Treatment Option Process Flow Diagram 2-45 • Figure 2.17 Conventional Treatment Option Site Plan 2-52 Figure 2.18 Actiflo@ Treatment Option Process Flow Diagram 2-55 Figure 2.19 Acfrflo® Treatment Option Site Plan 2-60 Figure 2.20 Membrane Treatment Option Process Flow Diagram 2-62 Figure 2.21 Membrane Treatment Option Site Plan 2-69 • Figure 2.22 Reach Descriptions Finished Water Transmission Main 2-87 • Figure 2.23 Waluga Reservoir 2-91 Figure 3.1 Clackamas River Water Right Profile Over Time 3-8 Figure 3.2 Clackamas River Water Right Profile Over Time 3-9 Figure 3.3 Clackamas River Water Right Profile Over Time 3-10 Figure 4.1 Conservation Impacts on Lake Oswego Future Demands ...........................4-3 DRAFT - July 13, 2007 vii • H:\Clienftake Oswego_POR\7525A.00\Deliverables\Draft ReporWaster TOC.doc • • • • • • • • • City of Lake Oswego and Tigard Water Service Area • DRAFT SUMMARY REPORT . JOINT WATER SUPPLY SYSTEM ANALYSIS July 2007 • Engineers... Working Wonders With Water- • • • 4380 SOUTHWEST MACADAM AVENUE • SUITE 350 • PORTLAND, OREGON 97239-6406 • (503) 227-1885 • FAX (503) 227-1747 HI:\Client\Lake Oswego POR\7525A.00\Deliverables\Draft Report\Master TOC,doc • • • • • City of Lake Oswego and Tigard Water Service Area • • JOINT WATER SUPPLY SYSTEM ANALYSIS • SUMMARY REPORT • • TABLE OF CONTENTS • Page No. • • ES.1 BACKGROUND ES-1 ES.2 SUPPLY SCENARIOS ES-1 • ES.2.1 Capital Cost of Infrastructure Improvements ES-4 • ES.2.2 Implementation Timing ES-4 ES.2.3 Financial Evaluation ES-5 • ES.3 CONSERVATION IMPACTS ES-7 ESA INTERIM WATER SUPPLY ES-7 • ES.5 WATER RIGHTS ES-8 • ES.6 ORGANIZATION AND GOVERNANCE OPTIONS ES-9 • ES.7 BENEFITS OF JOINT SUPPLY ES-10 • • LIST OF TABLES • • Table ES.1 Conceptual Cost Estimate -Capital Cost 4 • Table ES.2 Implementation Capital Costs by Scenario 5 i Table ES.3 Net Present Value of Lake Oswego's Supply Options (25 Year Outlook)........ 6 • Table ESA Net Present Value of Tigard's Supply Options (25 Year Outlook) 6 i Table ES.5 Summary of Conservation on Supply Expansion Costs and Timing 7 • • LIST OF FIGURES • • Figure ES.1 Lake Oswego Water Service Area 2 • Figure ES.2 Tigard Water Service Area 3 • • • • i • • • • DRAFT - July 12, 2007 i H:\Clienftake Oswego_POR\7525A.00\Deliverables\Draft Report\Executive Summary.doc • • Executive Summary JOINT WATER SUPPLY SYSTEM ANALYSIS • ES.1 BACKGROUND The Cities of Lake Oswego and Tigard (Cities) retained Carollo Engineers in June 2006 to develop and evaluate options for the possible formation of a joint water supply system for • the two communities. This report, which summarizes the results of the Joint Water Supply • System Analysis (JWSSA), presents a range of supply alternatives, and addresses the • design, financing, permitting, governance, and public outreach issues associated with implementing the proposed joint water supply system, as well as the potential impacts of conservation and interim supply alternatives. ES.2 SUPPLY SCENARIOS The City of Lake Oswego's (City, Lake Oswego) existing water supply system is essentially at capacity. The capacity of the existing system is 16 million gallons per day (mgd), existing demands are over 15 mgd, and projected build-out demands are 24 mgd. Therefore, Lake Oswego needs to expand their supply capacity or reduce per capita water demands substantially in the near future. The water service areas for Lake Oswego and Tigard are • presented in Figures ES.1 and ES.2, respectively. Four supply scenarios were developed to address the needs of Lake Oswego and Tigard. These scenarios are as follows: 1. Scenario 1: Existing Capacity (16 mgd) This scenario represents the existing demands and capacity of the Lake Oswego infrastructure. 2. Scenario 2: Future Capacity (24 mgd) • This scenario represents the required capacity to treat the build-out demands of the Lake Oswego water service area. • 3. Scenario 3: Senior Water Right Capacity (32 mgd) This scenario represents the capacity needed to convey the senior water rights that • Lake Oswego has been permitted to withdraw from the Clackamas River. 4. Scenario 4: Combined Junior and Senior Water Right Capacity (38 mgd) r This scenario represents the capacity needed to convey the combined junior and senior water rights that Lake Oswego has been permitted to withdraw from the • Clackamas River. DRAFT - July 12, 2007 ES- 1 HAClientlake Oswego_POR\7525A.00\Deliverables\Draft Report\Executive Summary.doc • Est' ~ ~ ,l f: •~h'~ _'V _ i y ( p 4 v, •AiI, 'x'^^^555 4 l ~ 8 +..»r *C t 15 ~ 4 Taus=...._, t f f m^..,4.)^-....tea.. , -.l• . _ _ n M- - ~l '~'~,„..r/' f f~ l}~4LT*♦54()E1Y.~~u l44 J 1 ((r ,~/~r' /~qjppp d $ *,rT V E ✓ / f ( fir, `17.,i } kt'Su legend 1 4 - _ Water Service Area - s x Laos 6svla;c z Figure ES. 1 LAKE OSWEGO SERVICE AREA JOINT WATER SUPPLY SYSTEM ANALYSIS 1_0707e= 1-7525 A. CITY OF LAKE C}SNJEG{3 AND TIGARD WATER SERVICE AREA jj Rr. Q_ i .3`CSar ~i3`Ra54'!P` 7sa! i(:'nP'r . .a t:m q.;Cu. :},~$,G RCI:CfYtg:: Figure ES. TI ARD WATER SERVICE AREA JOINT WATER SUPPLY SYSTEM ANALYSIS CITY OF LAKE OSWEGO AND TIGARD WATER SERVICE AREA i_o%0"e~[; 525 q; ES.2.1 Capital Cost of Infrastructure Improvements • Lake Oswego's existing infrastructure is comprised of a raw water intake, treatment facility, • conveyance, storage, and pumping. The capital costs for each of the supply scenarios are provided in Table ES.1. Table ESA Conceptual Cost Estimate - Capital Cost' • Joint Water Supply System Analysis • City of Lake Oswego and Tigard Water Service Area • System Scenario 1 Scenario 2 Scenario 3 Scenario 4 Component 16 mgd 24 mgd 32 mgd 38 mgd Clackamas River Intake $2,000,000 $2,100,000 $4,440,000 $4,670,000 • Raw Water Transmission N/A $19,890,000 $23,920,000 $23,920,000 Main Lake Oswego • Water $3,000,000 $28,840,000 $39,430,000 $44,990,000 Treatment Plant Finished Water Transmission N/A $25,290,000 $44,300,000 $55,240,000 • Main Waluga N/A $2,470,000 $3,820,000 $4,010,000 Reservoir Bonita Pump N/A N/A $1,480,000 $1,700,000 • Station . Total $5,000,000 $78,590,000 $117,390,000 $134,530,000 Notes: • 1. Presented in November 2006 dollars. ES.2.2 Implementation Timing • The following assumptions were applied to development of implementation timing of component improvements for each scenario: 1) Tigard will begin using its share of the water supply infrastructure in 2016, and 2) the components of the infrastructure that are already at their maximum capacity will be improved immediately to meet the needs of Lake Oswego. For scenarios 3 and 4, component improvements were phased to provide incremental capacity additions over time to defer costs. • DRAFT - July 12, 2007 ES- 4 HAClienftake Oswego_POR\7525A.00\Deliverables\Draft Report\Executive Summary.doc • • Table ES.2 Implementation Capital Costs by Scenario' Joint Water Supply System Analysis City of Lake Oswego and Tigard Water Service Area Project Completion Date • Scenario Immediate2 2016 2020 1 (16 mgd) $5,000,000 2 (24 mgd) $76,120,000 $2,470,000 3 (32 mgd) $88,360,000 $29,030,000 4 (38 mgd) $91,450,000 $43,080,000 Notes: 1. Presented in November 2006 dollars. 2. Immediate improvements should be made by 2009. • Throughout the report, capital costs are presented in November 2006 dollars to facilitate comparison of scenarios. However, actual costs will be subject to construction cost escalation up to the time the improvements are actually constructed. This construction cost escalation, based on the anticipated implementation schedule for each scenario, is included in the financial evaluation of alternative scenarios. It should be further noted that because construction cost escalation is projected to occur at a rate greater than the general inflation • rate', scenarios that are delayed beyond the anticipated implementation schedule will likely • have a higher cost than the costs shown in the report. Further evaluation of the financial implications associated with delaying implementation of the proposed improvements should be conducted before final decisions are made regarding the timing of implementing Scenarios 2-4. ES.2.3 Financial Evaluation • A financial evaluation of the supply scenarios was conducted, which presents a comparison of the economic impact of the scenarios for each City. Additionally, for the City of Tigard, an evaluation of three other water supply alternatives was developed: 1) partnership with the Joint Water Commission (JWC), 2) partnership with other regional suppliers for development of the Willamette River Project, and 3) Tigard-only development of the Willamette River Project. A summary of the net present value of the scenarios over a 25-year timeframe is presented for Lake Oswego and Tigard, in Tables ES.3 and ESA, respectively. The details, limitations, and assumptions for the net present value analysis are presented in Chapter 6 • and Appendix D of this Summary Report. The cost sharing allocation between Tigard and • Lake Oswego, the JWC, or other regional suppliers is based on a percent capacity proportion, and may need to be revised based on the terms of the institutional arrangement agreed upon between the two governments. • ' "Inflation is Set for a Strong Rebound; Steel and Rebar Prices Lead Resurgence in Construction • Costs," McGraw Hill Construction, June 2007. • DRAFT - July 12, 2007 ES- 5 HAClient\Lake Oswego_POR\7525A.00\Deliverables\DraR Report\Executive Summary.doc • • Table ES.3 Net Present Value of Lake Oswego's Supply Options (25 Year Outlook) Joint Water Supply System Analysis City of Lake Oswego and Tigard Water Service Area • Cost Lake Oswego Partner with Tigard Partner with Tigard "Go it Alone" Components Scenario 2 (24 mgd) Scenario 3 (32 mgd) Scenario 4 (38 mgd) . Capital Costs $76,500,000 $61,500,000 $52,100,000 O&M Costs $41,300,000 $33,200,000 $31,000,000 Total Costs $117,800,000 $94,700,000 $83,100,000 Notes 1. Net Present Values are based on a 25-Year Outlook and include a discount factor of 5%, • construction escalation rate of 6%, and a general escalation rate of 3.5%. • Table ES.4 Net Present Value of Tigard's Supply Options (25 Year Outlook) Joint Water Supply System Analysis City of Lake Oswego and Tigard Water Service Area Partner with Willamette Willamette Partner with Purchase Cost JWC With Without Lake from Components Partners Partners Oswego Portland Scenario 2A Scenario 2B Scenario 2C Scenario 4 Scenario 6B Capital Costs $145,800,000 $77,900,000 $183,100,000 $80,600,000 $1,400,000 • O&M Costs $17,400,000 $11,700,000 $14,600,000 $32,500,000 • Purchased $33,600,000 $33,600,000 $33,6000,000 $27,800,000 $97,200,00 Water Costs Total Costs $196,800,000 $123,200,000 $231,300,000 $140,900,000 $98,600,000 Notes • 1. Net Present Values are based on a 25-Year Outlook and include a discount factor of 5%, • construction escalation rate of 6%, and a general escalation rate of 3.5%. • For Lake Oswego, the lowest cost option is to develop a joint supply with Tigard at a 38 • mgd capacity (Scenario 4). Tigard's lowest cost option is to purchase water from Portland • via the new gravity connection with the WCSL-Tualatin Line (see Chapter 5) for nine months of the year, and to purchase water from Portland via the existing water transmission main during the peak summer months. Tigard's second lowest cost option is to partner with other regional suppliers in the development of the Willamette River Project. However, without the economies of scale associated with group development at the regional level, costs increase considerably. Therefore, the next the lowest cost option for Tigard is to develop a joint supply with Lake Oswego for 38 mgd (Scenario 4). • DRAFT - July 12, 2007 ES- 6 HAClient\Lake Oswego_POR\7525A.00\Deliverables\Draft Report\Executive Summary.doc • • • • • • ES.3 CONSERVATION IMPACTS • • As part of the JWSSA, the impacts of water conservation in Lake Oswego on the overall • capacity, cost, and timing of the supply scenarios was assessed. Three scenarios were • considered: • 1. 5% Reduction Target, resulting in 0.5% reduction in per capita demands per year for • eleven years, 2. 10% Reduction Target, resulting in 1.0% reduction in per capita demands per year for eleven years, • 3. 25% Reduction Target, resulting in 2.5% reduction in per capita demands per year for • eleven years. • Successful implementation of any of the proposed conservation strategies would enable • Lake Oswego to defer the timing of the expansion of their water supply infrastructure; • however, no conservation strategy will eliminate the need entirely. Therefore, Lake Oswego • must still plan for the capacity expansion of their intake, raw water transmission main, • treatment plant, storage, and distribution system. Depending on the conservation strategy • adopted, Lake Oswego would be able to defer the timing of the expansion of supply capacity from 2017 to 2037. If supply capacity expansion is deferred beyond 2009, it is • recommended that Lake Oswego implement near term reliability improvements (as identified in Scenario 1). A summary of the capital costs and timing for each of the • proposed conservation strategies is presented in Table ES.5. • Table ES.5 Summary of Conservation on Supply Expansion Costs and Timing • Joint Water Supply System Analysis • City of Lake Oswego and Tigard Water Service Area • Conservation Capital Cost Implementation Timing • Strategy Savings Amount Percentage Year No. of Years Deferred • 5% Target N/A N/A 2017 8 • • 10% Target N/A N/A 2025 16 • 25% Target $13AM 17% 2037 28 • Notes: • 1. Presented in November 2006 dollars. • • ES.4 INTERIM WATER SUPPLY • Lake Oswego's existing emergency intertie with the City of West Linn and a possible intertie • to the City of Portland's Washington County Supply Line (WCSL-Tualatin Line) in Tigard • were evaluated as possible interim peak season supplies that would allow Lake Oswego to defer near-term expansion of their existing supply system. In both cases, demands on • • DRAFT - July 12, 2007 ES- 7 HAClient\Lake Oswego_POR\7525A.00\Deliverables\Draft Report\Executive Summary.doc • • • • • these alternative sources are such that peak season capacity would not be available to • meet Lake Oswego's projected peak day needs (in excess of Lake Oswego's existing • capacity); thus, they are not feasible means of deferring expansion of the Lake Oswego • supply system. • However, the proposed connection from the WCSL-Tualatin Line would potentially provide • near-term benefits to the City of Tigard by decreasing Tigard's costs for non-peak season • water purchases from Portland. If Tigard were able to purchase approximately 50% of its • annual average supply from Portland through the new gravity connection, the total • operating savings would be approximately 14 percent per year (actual savings will depend • on required agreements with Portland and WCSL owners), resulting in a potential net • savings (less construction cost) during the nine years remaining on Tigard's existing • contract with Portland of approximately $1 million. • In addition, Lake Oswego, Tigard and other water providers in,the region would benefit by • having this connection available as an emergency intertie between the Portland and Lake • Oswego supply systems. • Also considered as a potential source of interim supply was purchase of additional capacity • from the South Fork Water Board (SFWB). As an alternative to constructing a new Lake • Oswego intake, conceptual-level cost estimates were developed for purchasing raw water • capacity from SFWB's existing intake on the Clackamas River. • The cost for purchasing raw water intake capacity from the SFWB ranges from • approximately $13 million to $16 million for Scenarios 3 and 4, respectively. This cost is • dominated by the relatively large cost of the transmission pipeline and river crossing required to convey water from the SFWB intake to the Lake Oswego intake. In comparison, • the cost of constructing a new Lake Oswego raw water intake for Scenarios 3 and 4 is • approximately $4.4 million to $4.7 million, respectively (see Chapter 2). Given the large cost difference between the SFWB option and construction of a new intake, it is recommended that the option for purchasing raw water capacity from the South Fork Water Board be • dropped from further consideration in the Joint Water Supply System Analysis. • ES.5 WATER RIGHTS • • The State of Oregon's water rights laws are based on the prior appropriation doctrine: the • first person to obtain a water right on a stream is the last to be shut-off during times of . drought. Therefore, Lake Oswego's water rights on the Clackamas River have relatively • high priority as compared to most other municipal water rights holders. Lake Oswego's • senior water rights are the second largest on the river, at 32 mgd, and their junior water rights (6 mgd) are senior to 109 mgd of other holders rights. • • Recently, new regulatory requirements promulgated under House Bill 3038 (HB 3038) have • modified the requirements for municipal water right extensions and the Oregon Water Resources Department's policy for perfection of municipal water rights. Under HB 3038, it is • • DRAFT - July 12, 2007 ES- 8 HAClient\Lake Oswego_POR\7525A.00\Deliverables\Draft Report\Executive Sumrnary.doc • • • • • • expected that instream flows will be increased 20%-60% over the existing instream rights • on the Clackamas River. To address the potential impacts of HB 3038, Portland State University conducted extensive modeling2 of the lower Clackamas River. This modeling • indicates that in general, in typical weather years, the availability of Lake Oswego's water • rights will not be impacted. This is due to two factors: 1) The timing of the City's peak • demands, which typically occur in July or August, as compared to the timing of typical low • stream flow, which occurs in September, and 2) Flow releases from Timothy Lake, based • on existing agreements between other water rights holders and Portland General Electric. It should be noted that under the most extreme low flow conditions (based on the lowest flows on record), it is possible that Lake Oswego would need to reduce their supply by about 3.5 • mgd over a two week period in the low flow season. • Specifically, under average conditions (average river flows from 2000-2005 and existing • withdrawals by water rights holders on the Clackamas), the PSU modeling indicates that Lake Oswego would need to reduce their withdrawals from the river by about two percent • (0.5 mgd) for approximately one day per year. In extreme conditions, based on flows from • 2000-2005 and assuming future demands such that all holders are fully utilizing all of their • available water rights (and with releases from Timothy Lake), it is possible that Lake • Oswego would need to reduce their withdrawals by about 12 percent. This would result in • an average reduction for Lake Oswego of 2.6 mgd in supply over a period of 40 days. Within this 40-day shortfall period, a maximum one-day reduction of up to 18 percent (4 • mgd) could occur. However, it should be noted that this very conservative condition does • not consider the priority of water rights. Additionally, the total existing build-out demand • projections for municipal water right holders comprise only 60 percent3 of the total existing • maximum municipal rights on the Clackamas River. • ES.6 ORGANIZATION AND GOVERNANCE OPTIONS • As the City of Lake Oswego and the Tigard Water Service Area consider long-term water • supply improvements, governance becomes a key consideration. The nature and • complexity of the proposed Joint Water Supply project, and the associated significant • capital investments, requires discussion and adoption of a service delivery model beyond the existing surplus water supply contract. • • There are five alternative governance structures for a joint water supply that could be used • by the Cities: 1. An intergovernmental agreement ("IGA") • • 2 "Lower Clackamas River Model: Model Development, Calibration, Scenarios, Executive Summary, • and Hydrodynamics," Water Quality Research Group, Department of Civil and Environmental • Engineering, Technical Report EWR-01-06-ES, October 2006. s It should be noted that if the current CRW applications for 96 mgd are not permitted, the build-out • demand projections will be 90 percent of the maximum municipal water rights on the Clackamas • River. • DRAFT - July 12, 2007 ES- 9 HAClient\Lake Oswego_POR\7525A.00\Deliverables\Draft Report\Executive Summary.doc • • 2. People's Utility District ("PUD") 3. Domestic water supply district ("Water District") 4. County Service District ("Service District") • 5. Water Authority ("Water Authority"). The details on each governance structure is provided in Chapter 8. A summary and comparison of utility service delivery models is presented in Appendix G. Based on discussions with staff from both Cities, the preferred governance structure, should a joint water supply be developed, is an IGA, which is formed under ORS Chapter 190 by a written agreement between local governments, and approved by ordinances of each party's Council. An IGA is the simplest form of structure for water supply. Although there are some limitations, an IGA provides the most flexibility regarding the relationship • between the participating entities. An IGA may be formed without a vote by the electors, the . governing body of an IGA may be appointed by the participating cities, the participating entities may retain ownership in the facilities like a partnership agreement, and the agreement between the parties defines the powers of the new entity. It is also easier to withdraw from or dissolve an IGA, or to add new partners or make an amendment, than with the other governance structures. It should be noted that an IGA is limited by the • inability to levy taxes or issue general obligation bonds. However, these factors are not • usually major drivers in utility settings because of the ability of the entity and its underlying partners to charge utility fees and charges and system development charges. If Lake Oswego and Tigard agree to use an IGA as the basis of a joint water supply system, it is further recommended that the parties engage in a process of developing the anticipated • terms of such an agreement. The list of issues identified in Appendix I of this report is intended to serve as a starting point for further discussion between the Cities. It is recommended that the financial terms of such an agreement, including fiscal authority, system ownership, and fiscal standards, be an initial priority since these terms will establish the basis for subsequent financial evaluation of the proposed joint supply system. ES.7 BENEFITS OF JOINT SUPPLY The benefits of a potential joint water supply between Lake Oswego and Tigard are presented below: COST SAVINGS Partnering with Tigard would provide Lake Oswego significant financial benefits. By • jointly constructing a 38 mgd water supply system with Tigard, Lake Oswego and its • ratepayers could save about $63 million in equivalent annual costs over the next 25 years, • including about $23 million in one-time capital savings. • DRAFT - July 12, 2007 ES-10 HAClienftake Oswego_POR\7525A.00\Deliverables\Draft Report\Executive Summary.doc • • Partnering will minimize and smooth future rate increases for Lake Oswego. By jointly constructing a 38 mgd water supply system with Tigard and assuming a 24mgd/14mgd (Lake Oswego/Tigard) allocation of new supply capacity, rate increases for Lake Oswego are forecasted to be increase cumulatively 56% over the next 25 years, as compared to cumulative increases of almost three times as much (148%) for the "Lake Oswego go it alone" scenario. Based on a capacity share cost allocation, the least cost options for Tigard are to purchase water from Portland via a new intertie with the WCSL-Tualatin Line or to partner with TVWD to develop a supply on the Willamette River ($98 and $123 million, respectively). However, • Tigard's third lowest cost option is to partner with Lake Oswego for 38 mgd ($141 • million), and would provide a supply on the Clackamas River. Although purchasing water from Portland is the least cost scenario for Tigard in the 25-year timeframe, the rate impacts of this scenario do not exhibit the same results. While the other scenarios include capital projects that can be offset with a supply SDC revenue stream, • purchased wholesale water costs cannot be offset with any additional revenue source. Therefore, the resulting annual rate impacts of Tigard's water supply options are a cumulative increase of about 113% over the next 25 years to partner with Lake Oswego, 128% to partner with other regional providers on the Willamette River, or 169% to purchase water from Portland. Partnering can be the first step in a multi-step process. An agreement to form a partnership means preliminary work related to cost sharing, operating protocols, form of governance, and allocation scenarios can be initiated without burdening either City with the need to immediately finance a large capital project. WATER RIGHTS • Partnering would help secure Lake Oswego's rights. Lake Oswego holds senior water • rights (32 mgd) and junior water rights (6 mgd) on the Clackamas River. These rights are of relatively high priority compared with other municipal users of the river, but rights in excess of future demands may be at risk from recent increases in instream rights. Partnership with Tigard would enable Lake Oswego to secure the unused portion of their existing water rights. CONSERVATION Partnering plus water conservation would provide significant benefits to both Cities. • A successful conservation program in Lake Oswego would shift a greater capacity share to • Tigard. Depending on conservation savings, Tigard's share could be sufficient to completely meet its long-term build-out demands. This would result in Tigard's cost share increasing to about 70% of the cost of the supply expansion needed to meet both cities' future water demands. • DRAFT - July 12, 2007 ES-11 HAClienALake Oswego_POR\7525A.00\Deliverables\Draft Report\Executive Summary.doc • REGIONAL RELIABILITY Constructing an interne between Tigard and the Washington County Supply Line would save Tigard approximately $300,000 in annual operating costs and would pay for itself • in about 5 years. Partnering would provide regional benefits. Lake Oswego, Tigard, and other water suppliers would benefit from connections to other regional systems for emergency backup, improved reliability and source optimization, and is consistent with the goals of the Regional • Water Supply Plan. • DRAFT - July 12, 2007 ES-12 H:\Client\Lake Oswego_POR\7525A.00\Deliverables\Draft Report\Executive Summary.doc • • Sheet for bookmarking items unable to send to microfiche Date: 7/17/07 Item: CD Subject: City of Lake Oswego and the Tigard Water Service Area Joint Water Supply System Analysis - Draft Report Stored in vault: See Records Division S:. . 2 VV ~ ,yy1 i ~ a ~ . a \ / • t~Gf , J rxd}X~ LU t ~ • # m'p1 ~A• • Aoi,tm Meeting Objective & Overview " *Meeting Objective to identify general direction for possible partnership Presentation Overview Project • Objectives Status Review of Supply Scenarios Responses to Questions from Workshop 1 Recommendations & Next Steps Discussion Project Drivers Lake Oswego Identify and plan for future capacity requirements ,@-Rate- I • • • su-pp-ly • s • Protect existing water rights Tigard Establish ownership position in long-term supply Address schedule requirements of Portland agreement Use • to fund capital improvements Region Reliability through interconnection of multiple sources Momentum for increased regional cooperation Project Objectives Develop and evaluate options for possible formation of a joint water supply system Long-term supply for Lake Oswego • Tigard Identify: - Preferred supply scenario Feasibility and costs of joint system - Facility improvements Institutional arrangements Status Lake Oswego peak day demands are approaching capacity of existing supply system Reliability improvements to intake s WTP Tigard intends to decide on supply option by the • of this calendar year Options for Willamette, JWC, Portland, • i Draft report on LO-Tigard Joint Water System Supply Analysis is complete and is being distributed today scenar'Os SUPP woo logo,, -Scenario Water Supply Scenarios Lake Oswego Only D• Nothing- Reliability • des UpgraNeed to purchase water above 16 rngd • Ultimate Demand - 24 Lake Oswego i Tigard Joint Supply - Scenario 3: Senior Water Rights Only - 32 mgd 9 Tigard concern for cost effectiveness - Scenario 4: Senior & Junior Water Rights - 38 mgd ~G 64 f 'v eg;xj" t'p~+ ,m _ .v.. .v . ,v ,r ' . n. ' ~~,tAom~. Y,zr,Y r qp q µ .9t }}g~~ X~ Rv ~ # oN ~ fk N'n P -"rk My - ~JMf nYP ,W 3, w .t.,.°;:::..v"in..::.ut':,.,;>,~..r+«n A. ,*.a ?~`.kRt' .aw.mwtiA$;:,a:w.re+ ..,.:...v. 43', p 4 a, v: .8 a4 .''4, q,.,...ERu.x.SA4 vm+.~ma ~cv v t< k** Stafford Triangle is incorporated into LOWSA and Lake Oswego Water y. LO, Wholesalers, and Service Area ~=fl rd (LOINSA) n 4 " t , f t t'. req.: ' . s 1t t' F v i Y" ~ re ,..tts„,..:M.. .aC.: n.. ..,R: v„.',~'~•'Py~ zivE" ,4#? r.'v'S ^;:.:,a ~ m s. s yn#• "'~w' 7F....:. .:.v...,. i.. `~i ~ti a. e,, ..n.. v a,".~... h3'i. w.... wr t. Meets Demands Capital Supply Scenario Until Year Cost* LO i Tigard • LO i i Tigard Additional Supply Scenarios Scenario 5: Interim supply to defer expansion needs Supply from SFWB * New pipeline from SFWB intake to LO intake 9 Wheel water through West Linn intertie S-u-p ply-frGm- • rt-l-a • * New intertie to WCSL via Tigard's Bonita Pump Station Options not cost-effective or inadequate capacity Scenario 6 (Tigard Only): Continue to purchase water from Portland Questions Posed in Workshop 1 IF Influence of Conservation Water Rights Financial Analysis Influence of ® ro-n-servation-- Conservation Questions 1. Is conservation being considered as a water supply source? 2. Can we defer expansion by p-l-em-en-ti-n-g- • s . • 3. What are the financial consequences of conservation? . tSa . ~ ti. .It a Y ~ f t w.v *'vY.•i~.v._ 'jir .n ~ u+ww..w.w,.w~.,.u..Y"."~......H..•tP..:~'.,. .dn y✓M' . ~w+.m"w.<,.w,.wn....vm..ew.w,,~wvnmw.v,..:w..,.«wuun..nnm.wsnn-w+nwn.v«,~aw,.-.«m« f ~ ~ Y. - - Conservation could defer - Existing Conservafion a supply expansion by 8 to 28 p r but does not eliminate 0.5% Conservation ,or 11 yrs years the reed for expansion. 1 % Conservation for 11 yrs 4a G% Ui nictti n for 1 yrs ma ~ n FY$... - ff U H `L. yc' •:m.ax'y...,d;o,.,a~s•tia:,"..pF,..... "~„~~7'0.a,*,g Y~X•.$ ?"'Ak,.' "ff 1 he v ~k ~y •Y R . 4 ''•f!A4a;- x S,tSy ~ .i F.a 'y~e'.tt•~~'Y~v to ' ,•,gR T.':....i Su.%ri •vf' '.n..;., v ~"41'va.-nY+. ''~u 7x$ A ""r'•~s+''''ai. s^ ~~~^S ;el' ;~y~y i3.. ~ r..px; ~•,%'~,`5~'~'~py, v. 6 xr, ~.Y YYpp,u~ ,yAy ~Vy~ } ,~,„m~vvc~:~;•. ' ~ v.. i', `•xk ,~.ryta~, Y 3 vY:.i ~•C.,'W Ay.; gS4a.`x.'yl!".:'N. '$.~:~:}i~ fi P . ~ .v.. nv.. ..e. ~Yd.i.~ 'F'.: Y' ::Y:!..'j,.i.~ .rp^v YeT,:.d i ~ ,.,i,•,M ~a.. .:<~s,;. 'F 4..~,..N Y•:•~',{ s :,,n.I.....Y~ ~ s.t... .,_'$i~' .~.,y..., <.,~a 4,~..ae o-$!.. ~a"b~':~. -~a".~' •iF,'.',?~'°~ @`~y:~c',., ri.,~~y;,, • • I • • • • • • • • • Vill Conservation Build-out Expansion Capital Capital • Demand Needed By Cost* Savings Existi-ng ~ • 5% reductio 10% reduction see 25% reduction • • • - 11. • i Lake • • . Day Capacity (mgd) LO Capacity Conservation Lake Scenario Oswego Share ® • • Existing i % reduction reduction i i • reduction Conservation Observations & Limitations Environmental benefits • conservation are notable included in in-stream water rights 2. Achieving savings requires early & sustained • • Council, staff and community 3.- • 1 • ha ig-nificant co - sts 4. Lake Oswego has unique opportunity to minimize financial risks of conservation through partnership with Tigard 5. Not achieving water savings may increase costs to Lake Oswego Conservation Questions 1. Is conservation being considered as a water supply source? Yes. Conservation the most- •future water supply source and is included in this evaluation. Savings from aggressive conservation scenario would provide sufficient capacity to meet demands of both LO and Tigard. Conservation Questions 2. Can we defer expansion by implementing further conservation? Yes. Lake Oswego could defer its supply system expansion by B-2-8 d-eperid-i-n-g on actual water demand reduction. Some improvements are needed immediately to increase reliability of the existing system. 5% • by LO results schedule for LO expansion consistent with Tigard's needs. Conservation Questions 3. What are the financial consequences of conservation? Capital costs could be reduced only if Lake --O-sw-eg-o- ac h-i-eve-s 2 5 red u- c-t-i-o-n-i-n. -d-e-m-a-n-d- • by Lake Oswego results in increased capacity and cost shares for Tigard Partnership minimizes Lake Oswego's financial risk • conservation INater Water Ri hts Questions 9 1. What is the position • LO's water rights? 2. Will cc up-basin" • I development preclude future use • LO's rights? 3. -Will LO's junior water right be available for use in- th e__ future? 4. How would partnering impact water rights? 5. Should some of LO's water rights be preserved for fish and the environment. Oregon Water Rights 101 Oregon water rights based on prior appropriation doctrine - "First in time is first in line" - First to obtain water right is I to be shut off - Last to obtain water right is first to be shut off Gra-nted-by Oreg-o-n- Water Resource-s De-pt - Specifies quantity and location (river In-stream rights for environmental benefits n 1 r. r Pi... i r ~rtr ter fights mirth Clackamas tij Dnr SCtiS€-1ti: w5$,5 n ,d ester Commission Wd Season: 413,6 m9d 2 w 41 .v~r ~":!"'`'.`~n~r.,'n~e"i ~6;i tw",Q'.;.' ~~;;'r<i~~'•,e~:i, r: ~'',:~~"~;4~;rµ €t Fork u y:µro:j4r,rvR Water Board City x, m Lakes Oswego a~ Estacada Ivt d. ``^~yNi' city o Estacada Sf:, , n M ~ .x (,Y (s.. • p .k j~'iv~,.., i~jH,:.' e tiG~~~<4v^S~: s, c;~d_.... :,..x.' *RJA<:u,; ~ `,.ali..4'> '..''r: .rc„ , m. ;'r" .m A. ,n.a,,, ,ra '.E's.. ; Priority Water Right 1 S FW 56 3,6 1-9014r 1931 2-N.CCWC 4 2.6 1951 3 SFWB 60 39, 1953 4 Estacada 2 1,3 955 5 CRW 15 1' 0 1962 6 Lake Oswego 50 32 1967 7 CRW 25 1:6 1968 8 OWRD JE:400-640~~ 258--413 196,8 9 CRW 6.5 4 1969 10 NCCWC 62 40 19,70 11, Estacada 2 1.3 1,9173 12 Lake Oswego 9 6 1973 13 NCCWC 1.9.7 13 1978-1' 994. 14 CRW 148, 9 96, 995 Water Rights Under HB=3038 . • requiring "persistence" of New "standard" fish species. Oregon Water Resource Department (WRD) required to consult with Oregon of Fish- i • • • extensions A showdown looms on the Clackamas `Rimier over drinking water -Applies undeveloped :Limited river- water- mad pit fish against utilities € BY LEE VAN DER VOO portion . existing The Lake Oswego Review, Mar 7, 2007, [lpdaredMar 7, 2007 (4 Reader cammenrs) A state law prompting J , VERN :higher water levels in UYETAKE / :the Clackamas River REVIEW WEGO -Must satisfy new in- :may one day force water • ~ users to trade their ;green lawns for the survival of endangered _ :species. - ~ ' s I Model Scenario Results - 2005 ' ' • • ' • 5rz9105 6/18105 718105 7128105 8117105 916/05 9176/05 10116105 1115105 102 3600 Existing Conditions • • • 94 Existing Conditions wrTLRO 3300 • I ' Instream Water Requirements for Fish 85 Dairy Maximum TLRO 3000 Q O O DattyTLRO 77 Clackamas River, RM 0.7 2790 Model Segment 144 66 2400, 60 2100 3 - m + a Modeling i. •"r s1 \ 7soo Lower Clackamas 43 \ 750 0 River Ss"stem I.L\. .l ;r _ - \ (1 U 34 \ 1200 26 900 2 , `rte y eoo us cn.ss crosJ J 17 s a ors c18.41 «ngJ soo 1 Robert Annear g Labor Day 304 and Dr. Scott 0- -0 1976 1996 2016 2036 2056 2076 2096 2116 2136 Department of Civil and Julian Day Environmental Engineering C~ Portland State Water Rights Questions 1. What is the position of LO's water rights? Lake Oswego's existing water rights are of relatively high priority as compared to other Second largest senior water right (32 mgd) on the Clackamas River • water • • mgd) has priority over 19 • other junior rights Water Rights Questions 2. Will cc up-basin" development preclude future use of LO's water rights? • e- - p-rior . • d-o-ct-ri-ne-, water is allocated based on priority date of the water right, not by location on the river. Upstream users cannot increase their water use to the detriment • downstream rights. a Water Rights Questions 3. Will LO's junior • be available for use in the future? Yes. LO's 6 mgd junior water right has priority over 109 • other junior water rights in basin Must-show • s • . - to perfeGt-junior--r-ig-fit Under proposed HB-3038 criteria: - Typical weather - no impact on availability - Worst-case conditions and 38 mgd, reduction of 2-4 may be required for • to 40 days Water Rights Questions 4. How • • partnering impact • hts? Benefits: Partnering allows perfection of LO's remaining rights • Pe-r-fection-e-li-m-i-nate-s risk • - • • • Opportunity for alternate sources to provide reliability In-stream rights are subordinate to domestic rights Risks: In worst-case weather year and development of all existing water rights (38 mgd), LO's diversion may to be reduced • • • to 40 Water Rights Questions 5. Should • • LO's water rights be preserved for fish and the environment? Benefits are provided through in-stream water rights • - . • - June • 400 : September . •41 Under i 3038, rights increase • 20-60%: 40 j► s Financial Questions 1. What is the best deal for Lake Oswego? 2. What is the best deal for Tigard? 3. What are the financial benefits, and • ° • • pa-rt-neri-ng-?.- a Assumptions Financial • by equivalent annual cost and resulting water rates Demands assume no additional conservation • (e.g., existing conservation) Cost escalation: • • -costs- a - General costs: 3.5% - Discount rates: 5% Includes only supply system improvements Revenues (rate & SDCs) increase with growth I will be available to pay costs and debt Lake Oswego- 5% Discount Rate $10,000,000 ■ 25-Year OjUook $9,000,000 ~ 50-Year $8,359,150 $8,316,075 $8,000,000 000,000 $6,718,032 $6,745,943 $7,Cn o $6,028,324 $5,897,442 $6,000,000 ~ I_- $5,000,000 J $4,000,000 Cr u' $3,000,000 $2,000,000 $1,000,000 Scenario 2 - Lake Oswego Scenario 3 - Senior Wafter Right Scenario 4 - Combined Junior "Go-It-Alone" (24 mgd) Capacity (32 mgd) and Senior Water Right Capacity (38 mgd) Rate Increases over 25 years* Cumulative Average Rate Impact Customer Bill • ~ 1 i . 100 0 M 0 . M • ° 0 • • M 0 0 M s • Tigard - 5% Discount Rate ■ 25-Year Outook ❑ 50-Year Outook $18,000,000 $16,429,546 $16,000,000 $14,000,000 $13 965 705 13,795,77 $13,792,847 $13,075,498 o $12,000,000 $12,0 83,634 U $10,933,17 $10,000,000 $10,001,238 i a $8,738,131 $8,000,000 $7,640,867 i $7,371,493 $6,986,328 i Cr $6,000,000 $4,000,000 $2,000,000 Scenario 2A Scenario 2B Scenario 2C Scenario 4 Scenario 6A Scenario 6B ~ s I • I • I • I Pro-Lot Rate Increases over 25 years- *1 Scenario Cumulative Average Rate Impact Customer Bill • • • 0 ' 0 • • Am • • Financial Questions 1. What is the best deal for Lake Oswego? Partnership with Tigard for 38, • Initial capital cost savings of $23 million Loweste-quiva-l-e-n-t a-n-n-u-a-l- • Savings of $2.5 million per year x 25 years ($62.5m) Lowest impacts: Savings of - $20 per month in average residential bill Financial Questions 2. What is the best deal for Tigard? It depends... Portland and Willamette options have lower equivalent annual costs as compared to LO Option (Scenario 4) • s • Equivalent annual savings • • to $3.0 million ($75M) No • • and significantly higher 50-year costs Ownership Partnership with Lake Oswego results in lower future rates as compared to Portland or Willamette options position allows investment of SDCs Savings of - $15 / • average bill as compared to Portland option Financial Questions 3. What are the financial benefits & consequences of partnering? Significant financial benefits for both Tigard & LO For Lake Oswego: R'• . • • Reduced equivalent annual cost Lower future rate increases Reduced financial risk from conservation For Tigard: Ownership • long-term supply - Lower rates 'ReCommendations and -----N-19-x,-t-S-t- e- s Ji Staff Recommendation Proceed with development of the draft partnership agreement for the Joint Water Supply project Initiate public outreach program Joint Council Meeting Q Individual Council Meetings Develop Draft Partnership r Agreement C)IJI Public Outreach Public Hearings Final Agreement Individual Council Meetings Sign Final Agreement Q Discussion Discussion Topics 1. Consensus on general direction 2. If direction is toward developing partnership: • _ to e- I • . • schedule • decision 11 - Initial agreement may not require financial commitment • Direction • public process through 11 c. Process and schedule for individual agency follow-up and decision-making 3. What additional information is needed? • i C\j L • s 21 i' Cl) • (1) cc • ' • • 1 ,r • • • • • • • • Meeting Objective & Overview • *Meeting Objective - to identify general direction for possible partnership 10 • • • Presentation Overview • Project Drivers & Objectives - Status • • Review • Supply Scenarios - Responses to Questions from Workshop 1 • Recommendations & Next Steps • 0 Discussion • • • • Project Drivers Lake • • • • • requirements 0 Identify and plan for future capacity Rate stability during supply * Protect existing water rights • multiple 0 Access to sources • Tigard 0 Establish ownership long-term supply Address . Portland ag • improvements 0 Use of SIDCs to fund capital multiple 0 Access to sources • Region * Reliability through interconnection of multiple sources • 0 Catalyst • regional cooperation • • • • 1 • • • Project Objectives 0 Develop and evaluate options for possible formation of a joint water supply system • Long-term supply • • Oswego & Tigard Identify: • Preferred supply scenario • Feasibility and costs • • • Facility improvements • - Institutional arrangements • • • • • • • Status 0 Lake Oswego peak day demands are approaching capacity of existing supply system - Starting implementation of conservation program • Reliability improvements to intake i WTP 0 Tigard intends to decide on supply option by the • • of this calendar • Options for Willamette, JWC, Portland, i 0 Draft report on LO-Tigard Joint Water System Supply Analysis is complete and is being • distributed today • • • • • • 2 • . Supply Scenarios • Water Supply Scenarios 10 - Oswego Only Reliability - Scenario 1: Do Nothing - 16 mgd des UpgraNeed to purchase water above 16 rngd Scenario • Ultimate Demand - 24 • 10 . • i Tigard Joint Supply • Scenario Senior Water Rights Only - 32 • Tigard concern for cost effectiveness Scenario 4: Senior & Junior Water Rights - 38 mgd • 3 • • • • i • 1 Stafford Triangle is • . 1 -0-LOWSA+Tigard incorporated into Lake Oswego Water • ' -d -LO, Wholesalers, and Service Area Stafford (LOWSA) • 1 11 1 1 1 1• • • • • • Meets Demands • Until - Supply Scenario Capital • Cost* LO Tigard • • • 11• • 4 • Additional Supply Scenarios • 10 • Scenario to expansion defer • needs • Supply from SFWB . - New pipeline from SFWB intake to LO intake • water - Wheel through West Linn intertie • Supply • Portland New intertie to WCSL via Tigard's Bonita Pump Station • Options • • ' • inadequate capacity • Scenario 6 (Tigard Only): Continue to • purchase water r • • • • • Questions • • in Workshop 1 • • • • 0 Influence of Conservation • 0 Water Rights • 9 Financial Analysis • • • • • • • • 5 • • • Cf) • • ' • • • • • • • • • • p CZ -r C: • • • • • • . • ( • • • . • • 1 • co • • • • • , • • • • • • Epstng Conservation •1 • 0.5% Conservation for 11 yrs • -k-1 % Conservation for 11 yrs • 1 . 2% Conservation for 11 yrs S~s7si_`t;7 77777777 1 c ° ° ° • 11 1 1 1 1 1 1 1 1 1 1~1 1 • • • • . • IN KO) IN kf&@J il LTA WA • . • • • Conservation Build-out Expansion Capital Capital Strategy Demand Ne Cost* Savings 5% reduction 25% reduction • • • • - as 7 • • • • • • • • Lake Oswego Max Day Capacity (mgd) Conservation Scenario Oswego 5% reduction • • • • • • Conservation • Observations Limitations • • Environmental benefits of conservation are • notable - included in in-stream water rights • Achieving savings requires early & sustained • commitment • Council, staff and community • Conservation . significant utility costs 4. Lake Oswego has a unique opportunity to • • minimize financial risks of conservation through partnership with Tigard • • • achieving water savings may increase costs to Lake • • • • • 8 • 0 0 0 • Conservation Questions 1. Is conservation being considered as a • water supply source? • Yes. Conservation is the most important future water supply source and is included in this evaluation. Savings from aggressive conservation 0 scenario would provide sufficient capacity to meet demands of both LO and Tigard. • Conservation Questions • Can we defer expansion • • • • further conservation? system Yes. Lake Oswego could defer its supply expansion • 8-28 years, depending on actual water demand reduction. Some improvements are needed immediately • to increase reliability of the existing system. • % savings by LO results in schedule for LO expansion consistent with Tigard's needs. • • • • 9 • • • • • • • • Conservation Questions • 3. What are the financial • consequences • • conservation? • • Capital costs could be reduced only if Lake Oswego achieves 25% reduction in demand • Savings by Lake Oswego results in increased capacity and cost shares for • Tigard Partnership minimizes Lake • a • conservation financial risk of • • • • • • • • • • Water Rights • • • • • • s • • • • • 10 • • ghts ater • • • What -is the PO ent preclude -Up-basil 2. 0" • rights? • - • use or \Natef • be a\] 3. \N-111 LO's lun' the w • hts? use water . • • • Part0 • be I - ^ . • • • r r • gnome s based r • • • • • w • • • " • • ' a 't in line • • • • • , to be shut • "First in time -is firs ' - ast . ter • • • fight 'is firs • • • 6 esoutces Dept Last t n Water (river mile) • Granted by OregO _,s, and 10 specit-tes • (r mental benetits In-streaM rights or environ • • • • • • • • • • • • • • • • '«~.i~~-K F. .r..t. ~ o r .qtr amv JhnsonCity Clackamas, ~r • ~~~s~` ~~,,~sTH ,,River ter. Instreamwater • •..w :•`i 1 Rights North;Clacka~-mas,Roouufl I KgMgs DrySemon:258.5mgd • WaternCommisston,-P tt ago Wet Seaton: 413.6 mgd • South Fork-- FORSYTHE-,j f I Water Board' • L Oswego yo- j - • co`~ ~Estacada~ tu • CIty.Of>> eN' Estacada • h 11 \ • • • Water • Priority . - No"o • Q • 6 3o; ~s • , low"* IL 1 1 a, COW 11 '4, 1 • 6 Lake Oswego 50 32 1967 t • ®f - 118 IL • 8 OW RD 400-640 ; 258-413 1968 ~ ~l • 9)/ • 161 N 6' i ~917~0~ 12 Lake Oswego 9 6 1973 Nome • • • • • 12 • • • • • • • Water Rights Under HB-3038 • New "standard" requiring "persistence" of fish • • species • Oregon Water Resource Department (WRD) required to consult with Oregon • Department of Fish i Wildlife (ODFW) in • • extensions IA showdown looms on the Clackamas {River over drinking water • -Applies to undeveloped • !Limitednuer+uatermaypit/ishageins[utilitles ertffv~ittoetvtw Qs portion • existing Tag Cake Daxvpo Revlev; Nar 1, 7OP7, UptlaNdA/ar 7, N1O7 (a ReacHr[ommenfy • permits 6i~Eer water levels In I ~""F / LIKE OSWEOO • jthe (,IiCklnlaa Ftlrer REVIEW -Must satisfy new in- may one day foECe water • uun to tnda their • survival of endaEygaEed jspeciea. r f Water j®een lawns for tha • • • • • Rights Under H'B-3038 • Regional evaluation by Clackamas Basin • Water Users • Model Scenario Results - 2005 Extensive modeling • • Portland State 0 0 0~ xmo 0 - I • f .11 felill", tile Lowl". Clackamas it h et, SV%tVIII I t!f , ~ 0 1), • • • • • • 13 • 0 0 0 0 • Water Rights Questions • What is the position of LO'S water rights? Lake existing water rights are of relatively high priority as compared to other • municipal - Second largest senior water right (32 mgd) on the Clackamas River - Junior water right (6 mgd) has priority over other • junior rights - In-stream rights are subordinate to domestic rights • Water Rights Questions 2. Will "up-basin" development preclude future use • water rights? • No. Under the prior appropriation doctrine, water is allocated based on priority date of the water • right, • • location on the river. • Upstream cannot increase to the detriment of downstream rights. 0 • • • • • 14 0 . Water Rights Questions 3. Will LO's junior water righit be available • for use in the future? Yes. Must • "beneficial to perfect junior right Under proposed HB-3038 criteria: • no impact • availability about - Worst-case conditions and 38, mgd, reduction of may be required • • to 40 Maximum reduction of 4 mgd for 1 day • Water Rights Questions . • • • partnering impact water • rights? • • Benefits: Partnering allows perfection of LO's remaining rights • Perfection eliminates risk • future loss of rights Risks: • - In • and development of all existing water rights (38 mgd), LO's diversion may need to be reduced by 2 mgd for up to 40 days (max 4 for 1 • • • • • • • 15 • • Water Rights Questions • • • • of LO'S water rights be • • for fish and the environment? Benefits are provided through in-stream water rights Existing in-stream rights: - June • 4// : Under HB 3038, in-stream rights increase by 20-60%: • Financial Analysis • 16 • • • • • • • • Financial Questions • 1. What is the best deal for Lake Oswego? • 2. What is the best deal for Tigard? 3. What are the financial benefits and • consequences of partnering? • • • • • • • • • • • • Assumptions • Financial • • equivalent annual cost and resulting water rates • Demands assume no additional conservation • existing savings (e.g., conservation) • • • escalation: - Construction costs and SDCs: • - General costs: 3.5% • - Discount rates: 5% Includes only supply system improvements • Revenues (rate . increase SDCs) with growth and will be available to pay costs and debt • • • • • 17 • • Lake Oswego- 5% Discount Rate $10,000,000 - 0aYeeraAook • $9,000,000 0 50-Year a>loak $8,359,150 $8,316,075 • $8,000,000 $6,745,943 o $7,000,000 $6,718,032 • v $5,897,442$6,028,324 • $6,000,000 • a $5,000,000 z $4,000,000 • $3,000,000 • $2,000,000 • $1,000,000 • $ Scenario 2 -Lake Oswego Scenario 3 • Senior Water Right Scenario 4 -Combined Junior • 'Go4ftne' (24 mgd) Capacity (32 mgd) and Senior Water Right Capacity (38 mgd) • • • • Rate • • Increases over 25 years* Scenario • • Rate Im Customer Bill • • • • • 18 f • • • • • • to] F Zt M A T • • • • ,410-1 Tigard - 5% Discount Rate ■ 25-Year Oufook • $18,000,000 0 50-Year Outlook • 516,429,546 $16,000,000 • $14,000,000 $13965705 13,795,771, $13,792,847 513,075,498 • o $12,000,000 - 12 083,634 $10,933,17 $10,000,000 510,001,238 • dc` $8,738,131 • $8,000,000 $7640,867 $7,371,493 $6,986,328 • w° $6,000,000 • $4,000,000 • $2,000,000 • $ Scenario 2A Scenario 2B Scenario 2C Scenario 4 Scenario 6A Scenario 6B • • • • • • • • ~ . 1 W. It I V& • • 'Rate years* Increases over 25 • Cumulative Average • • - Impact 1 Customer Bill • • • • • • • • 19 • Financial Questions 1. What is the best deal for Lake Oswego? • Partnership with Tigard • i capital Initial • • of $23 million • Lowest equivalent annual costs: Savings of $2.5 million per year x 25 years ($62.5M) • Lowest rate impacts: Savings of - $20 per month in average residential bill • Financial Questions 2. What is the best deal for Tigard? depends... Portland and Willamette options have lower equivalent annual costs as compared to LO Option (Scenario 4) • No capital initial • • Equivalent annual • • • to • million No • • and significantly higher 50-year costs • Partnership with Lake Oswego results in lower future rates as compared to Portland or Willamette options • • • position allows investment of SDCs Savings of - $15 / mo in average bill as compared to Portland option • • • • 20 • • 0 0 Financial Questions • 3. What are the financial benefits & consequences • partnering? Significant financial benefits for both Tigard & LO • For Lake Oswego: - Reduced capital cost Reduced equivalent annual cost - Lower future rate increases Reduced financial risk from conservation For Tigard: • • • long-term supply • - Lower rates r Recommendations and Next Steps • 21 • • • • • • • • Staff Recommendation • 0 Proceed with development of the draft partnership agreement for the • Joint Water Supply project s 0 Initiate public outreach program • • • • • • • • • • • • • • Joint Council Meeting Q • Individual Council Meetings m • Develop Draft Partnership • Agreement • Public Outreach • Public Hearings • Final Agreement • Individual Council Meetings • Sign Final Agreement Q • • • • • 22 • • Discussion • Discussion Topics Consensus • general direction 2. If direction is toward developing partnership: a. Willingness to develop draft agreement Tigard's schedule for decision in 2007 Initial agreement may not require financial commitment b. Direction for public process through 2007 c. Process and schedule for individual agency follow-up and decision-making 3. What additional information is needed? 23