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11/10/2010 - Packet Completeness Review for Boards, Commissions ry � ; and Committee Records CITY OF TIGARD Intergovernmental Water Board Name of Board,Commission or Committee Date of Meeting To the best of my knowledge this is the complete meeting packet. I was not the meeting organizer nor did I attend the meeting;I am simply the employee preparing the paper record for archiving.This record came from Greer Gaston's office in the Public Works Building. Kristie Peerman Print Name Signature Date r Intergovernmental Water Board Agenda SERVING TIGARD,KING CITY,DURHAM AND TIGARD WATER DISTRICT MEETING DATE: Wednesday, November 10, 2010, 5:30 p.m. MEETING LOCATION: Tigard Public Works Building 8777 SW Burnham Street Tigard, OR 97223 1. Call to Order, Roll Call and Introductions Call the meeting to order, staff to conduct roll call. 2. Approval of Minutes — October 13,2010 Action: Motion to approve the October 13, 2010 minutes. 3. Public Comments Call for comments from the public. 4. Water Supply Update -John Goodrich 5. Discussion of Intergovernmental Agreement—Dennis Koellermeier 6. Discuss IWB Representatives' Terms which Expire in December 2010 7. Informational Items a. Update from Commissioner Buehner on Lake Oswego/City of Tigard Oversight Committee activities. b. Update from Commissioner Winn on West Bull Mountain Technical Advisory Committee activities. 8. Non-Agenda Items Call for non-agenda items from the Board. 9. Future Agenda Items Schedule Date Item February 9, 2011 Election of Chair and Vice-Chair To Be Announced Additional Tenancy in Common Agreements for Properties within the Tigard Water Service Area. 10. Next Meeting: ■ December 8, 2010 at 5:30 p.m. Public Works Auditorium, 8777 SW Burnham Street,Tigard, Oregon 11. Adjournment Action: Motion for adjournment. INTERGOVERNMENTAL WATER BOARD AGENDA—November 10, 2010 Cityof Tigard 1 13125 SW Hall Blvd.,Tigard,OR 97223 1 503-718-2591 1 www.tigard-or.gov I Page 1 off f Executive Session The Intergovernmental Water Board 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. INTERGOVERNMENTAL WATER BOARD AGENDA—November 10, 2010 Cityof Tigard 1 13125 SW Hall Blvd.,Tigard,OR 97223 1 503-718-2591 1 www.dgard-or.gov I Page 2 of 2 i Agenda Item No.: �— IWB Meeting Date: Intergovernmental Water Board (IWB) Meeting Minutes October 13, 2010 Tigard Public Works Building 8777 SW Burnham Street Tigard, OR 97223 Members Present: Gretchen Buehner Representing the City of Tigard Ken Henschel Alternate Representing the Tigard Water District Keith Jehnke Representing the City of Durham Dick Winn Representing the City of King City Mike Stone Member At-Large Members Absent: None Staff Present: John Goodrich Utility Division Manager Greer Gaston Executive Assistant Visitors: None 1. Call to Order, Roll Call and Introductions Commissioner Winn called the meeting to order at 5:30 p.m. 2. Approval of Minutes —September 8, 2010 Commissioner Buehner motioned to approve the September 8, 2010 minutes. Commissioner Stone seconded the motion. The minutes were approved by unanimous vote of the Board, with Commissioners Buehner, Henschel, Jehnke, Stone, and Winn voting yes. 3. Public Comments: None 4. Water Supply Update Mr. Goodrich reported: • Water consumption was about 4.6 to 5 million gallons per day. • One reservoir continues to be offline for construction, which will be completed next spring. ■ Tigard is operating under its winter contract with the City of Portland. • There is about a 24-day supply in aquifer storage and recovery wells. Injection will start in November. Commissioner Henschel inquired about summer water usage and revenues. Mr. Goodrich said he would bring that information to the November meeting. Intergovernmental Water Board Minutes October 13,2010 1 Commissioner Henschel asked for an update on the pump station at 125th and Bull Mountain Road. Mr. Goodrich said the contractor was excavating, framing, and pouring concrete, and the project was on schedule. 5. Water Rate Study and Water SDC Update Mr. Goodrich distributed a memo from Redoak Consulting dated September 28, 2010. The memo is on file in the IWB record. He described the memo which summarizes the water financial plan, an outcome of Tigard's Water Rate Study and Water System Development Charge (SDC) Update. He reminded the Board of the previous discussions on this topic. Mr. Goodrich said a 34.5-percent rate increase is needed now to position the City of Tigard for future bonding. Bonding requirements and strategy were discussed. Mr. Goodrich gave examples of how rate increases would affect various residents or businesses. The average household would see an increase from $27.55 to $37.05, or about $10 per month. The City of Tigard will likely go to monthly billing in January. Commissioner Henschel inquired about changes in the City of Tigard's electronic routing address. This affected water customers' automatic transfers. Mr. Goodrich was not aware of any change and said he would look into the problem. Mr. Goodrich reported he had met with the Home Builders Association (HBA) recently. There were no comments regarding the SDC methodology. However, there were requests that SDCs be phased-in over time. Mr. Goodrich asked for the Board's: ■ Approval of the water financial plan and summary findings. ■ Support for the City of Tigard to proceed with water revenue increases to offset costs associated with the Lake Oswego-Tigard joint water supply project. Commissioner Winn asked for clarification on the bonding strategy. Mr. Goodrich explained that instead of one large bond, the City of Tigard would probably bond three times for smaller amounts: ■ In 2012 for about $30 million. ■ In 2014 for between $40 and $44 million. ■ In 2017 for the remaining funding. Bond anticipation notes may be used for bonding in earlier years. These notes would allow the City of Tigard to defer the principal and pay only the interest for the first few years of the note. Once the Lake Oswego-Tigard project is online in 2017, Tigard will not have to purchase water from the City of Portland. This will result in a $3.5 million cost savings. Of this amount, about$1 million will go toward operating and maintenance costs for the Lake Oswego water supply. The remaining $2 million will be combined with water rate revenues and will be used to pay the interest and principal of the bonds. Mr. Goodrich also noted that revenues from the bonds must be spent within three years, so this precludes the use of only one bond since Lake Oswego water supply projects span many years. Commissioner Buehner added Tigard's finance department expects bond rates to remain flat for the next five years. Commissioner Winn noted the rate structure was not included with the memorandum. Intergovernmental Water Board Minutes October 13,2010 2 Mr. Goodrich summarized the recommendations: ■ Move to monthly billing. ■ Establish fixed rate charges that increase with meter size. ■ Generate a larger portion of revenues through fixed rates. • Decrease volume rate to offset fixed charges. ■ Move to a tiered rate system. The monthly rate structure was subsequently distributed to the Board and is on file in the IWB record. Mr. Goodrich summarized the tables, which extend out to 2015. Commissioner Buehner suggested extending the rates to 2019 when rate increases end. The Board discussed how to best present rate increases to the public. Additional suggestions included focusing on the dollar amount of rate increases, as opposed to the percentage increase, and providing comparisons to other jurisdictions. At the request of Commissioner Henschel, a City of Tigard document entitled, "Fact Sheet: Water Revenue Bonds" was distributed to the Board. This is on file in the IWB record. Note: Discussion of this agenda item continued under item 7, Non-Agenda Items. 6. Informational Items a. Update from Commissioner Buehner on Lake Oswego/City of Tigard Oversight Committee Activities • Commissioner Buehner reported the cost allocation between Tigard and Lake Oswego had shifted slightly in Tigard's favor. Initially Tigard's share to develop the Lake Oswego-Tigard water partnership projects was estimated to be 57.5 percent. That percentage has decreased to approximately 52 percent, because the percentage of Lake Oswego's existing infrastructure that can be used in the new water system has declined. This excludes Tigard's share of the $17.5 million additional ozone treatment process. Overall Tigard's share of the project is on target. • The analysis of existing facilities is completed. • The water intake will be in the same general location along the Clackamas River. • A preliminary meeting with staff from the City of West Linn went well. Most issues with neighbors near the treatment plant have been resolved. • The size of the Waluga Reservoir has been increased. Another Lake Oswego reservoir on 10th Street is nearing the end of its useful life. The Waluga Reservoir will need to absorb the capacity of the 10th Street reservoir. • Permitting will be coordinated among federal, state and other agencies. Filing will occur late summer or early fall of 2011 and is expected to take a year to process. A preliminary ruling, in favor of Tigard and Lake Oswego, was issued. The appeal period will start after the final order is issued. An appeal is anticipated. • Land use permitting is in the preparation stage. Permitting will be required in Gladstone, West Linn, Lake Oswego, and Tigard. Final design needs to be 20 to 30 percent complete before entering the permitting phase. • Commissioner Buehner asked Ms. Gaston to furnish the Board with an updated memo dated October 2, 2010 from Joel Komarek to the Oversight Committee regarding "Program Costs — Sponsor Allocations." Intergovernmental Water Board Minutes October 13, 2010 3 b. Update from Commissioner Winn on West Bull Mountain Technical Advisory Committee Activities • Commissioner Winn reported the water provider will not be determined until the financial and community plan is addressed in the next session. The concept plan will be ready to go to County Commissioners at the end of October. 7. Non-Agenda Items Commissioner Henschel inquired why the IWB intergovernmental agreement was not on the agenda as indicated in the September 8, 2010 minutes. Other Commissioners said the item was moved due to Mr. Koellermeier's absence. This item is expected to be on the agenda at the next IWB meeting. Note: Discussion of agenda item 5, Water Rate Study and Water SDC Update, continued under this agenda item. Mr. Goodrich asked for the Board to make a recommendation to the Tigard City Council. Commissioner Winn confirmed that the recommendation was related to the Water Rate Study. Commissioner Buehner motioned that the Board recommend approval of the Water Rate Study to the Tigard City Council as presented at this meeting. Commissioner Henschel asked for Mr. Goodrich to confirm his proposed motion. Mr. Goodrich said he was seeking the IWB's approval of the water financial plan summary findings and support for the City of Tigard to move forward to increase water revenues to offset costs associated with the Lake Oswego-Tigard joint water supply project. Commissioner Buehner amended her motion accordingly. Commissioner Stone seconded the motion. The motion passed by unanimous vote of the Commissioners present, with Commissioners Buehner, Henschel, Jehnke, Stone, and Winn voting yes. Commissioner Buehner said she was now meeting on the Lake Oswego partnership on a monthly rather than quarterly basis. She will be reporting to the Board about partnership activities more often. 8. Future Agenda Items Future agenda items were not discussed. 9. Next Meeting: • November 10, 2010 at 5:30 p.m. Public Works Building, 8777 SW Burnham St, Tigard, Oregon 10. Adjournment At 6:51 p.m., Commissioner Stone motioned to adjourn the meeting; Commissioner Henschel seconded the motion. The meeting was adjourned by unanimous vote of the Commissioners present, with Commissioners Buehner, Henschel, Jehnke, Stone, and Winn voting yes. Intergovernmental Water Board Minutes October 13,2010 4 Dick Winn, IWB Chair Greer Gaston, IWB Recorder Date: Date: Intergovernmental Water Board Minutes October 13,2010 5 Sign-in Sheet Intergovernmental Water Board Meeting Date: November 10, 2010 This is a City of Tigard public meeting, subject to the State of Oregon's public meeting and records laws. All written and oral testimony becomes part of the public record. The names and addresses of persons who attend or participate in City of Tigard public meetings will be included in the meeting minutes, which is a public record. Name Do you wish If yes, please give your Phone number/ Email (please print) to speak to address the Board? John Q. Public Yes 13125 SW Hall Blvd. (503) 555-5555 Tigard, OR 97233 johngpublic@yahoo.com ^MUD y� �1 f Y x; -� • ��`*�''"' -.;1_�� _ `.�_ � raj�;� � �►�. t a 41P � . A - ' Q.? Ll e. .. _. "y. 'l I� _x IfA , r - , , 7"" L r L .ir�. r_rR. f Submifted at the IWB Meeting By- r6 bl' S s- a �-• •�; Date: Item �i��� f �o:.i .� -.. {�� � '� �Y .ate X v4 M _ � � :. re�� � �, ��,,.,- ` I^ ��a �.' e� ,.,, r �, �.,: �._" �:: ,, �� _.:, r �?�, � �"� �'" �� �. i �� Y S fY', ... .- � �. _ I : . �:- �. �� ,. �r .,�= ., 7�k�7j ..4 , � i �. � �` f�k �{ S 1 `'�a�� *t,; #� �- � y rr k. �'-{ Sts .$F /tf �r - 1. k•. � � - '{w: Agenda Item No.: 5 IWB Meeting Date: // -/D -/O AMENDED AND RESTATED INTERGOVERNMENTAL AGREEMENT BETWEEN DURHAM, KING CITY AND THE TIGARD WATER DISTRICT AND THE CITY OF TIGARD FOR WATER SUPPLY 7th Draft 8/27/2010 This Agreement is made and entered into under authority of Chapter 190, Oregon Revised Statutes, by and between the cities of Durham and King City and the Tigard Water District, an ORS Chapter 264 district ("District") and the City of Tigard ("Tigard"), all Oregon municipal corporations ("the Parties"), in Washington County, Oregon. This Agreement replaces those individual agreements entered between Tigard and each of the other two cities and the District in or about 1993. This Agreement shall be effective in its entirety upon execution by all of the Parties. Upon effectiveness of this Agreement, those individual agreements entered between Tigard and each of the other two cities and the District in or about 1993, and all subsequent amendments thereto shall, by agreement of the Parties, be terminated and replaced by this Agreement. RECITALS: A. The three cities withdrew the areas included within their boundaries from the political boundary of the District effective July 1, 1993. In consideration of their separate contracts with Tigard for the operation and maintenance of a water supply to serve all four Parties, Tigard granted to Durham, King City and the Tigard Water District (all Parties other than Tigard being the "Served Parties") an equitable interest in those assets (described as "System Assets" in those contracts) located within the combined service area. Water supply, storage and distribution facilities ("System Assets", as further defined herein) were not divided between the cities and the District as provided for by ORS 222.540 and instead, all such assets wherever located were pledged to the use of the City of Tigard for the operation and maintenance of a single water supply, storage and distribution system to serve all four Parties, All Parties now desire to clarify the method to determine the value of those assets and the Parties' equitable ownership interest in same and to establish the methods for valuation of both real and personal property. B. The Parties intend that Tigard continue to provide and be the Managing Authority of a water supply system serving all Parties for the duration of this Agreement including use of assets and facilities not within the combined service area that are owned by Tigard and other entities that are not parties to this Agreement. All Parties agree that Tigard is empowered to use any right of condemnation possessed by any of the Parties that is necessary to provide water consistent with the terms of this agreement, and will take any action necessary for Tigard to exercise that right upon the request of Tigard. C. The combined area as shown on Exhibit 1 constitutes the Tigard Water Service Area. The Parties desire to clarify the role of the Intergovernmental Water Board ("IWB") as to those matters where its actions are advisory to Tigard. Tigard Water Supply Agreement Page I In consideration of those premises as generally recited the Parties now AGREE: 1. Purpose and Scope. 1A. Tigard shall continue to furnish and maintain a domestic water supply, storage and distribution system serving all Parties to this Agreement. All Parties pledge to the City of Tigard, the use and benefit of all assets of that system, wherever located whether inside or outside the Parties combined service area, as they now exist and hereafter are constructed or accrue, for the duration of this Agreement as to each Party served. Each Party's equitable interest in any and all System Assets located within the combined service area shall be deemed held as an undivided common interest until the Party terminates this Agreement or until the Agreement is dissolved. 1 B. All other Parties delegate to Tigard the authority to enact water system rates and charges, including systems development or connection charges, with the advice of the IWB and as limited by state law, in such amounts as are necessary to maintain the system for the benefit of all Parties. Any and all such rates and charges shall be applied evenly to all customers in similar rate classes throughout the area now served by the system and each Party agrees to enforce those rates and charges without exception within that Party's political boundary. No Party may sell water provided under this Agreement to a third party without the prior written consent of Tigard. 1C. Tigard shall enter into all contracts necessary or desirable to operate the system in its own name. Tigard shall issue and make provisions for repayment of any and all municipal revenue bonds or similar instruments issued to finance capital improvements to the system and may pledge any and all system revenues for repayment of such bonds or instruments. Tigard shall prepare and issue all statements and filings necessary to issue such bonds and shall make all continuing disclosures regarding the bonds or instruments as may be required by state and federal law or bond purchase agreements. A served Party may not issue or contract for any debt that is to be secured by any assets that are necessary to operate or maintain the water supply system. 1D. A served Party shall consider any request by Tigard to exercise powers of eminent domain if needed to acquire property within that Party's political boundary for use for the water supply system. A Party shall not unreasonably withhold its consent to such a request. A Party may condition its exercise of such authority on Tigard's agreement to pay all attorney fees and costs incurred in any such proceedings. IF. Tigard may incur, without the consent of any other Parties, debt relating to the water supply system, provided payment of the debt is fee, rate or charge based. If the debt is to be paid for by means other than fees, rates or charges, Tigard must have approval and consent of the governing bodies of all minus one of the Parties. Each Party shall be liable for its proportionate share of any debt which has been incurred under this section. Tigard Water Supply Agreement Page 2 2. Term of Agreement. 2A. The term of this Agreement shall be perpetual. Any served Party may terminate this agreement as between that Party and all other Parties by delivering written notice to the other Parties not less than 5 years prior so as to allow the Parties to reconfigure the supply, storage and distribution system serving the remaining Parties after any division of assets that may result from such termination. 2B. Tigard may terminate this Agreement as to any served Party only for cause and only after Tigard has served written notice to that Party of that Party's default as to a material term of this Agreement and has allowed that Party not less than 30 days to cure that default. On a Party's continued default Tigard may serve written notice of termination to that Party not less than 5 years prior so as to allow that Party to arrange for a replacement water source and supply system with Tigard or with another supplier. 2C. Tigard agrees to negotiate in good faith a wholesale water supply contract with a terminating Party on that Party's request. Tigard and the terminating Party may mutually agree to a different date of termination. 3. Intergovernmental Water Board. A. The Intergovernmental Water Board (IWB) is continued. The IWB shall consist of five members, with one member to be appointed by each of the four Parties to serve at the pleasure of the appointing Party and a fifth "at large" member who resides in the service area as shown in Exhibit 1 to this Agreement to be appointed by a majority vote of the other members and who shall represent the interest of the general public. The IWB shall decide the process by which it seeks candidates for and appoints the member at large. A member representing a Party shall hold a current elective office for that Party and shall be deemed to act on behalf of the governing body of that Party when voting on any issue before the IWB. The extent to which that Party's member's vote at the IWB is binding on the Party that the member represents shall be determined by each Party. Each Party may appoint an alternate IWB member who may take the place of the regular member who is absent at any IWB meeting. An alternate member shall have the same qualifications as the regular member. A person appointed to fill a vacancy shall serve the term of the position that was vacated. The IWB by majority vote may declare a position to be vacant for that member's unexcused absence for more than 3 consecutive IWB meetings and shall notify the Party of any such declared vacancy. A Party so notified shall promptly appoint a replacement to fill the term of that vacancy. The Party members shall appoint a member at large for the remainder of the existing term of that position if and when that position becomes or is declared to be vacant. 4. Term of IWB Membership. An IWB member shall continue to occupy the same position on the IWB from and after the adoption of this Agreement for the duration of that member's term. Each IWB Tigard Water Supply Agreement Page 3 position including the Member at Large shall have a term of two years that begins on January 1 and expires on December 31 of the second year of each term. There is no limit on the number of terms that any person may serve in any position. Notwithstanding that the term of a position has expired, the Member occupying that position may continue to serve on the Board until a successor is appointed. 5. Conduct of IWB Meetings. 5A. The IWB shall schedule regular meetings and shall conduct all meetings according to Oregon public meetings law and any rule of conduct approved by the Tigard City Council. At its first meeting in every calendar year the IWB shall elect a chairperson for the ensuing calendar year and may elect other officers, all of whom shall have such powers and duties as assigned by the IWB. The Chair shall set the agenda for each meeting. A quorum of the IWB shall be three (3) members and no vote shall be taken on any matter requiring a vote without a quorum. All matters requiring a vote shall be enacted by affirmative vote of at least three (3) members present and voting except where this Agreement provides a different voting requirement. 56. Tigard shall budget for and provide a sufficient number of employees to provide staff support to the IWB during and between meetings. Tigard employees shall serve at the pleasure of Tigard and shall have no voting privileges. Tigard shall provide adequate facilities and equipment for use for all IWB meetings. 6. Jurisdiction of IWB. 6A. The IWB shall hear and by a majority vote of those members present and voting may advise the Tigard City Council on the following issues: 1) Uniform rate structures to be charged to all water system customers throughout the system, including connection charges, with different rates to be allowed only for different classes of use (e.g., residential, commercial, industrial, irrigation, high elevation surcharge) and all rates and charges (e.g., block rates, consumption rates, lifeline rates) are to be limited to the costs of service; 2) Operation and maintenance issues referred to the IWB by Tigard or that a majority of the IWB raise on the IWB's own motion: 3) The proposed annual budget for the Parties' water supply system; 4) Policies and rules for curtailing water consumption in the same manner throughout the service area in cases of emergency: 5) Capital improvements not listed or scheduled in a capital improvements plan that is adopted as part of Tigard's annual budget for the system; 6) Tigard's proposed issuance of municipal revenue bonds or similar instruments to be used to finance water system capital improvements or to refinance existing water system revenue bonds; 7) Any and all rules and regulations issued by Tigard as to the use of the water system. 8) A proposal by Tigard to provide water service to any area or to any public or private reseller of the water that is located outside the Parties' combined service area as shown Tigard Water Supply Agreement Page 4 on Exhibit 1 to this Agreement, or a proposal by Tigard to serve by wholesale contract a once-served Party who has terminated this Agreement; 9) A proposal by Tigard to enter a contract or partnership with a water source other than a mutual aid or similar emergency supply agreement; 10) The valuation of a served Party's ownership share(s) of System Assets when recalculated from time to time and when calculated at the time of a Party's termination of this Agreement, as further provided in this Agreement; 11) The sale or purchase of any real property used or proposed for use in the water system, and the terms of any such sale or purchase; 12) The assignment, sale or other conveyance or transfer of any Party's rights or liabilities under this Agreement to any person or entity other than another Party. 6B. In all cases, action taken by the IWB shall be advisory to the City of Tigard. The City shall address and consider the Board's recommendation when taking action or a position on the matter. 7. Ownership and Valuation of Assets. 7A. Each of the Parties owns an equitable, undivided common share (as calculated per Section 713 of this Agreement) of all System Assets used in the system wherever located. The City of Tigard is authorized to pledge the Parties' equitable shares of ownership of any and all such System Assets, to the repayment of any revenue bonds, whereby such interest of the Parties shall be subordinated to the interest of the bond holder(s) as to any and all revenue bonds sold by Tigard to finance capital improvements to the Parties' water supply system the extent required by the debt instrument(s). 713. A Party's equitable share of a system asset, whether real or personal property, shall be calculated using cumulative meter equivalency values, as defined by the American Water Works association Manual M1, and as shown in Table 7.1. Tigard shall recalculate those shares every two years in the course of Tigard's annual audit and consolidated financial reporting process and will recalculate the Parties' shares on any Party's termination or on dissolution of this Agreement. The Parties' shared interests in any system asset that is real property and that Tigard uses in part for purposes other than operation of the water system shall be shown by lease agreements between the Parties and Tigard and recorded in county deed records. 7C. All System Assets and Other Assets shall be pledged by the Parties to the City of Tigard. All System Assets and Other Assets shall be managed by Tigard and shall be utilized by Tigard in order to provide water services to properties, residences and businesses in the service area. 7D. The value of a system asset shall be calculated by one method for assets that are personal property and another method for real property. An asset that is personal property shall have that asset's depreciated value over its useful life using straight line Tigard Water Supply Agreement Page 5 depreciation as are set out in the "Tigard Water District System Assets and Liabilities Final Report" of November 1994 , Section II, attached hereto as Exhibit 2. The depreciated value shall be based upon the useful life of the capital improvement under generally accepted accounting principles using a straight line method of depreciation. An asset that is real property shall be valued by an independent appraisal at such time as the property or a portion of same is assigned, sold or otherwise conveyed and at the time of any Party's termination or the dissolution of this Agreement. A list of all System Assets, as of July 1, 2010, is attached hereto as Exhibit 2. Assets not listed in Exhibit 2, or subsequent exhibit amending Exhibit 2, are System Assets if the asset falls within the meaning of the term "system asset" as defined at Section 15.5 of this Agreement. 7E. The proceeds of any sale or other conveyance of any portion or all of a system asset that is real property shall be considered a system asset and deposited into the "Water CIP Fund" or similar other segregated account for use for capital improvements 7F. Tigard shall maintain all assets according to industry standards and shall consider the disposition of any asset that is or becomes surplus to the needs of the water supply system. Tigard shall adequately insure all System Assets against all risks of loss and charge such costs to the Water system. Tigard on any served Party's request, given with adequate notice shall calculate the value of that Party's ownership share of a system asset for that Party's use in its annual budget as may be required by General Accounting Standards Board rules. 7G. For the duration of this Agreement, the cities of King City and Durham and the Tigard Water District, shall be entitled an annual surcharge which shall be calculated as set forth for the year 2010 in Table 7.1 of this Agreement. Tigard shall dispense that amount to a served Party at least once annually. Tigard Water Supply Agreement Page 6 Table 7.1 Current Meters AWWA TWSA 2009 Proposed 1% in Meter Asset $ per 2010 Est. 2010 Jurisdiction 2009 Rev calc 2009 E iv. Ownership M. E. Ad ustment Surcharge Durham $190,856.52 $1,908.57 354 504 2.02% $3.79 $6.00 $3,024.00 Fire Hydrant $4,524.45 N/A N/A N/A N/A N/A N/A N/A King Cit $411,886.61 $4,118.87 1313 1541 6.17% $2.67 $6.00 $9,246.00 Metzger $465.07 N/A N/A N/A N/A N/A N/A N/A Tigard $5,739,880.45 N/A 12410 17533 70.25% $ - N/A N/A Tigard Water $1,703,524.79 $17,035.25 3742 5379 21.55% $3.17 $6.00 $32,274.00 $8,051,137.89 17819 24957 100.00% $44,544.00 8. Division of Assets on Termination or Dissolution. 8A. Upon termination of this Agreement, a Party shall have rights to the use of all System Assets equal to its equitable share, as calculated in section 7B. Tigard shall be compensated for any use of its water system necessary for the continued reasonable use of a system asset by a terminating Party. If a system asset is not essential to the operation of a terminating Party's water system, Tigard may terminate such jurisdiction's right in the system asset capital improvement by payment of a sum equal to the terminating Party's equitable share in the depreciated value of the asset. Alternatively, the Parties may negotiate a wholesale water supply agreement between the terminating Party and the remaining Parties. A Served Party that terminates this Agreement shall not thereby be relieved from liabilities and indebtedness previously contracted by Tigard for the benefit of the water supply system and shall assume its share of that liability and debt. 8B. If this Agreement is terminated by any Party and the terminating Party has remaining indebtedness incurred under Section 1 B, the terminating Party shall either: 1. Pay in full, within 60 days of the effective date of termination, its proportionate share of the indebtedness; or 2. Pay annually its proportionate share for the indebtedness as payment is due. Tigard Water Supply Agreement Page 7 8C. Revenue generated by the operation of the supply system shall not be subject to distribution or accounting on a served Party's termination and shall not be subject to an equitable or other claim by that Party. 8D. A terminating Party may offer to convey its ownership share of System Assets to Tigard and may waive its rights to a division of assets as provided in this Agreement in consideration of a wholesale contract for water supply between the terminating Party and Tigard. Any such contract is subject to IWB review. If the asset is not essential to the operation of such jurisdictions' water system, Tigard may terminate such jurisdiction's rights in the system asset capital improvement by payment of a sum equal to the jurisdiction's proportionate Interest in the depreciated value of such system asset. 8E. Tigard shall have the first right of refusal to purchase a served Party's share of a system asset on that Party's termination of this Agreement or on the Parties' decision to sell all or a portion of a system asset, on the same terms and conditions as offered to any other person or entity. The offer to purchase and Tigard's exercise of its rights as to that offer shall be on the same terms as in that certain Tenancy in Common agreement between the served Parties and Tigard for the property commonly known as 8777 Burnham Street, Tigard, Washington County, Oregon entered in or about June 2007, attached hereto as Exhibit 3. 9. Accounting and Records. 9A. Tigard shall account for the operation and maintenance of the water system as an enterprise fund using generally accepted accounting principles applicable to utility enterprises for the recording and identifying of all revenues and expenditures. . 9B. Tigard shall respond in the normal course of business to all requests for public records by persons who are not Parties and shall defend the other Parties and hold them harmless from any and all claims or legal actions made or filed by the person making the records request. Tigard shall make all financial records available to any Party for inspection and copying on reasonable advance notice and during Tigard's ordinary business hours. 9C. Tigard shall present the proposed annual budget for the water system to the IWB for its consideration and recommendation(s) prior to Tigard's adoption of that budget. Tigard shall provide a copy of each year-end financial audit of its accounts to any Party upon that Party's request. 10. Boundary Changes, Mergers, Consolidations and Annexation of Territory The Parties' combined service area as it exists on the effective date of this agreement is shown with relation to the Parties' political boundaries on Exhibit 1 to this Agreement, attached and incorporated by this reference. Boundary changes, mergers, consolidations and annexation of territory shall occur consistent with state law, Metro "Tigard Water Supply Agreement Page 8 Code and the adopted Urban Service Area agreements between the Cities and Washington County. Parties have the rights granted pursuant to Metro Code and State law to participate in these proceedings. All Parties may enter an urban services provider agreement with Tigard for water supply as provided by state law. Tigard reserves the right to determine if water service will be provided in all expansions affecting the Parties of this agreement. 11. Amendment. No amendment to this Agreement and no substitution of any exhibit to this Agreement shall be effective unless in writing signed and dated by all Parties. 12. Severability. If any portion of this Agreement is for any reason held to be invalid or unconstitutional by a court of competent jurisdiction, all remaining portions of this Agreement shall remain in effect until this Agreement is terminated or expired. After any declaration of invalidity or unconstitutionality of a portion of this Franchise, any Party may demand that one or more other Parties meet to discuss amending the terms of this Agreement to conform to the original intent of the Parties. If the Parties are unable to agree on a revised agreement within ninety (90) days after such a court decision is final and binding, any Party whose rights and obligations are affected by the decision shall have cause to terminate this Agreement by delivering one hundred and eighty (180) days notice to the other Party. 13. Property Conveyances. All parties agree in good faith to execute any and all real property conveyances deemed necessary or desirable to show each Party's share of ownership of such property as provided for in this Agreement. 14. Execution and Effective Date. This Agreement may be executed in several counterparts, all of which when taken together shall constitute one agreement binding on all Parties who have signed, notwithstanding that all Parties are not signatories to the same counterpart. Each copy of this Agreement so executed shall constitute a duplicate original. 15. Definitions. As used in this Agreement, the below terms are defined as follow. 15.1. "Assets" include real, personal and intangible property. Assets are divided into two different groups, "System Assets" and "Other Assets." 15.2. "Intangible Property" includes but is not limited to: moneys, checks, drafts, deposits, interest, dividends and income 15.3. "Managing Authority" means that Tigard will provide water to properties and customers in the current jurisdictions of the Parties equally. If circumstances require water restrictions, each jurisdiction shall share equally. Tigard will provide equally and in a manner consistent with the terms of this Agreement all services required for Tigard Water Supply Agreement Page 9 delivery of potable domestic water to properties and customers in the current jurisdictions of the Parties, including but not limited to system repair and maintenance, water distribution, new installations, system upgrades and billing functions. 15.4. "Other Assets" are Assets not necessary for the operation of the City of Tigard's water supply system. Other Assets shall remain the property of the jurisdiction in which the asset is located. Water mains, service installations, structures, facilities, improvements or other property not necessary for the operation of the City of Tigard's water supply system are Other Assets. 15.5. "System Assets" are Assets necessary for the operation of the City of Tigard's water supply system. As used herein, the term System Assets does not include any assets constructed, under construction, or to be constructed by the City of Tigard pursuant to the certain Water Agreement between the cities of Tigard and Lake Oswego, entered into on August 6, 2008. Other Assets shall become the property of the jurisdiction in which the asset is located. The term "System Assets" as used in this Agreement includes, but is not limited to: i) all interests in real property, all improvements on that property and all other personal property and facilities wherever located that is used by any Party for the supply, treatment, storage, transmission or distribution of potable water to that Party or to any other person or entity; and, ii) all revenue generated from the sale of any portion of the Parties' domestic water supply to any person wherever located, including connection and systems development charges; and, iii) all rights to the use of surface-, in stream- or groundwater held by- or for the beneficial use of any Party to this Agreement, notwithstanding that the formal certification or other evidence of that right may name fewer than all Parties to this Agreement as the holder or owner of that right; iv) all contracts held by Tigard or any other party with any entity not a party to this Agreement for a supply of water for the Parties' joint use. Tigard Water Supply Agreement Page 10 Intergovernmental Water Board Members November 2, 2090 NAME ADDRESS PHONE— FAX- E-MAIL TERM EXPIRATION Keith Jehnke 8015 SW Peters Road 503-572-9386 May 2010 - Durham Representative Durham, 97224 keith(a)_aks-eng.com December 2011 Chris Hadfield 8253 SW Woody End 503-620-1877 (home) Durham Alternate Durham, 97224 Gretchen Buehner 13249 SW 136 Ih Place 503-684-1031(home) December 2010 Tigard Representative Tigard OR 97223 503-684-1031 (work) 971-506-2096 (cell) gebuehner(o)-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 2010 King City Representative King City, 97224 thermw(a_webtv.net David Newham 16330 SW King Charles Ave 503-718-8581 King City Alternate King City 97224 Julie Russell 12662 SW Terraview Drive (503) 603-9152 (home) June 2011 TWD Representative Tigard, OR 97224 (503) 312-9163 (cell) 3 iarussell59CcDcomcast.net T Ken Henschel 14530 SW 144 Avenue 503 579-8375 home ( ) (home) vo TWD Alternate Tigard, OR 97224 Ken.Henschel(a)-comcast.net r Mike Stone 16349 SW 107 Ih Ct 503-968-9128 (home) March 2010 - Member at Large Tigard, OR 97224 503-682-4960 (work) December 2011 stone(c-ci.wilsonville.or.us 0 IWB phone list—term expirations Distributed to IWB Members Via: - E-mail Mail !]In-p son at meeting City of Tigard . . , Memorandum To: Intergovernmental Water Board Commissioners From: Executive Assistant to Public Works Greer Gaston Re: Lake Oswego-Tigard Cost Allocation Date: November 2, 2010 At the request of Commissioner Buehner, I am providing: ■ An updated "Overall Program Cost Estimate Scenario Summary" table, dated October 14, 2010. ■ An October 2, 2010 memo regarding"Program Costs —Sponsor Allocations." Commissioner Buehner briefed the Board on the information contained in these documents at October 13, 2010 IWB meeting. Lake Oswego•Tigard Water Partnership Lake Oswego-Tigard Water Program Overall Program Cost Estimate Scenario Summary 10/14/2010 12:05 Lake Oswego Lake Oswego Scanarfo A Description Phase I Phase II Program Total Allocation Tigard Allocation Net Present Value 25 years E Bass Cass(based on 2006 study) $200,000,000 $93,100,000 $114,900,000 w n Base Case Scenario as F H C Onginal Avocation 42.34% 57.49% t , O e 36 MGD With Ozone - $M.200,000 $106,/79,000 $123,232,000 $163,000,000 CL c a p_1 C i 0 Allocation Percentage 49.47% 53.53% � � u N 36 MGD WNhout Ozone - $212,400,000 $94,363,000 $119,070,000 $151,000,000 IL' P-2 Allocation Percentage 44,42% 53.59% A 1 24 MGD With Ozone $173,900,000 $176,800,000 0 2015 Completion 4 24 MGD Without Ozone r0 A-2 2015 Completion $160,300,000 $160,300,000 $228,000,000 m21 MGD y B 10%Conservation $66,000,000 $139,000,000 $203,000,000 $205,DD0,000 .. $229,000,000 2023 Completion Y 19 MGD J C 25%Conservation $62,300,000 $232,400,000 $254,700,000 $294,700,000 $243,000,000 2035 Completion LAKE ONEGOM MEMORANDUM Lake Oswego/Tigard Water Supply Partnership TO: Oversight Committee FROM: Joel B. Komarek, P.E., Project Director Technical Committee DATE: October 2, 2010 SUBJECT: Program Costs—Sponsor Allocations Program Cost Update At a meeting of the Oversight Committee (OVC) held on September 8, 2010, the Technical Committee (TC) presented updated program costs for the water supply expansion project ("the Project") for the cities of Tigard and Lake Oswego ("Program Sponsors"). The TC reported that over the last six months program consultants along with sponsor staff have been engaged in a comprehensive project definition effort and through this work an improved understanding of the infrastructure needs for the Initial Expansion had been achieved. Based on this improved understanding, the TC reported that program costs are now estimated to range from a low of$196M to a high of$281M with the figure $230M considered to represent a midpoint of the range. For context the TC noted that the prior reported program cost estimate of$200M represented a mathematical escalation of cost estimates developed in 2006 and published in 20071. The TC also reported that quality control review of the updated costs was ongoing and that at the October 4 meeting of the OVC, the TC would present updated information on the allocation of the updated costs to each city. Cost Allocation Methodology To be meaningful, discussion of updated cost allocations must be preceded by a review of certain terms contained within the partnership Intergovernmental Agreement ("IGA") relating to cost allocation and a review of Exhibit 7. This discussion and exhibit follows. Table 2.36 Supply Scenario 4:"Draft Summary Report,Joint Water Supply System Analysis",July 2007,Carollo Engineers. Memorandum Oversight Committee Page 2 Water Demands and Capacity Shares Program cost allocations and facility ownership shares have their basis in each city's forecasted population and water demands through build-out (assumed to occur in 2045). This analysis estimated that Lake Oswego water demands could ultimately reach 24 million gallons per day (mgd)on a peak day. Tigard's peak day demands are forecasted to be just over 21 mgd. Lake Oswego's Clackamas River water rights limit diversions to a maximum of 38 mgd. The IGA establishes Lake Oswego's ultimate ownership in supply facilities at 24 mgd. This leaves Tigard with 14 mgd. The difference between Tigard's partnership allocation of 14 mgd and its future build-out need will be addressed through its use of Aquifer Storage and Recovery("ASR")and other supply sources. "Initial Expansion" The IGA defines"Initial Expansion"as the planning, design,financing and construction of a water supply system that will treat and deliver 32 mgd of water to the parties by 2016. Of this amount, the Lake Oswego allocation is 18 mgd and the Tigard allocation is 14 mgd. The IGA contemplates that when or if Lake Oswego's demands exceed 18 mgd, it will implement another expansion to meet this demand up to a maximum of 24 mgd. New capacity vs. existing capacity Certain facilities to be constructed in the Initial Expansion will be new and will replace existing water system facilities owned by Lake Oswego. Other facilities will be additions to existing facilities and both existing and new facilities will operate together to deliver the total capacity needed for the Initial Expansion. In the former case,cost allocations will be based on each cities proportionate share of capacity in the new facility or"Proportional allocation". In the latter case,cost allocations will be based on each city's proportionate share of the capacity added to the existing facility or"incremental allocation". Implementation strategies and economies of scale Economies of scale and the sharing of costs to construct major capital facilities provide significant financial incentive to the partnership. These facilities will be designed to provide reliable service for 50 years or more. Because of the life cycle of these facilities it makes good financial sense to design and construct them to a size that will accommodate the needs of future generations. This strategy avoids the uncertainty and future costs associated with "under-sizing"facilities now for minimal or in some cases non-existent cost savings and then having to "right size"facilities in the future. This is particularly true for the planned new river intake pump station and raw and finished water pipelines. These facilities will be located within or will cross environmentally sensitive lands. To construct these facilities will require significant environmental review and permit acquisition. Right sizing these systems now mitigates future permitting uncertainty and potentially significant marginal costs per unit of new capacity derived. Memorandum Oversight Committee Page 3 Exhibit 7 Exhibit 7z summarizes the above discussion in tabular form. Cost estimates shown for the river intake pump station and raw and finished water pipelines reflect right sizing these systems now for the ultimate anticipated demand of 38 mgd. This capacity becomes the denominator in the capacity allocation ratio. For Lake Oswego, the numerator reflects its forecasted future water demand. For Tigard,the numerator reflects its maximum allocation of water pursuant to the IGA. Ratios of 24/38, 14/38 or 1.0/2.5 indicate use of a "proportional allocation". By contrast, the allocation percentages for the water treatment plant ("WTP") and finished water pipeline ("FWP") from Iron Mountain Blvd to Waluga Reservoir(i.e,, reach 11-12) reflect an "incremental capacity" allocation. EXHI BIT 7 ALLOCATION OF SYSTEM IMPROVEMENT COSTS TO THE PARTIES Cost of Lake Oswego Tigard Improvement Allocation(%) Share ($) Allocation(%) Share($) (i n 2006$) Water Treatment Plant Existing Plant n/a 100.00% n/a 0.00% $ 32 mgd Expansion $ 39,430,000 2/16 $ 4,928,750 14/16 $ 34,501,250 38 mgd Expansion n/a 100%** n/a 0.00% $ - Raw Water Intake and Pump Statio $ 4,440,000 24/38 $ 2,804,211 14/38 $ 1,635,789 Raw Water Transmission Main $ 23,920,000 24/38 $ 15,107,368 14/38 $ 8,812,632 Finished Water Transmission Main Reaches 7- 10 $ 38,220,000 24/38 $ 24,138,947 14/38 $ 14,081,053 Reaches 11- 12 $ 17,020,000 8/22 $ 6,189,091 14/22 $ 10,830,909 Storage (MG) $ 4,010,000 1.0/2.5 $ 1,604,000 1.5/2.5 $ 2,406,000 Bonita Road Pumping Station $ 1,700,000 0.000/0 $ - 100% $ 1,700,000 Total Costs $ 128,740,000 42.54% $ 54,772,367 57.46% $ 73,967,633 *-Project costs are presented in 2006 dollars. Actual cost will depend on project start and completion dates. •-Second(6mgd)expansion is currently assigned to Lake Oswego. Contract provides for potential reallocation by agreement. 2 Exhibit 7 is an exhibit to the water partnership IGA. Memorandum Oversight Committee Page 14 Cost Allocation Update At the last meeting of the OVC, the TC reported that due to age, obsolescence, current building codes, current and future operations needs and the recommendation to include Ozone in an expanded WTP, many systems within the existing WTP will have to be replaced and new buildings constructed. Current estimates suggest that the Ozone process (sized for 38 mgd) adds a cost premium of$17M to WTP costs. Applying the cost allocation methodology described above for new facilities (i.e., "proportional allocation") results in approximately$11M of these costs being allocated to Lake Oswego. Because the most expensive component of the overall partnership program is the WTP, costs for the overall program shift toward Lake Oswego. Also adding to the allocation shift is the plan to construct a larger Waluga reservoir to address existing storage deficiencies in this zone and add volume to meet future build-out storage requirements and replace volume lost by the eventual decommissioning of Lake Oswego's 85- year old, riveted steel, 10th Street tank. These items acting collectively result in the allocation ratios shown below for several different supply scenarios. Lake Oswego •Tigard & Water Partnership Lake Oswego - Tigard Water Program Overall Program Cost Estimate Scenario Summary Scenario# Scenario Program Total Lake Oswego Tigard Allocation Allocation Base Case(based on 2006 study) $200,000,000 $85,100,000 $114,900,000 Base Case Scenario Original Allocation 42.54% 57.46% 38 MGD With Ozone $230,200,000 $112,800,000 $117,400,000 1 Allocation Percentage 49.00% 51.00% 38 MGD Without Ozone $212,400,000 $100,300,000 $112,100,000 2 Allocation Percentage 47.23% 52.77% 3 24 MGD With Ozone $178,800,000 $178,800,000 NIA 4 24 MGD Without Ozone $160,300,000 $160,300,000 NIA The TC looks forward to discussing this new information with the OVC on Monday. Please feel free to email me at omarek@ci.oswego.or.tls with any questions this memorandum may give rise to and that you would like addressed on Monday. City of Tigard 13125 SW Hall Blvd. Tigard, OR 97223 Phone: 503-639-4171 FAX TRANSMITTAL Date November 3, 2010 Number of pages including cover sheet 3 To: The City of King City (Fax No. 503-639-3771) The City of Durham (Fax No. 503-598-8595) From: Greer Gaston Co: City of Tigard Fax#: 503-684-8840 Ph#: 503-718-2595 SUBJECT: Intergovernmental Water Board Meeting Agenda MESSAGE: Please post the attached agenda for the upcoming meeting of the Intergovernmental Water Board. Thank you. [:ENGTAX.DOT Intergovernmental Water Board Agenda SERVING TIGARD,KING CITY,DURHAM AND TIGARD WATER DISTRICT MEETING DATE: Wednesday, November 10, 2010, 5:30 p.m. MEETING LOCATION: Tigard Public Works Building 8777 SW Burnham Street Tigard, OR 97223 1. Call to Order, Roll Call and Introductions Call the meeting to order, staff to conduct roll call. 2. Approval of Minutes — October 13,2010 Action: Motion to approve the October 13, 2010 minutes. 3. Public Comments Call for comments from the public. 4. Water Supply Update -John Goodrich 5. Discussion of Intergovernmental Agreement —Dennis Koellermeier 6. Discuss IWB Representatives' Terms which Expire in December 2010 7. Informational Items a. Update from Commissioner Buehner on Lake Oswego/City of Tigard Oversight Committee activities. b. Update from Commissioner Winn on West Bull Mountain Technical Advisory Committee activities. 8. Non-Agenda Items Call for non-agenda items from the Board. 9. Future Agenda Items Schedule Date Item February 9, 2011 Election of Chair and Vice-Chair To Be Announced Additional Tenancy in Common Agreements for Properties within the Tigard Water Service Area. 10. Next Meeting: ■ December 8, 2010 at 5:30 p.m. Public Works Auditorium, 8777 SW Burnham Street, Tigard, Oregon 11. Adjournment Action: Motion for adjournment. INTERGOVERNMENTAL WATER BOARD AGENDA—November 10, 2010 City of Tigard 1 13125 SW Hall Blvd.,Tigard,OR 97223 1 503-718-2591 1 www.tigard-or.gov I Page 1 of2 Executive Session The Intergovernmental Water Board 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. INTERGOVERNMENTAL WATER BOARD AGENDA—November 10, 2010 Cityof Tigard 1 13125 SW Hall Blvd.,Tigard,OR 97223 1 503-718-2591 1 www.tigard-or.gov I Page 2 oft TRANSMISSION VERIFIi=ATION REPORT TIME 11/03/2010 17:24 NAME COT-PW FAX 5036848840 TEL 5036848840 SER.# 000L9N215453 DATE DIME 11/03 17:24 FAX NO./NAME 5036393771 DURATION 00:00:44 PAGE(S) 03 RESULT OK MODE STANDARD ECM TRANSMISSION VERIFICATION REPORT TIME 11/03/2010 17:26 NAME COT-PW FAX 5036848840 TEL 5036848840 SER.# 000L9N215453 DATE DIME 11/03 17:26 FAX N0./NAME 5035988595 DURATION 00:00:45 PAGE(S) 03 RESULT OK MODE STANDARD ECM