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11/12/2009 - Minutes Intergovernmental Water Board (IWB) Meeting Minutes November 12, 2009 Tigard Public Works Building 8777 SW Burnham Street Tigard, OR 97223 Members Present: Gretchen Buehner Representing the City of Tigard Patrick Carroll Representing the City of Durham Ken Henschel Representing the Tigard Water District Dick Winn Representing the City of King City Bill Scheiderich Member At-Large Members Absent. None Staff Present: Public Works Director Dennis Koellermeier Utility Division Manager John Goodrich IWB Recorder Kathy Mollusky 1. Call to Order, Roll Call and Introductions Commissioner Carroll called the meeting to order at 5:32 p.m. 2. Approval of Minutes —September 9, 2009 Commissioner Buehner motioned to approve the September 9, 2009 minutes; Commissioner Winn seconded the motion. The minutes were approved by unanimous vote of the Commissioners present, with Commissioners Buehner, Carroll, Henschel, Scheiderich and Winn voting yes. Commissioner Henschel would like the November 12, 2009, minutes to reflect he changed his vote to yes on item 6 - Discussion of Possible Methodologies to Calculate Ownership Interest from the September 9, 2009 meeting. 3. Public Comments: None 4. Water Supply Update Mr. Goodrich reported we are currently running 3.9 to 4.1 million gallons per day. We have not yet started injection in our ASR program; we are waiting to see what is happening with Portland Water Bureau as far as turbidity. This week we have been showing 0.55 to 0.6 turbidity, which is below our curb so we may start injection as soon as next week. The rain has filled Bull Mountain Reservoir 18 feet, which helps reduce turbidity. We do not want to inject water into the aquifer with high turbidity because it could clog the aquifer. Intergovernmental Water Board Minutes November 12,2009 1 5. Discussion of Draft 1993 Intergovernmental Agreements between Durham and the City of Tigard, King City and the City of Tigard, and the Tigard Water District and the City of Tigard — Commissioner Scheiderich Note: The Board skipped to Item 6, finished the rest of the items, then returned to Item 5. Pae 1 Opening Paragraph -The opening paragraph intent is to state that what exists is a wholesale water provider agreement between City of Tigard (COT) and everyone else. This is not purely a wholesale water provider contract, especially with the ownership of assets, which is not typically in a wholesale water agreement. There are carryovers from the past agreement whereby share of ownership was granted in exchange for everyone joining. Page 1, Recitals - Recitals show what the intent of the agreement were if any legal disagreement were to occur. It is a bit of prior history that includes the incentive, that everyone will have a share of the assets. This agreement is unique. It differs from state law regarding wholesale water supply agreements. It is important to show why we made the agreement the way we did. • This agreement gives all parties a shared interest in all assets no matter where the assets are located. If it were a pure wholesale provider agreement, there would not be any ownership of assets across political boundaries. Any political act that takes territory out of one boundary and puts it in a different boundary just divides the assets in the ground. This agreement describes the system assets that would have to stay with COT if another city withdrew. At dissolution, the parties could go to the division of assets. Without paying anything, the withdrawing party would get the local distribution lines, not transmission lines. For instance, if someone withdrew and did not assign a successor, Tigard would identify the 72" line as a major water supply line and say it belongs to COT because it is necessary to the operations. A 6" line running down a street in a particular City would not be a COT line, COT would have no use for them. • This agreement values other assets worth as zero. This is unique to this agreement. The standard for valuing personal property (everything but real estate) is usually replacement cost less depreciation. Modern agreements typically use the Joint Water Commission standard when valuing pipeline which is the cost to replace, age, useful life, and current worth. All parties pledge all assets, wherever they are located, to use for the common water system. • COT shall determine all rates and charges. COT is adopting the capital improvement plan and issuing revenue bonds. If the agreement said we should have consensus or use a veto approach, this would cause havoc on the issuing department. Commissioner Carroll states the IWB is more aggressive in raising rates than COT, so this is a non- issue. IWB is an advisory board that influences COT. The Council historically passed the IWB recommendations. If a city thought COT was getting too expensive, they could withdrawal. • Commissioner Henschel inquired if a city could enact System Development Charges (SDCs) outside their jurisdiction. Commissioner Scheiderich states the contract recognizes that the water service provider, COT, runs the capital improvement plan and spends the money. The 1GA delegates the right to collect SDCs to COT. Everyone Intergovernmental Water Board Minutes November 12,2009 2 pays the same charges, called meter connection fees. COT collects the flee when someone connects to the water service. Commissioner Scheiderich will make statement stronger and clearer that the parties are delegating this responsibility to COT. Each city has appointed someone to the IWB to make decisions on their behalf. The agreement delegates all revenue bond financing decisions to Tigard. The federal law says if COT becomes aware of something that happens to affect their ability to pay back bonds, they must disclose it. It would be problematic to go a different avenue, like having revenue bonds issued by individual parties. They would be issued privately based on each city's credit worthiness. Each city would have to gather signatures and refer to a vote. That is at least a 90-day process. COT cannot pledge assets, only cash. Commissioner Scheiderich will cross-reference that COT can pledge all revenue except the 1% each city receives. • The served party shall consider any request regarding condemnation by COT. Cities will declare we need the property, but COT must supply attorneys, appraisers, etc. Host government cannot unreasonably withhold consent, which means a judge will decide if the two parties cannot agree. Cities do not want to condemn property. Page 2, Item 2, Term —Keep the same five-year notice to terminate agreement. Tigard cannot initiate a withdrawal or termination since they are the provider. The agreement should say Tigard and all the other parties. • Five years make sense now, but in the future if there is debt and someone leaves before the debt is retired, there may be a 15-year hole of debt without the anticipated revenue. In termination, we could say to follow the model of state law regarding assets and liabilities. When a city withdrawals, the debt must be paid off, either annually or in a lump sum. That becomes a debt against assets, a line item on a calculation sheet. COT will have to run this by the Bond Council to see if they are happy with this approach or if they want to have some guarantee of cash flow. Commissioner Henschel inquired if COT would raise rates to cover the bond if this were not available. The interest rate would be raised if it were not secure. Another problem with this approach would be fairness. If the system was built big enough for everyone and someone terminates, the rest of the cities would have to pay for something bigger than they need. • If something goes wrong in this agreement, the cities have 30-days notice to fix what is wrong or COT may terminate the agreement. Upon request, COT agrees in good faith to negotiate a replacement wholesale water provider. Basically, the cities can be a partner or a client of Tigard. Pane 2, Item 3, Intergovernmental Water Board —The IWB shall decide the process by which it seeks a member-at-large. The member-at-large representative shall reside in the district area. • A member representing a city shall hold a current elected office of that city and must reside in the service area, rather than be an appointed official. Alternate members have the same qualifications as regular members. • After three unexcused absences, the IWB, by majority vote, may ask the Public Works Director or the Chairman to call the city requesting another member. They will inform Intergovernmental Water Board Minutes November 12,2009 3 the city that decisions are being made and they are not being represented. An absence is considered unexcused if the member does not notify the Public Works Director or his assistant. • According to the Tigard Water District (TWD), their Board cannot delegate the authority to vote. Both the TWD and Mr. Koellermeier will have their respective legal council look into whether TWD can vote without going back to their Board. • Everyone agrees they require an agenda, minutes, and notification needs to get out to the press 72-hours in advance. • IWB members are elected every year. Members may elect other officers if they so desire. • All matters requiring a vote shall be enacted by an affirmative vote of three members present and voting. Affirmative votes count, abstains do not count; however, they still count as a quorum.. No vote shall be taken on a matter requiring a vote without a quorum present. • IWB meetings shall be scheduled monthly. COT staff supports IWB meetings; COT staff does not support TWD meetings. • Annually, COT will hold a public meeting during one of the IWB workshop meetings, inviting Councils from each city to attend. • Uniform rates - the only difference of rates allowed is different levels of use for residential, commercial or high elevation surcharges. An advisory vote is required on the following: o proposed annual budget o policy and rules for curtailing consumption on billing methods o customer account management including meter reading contracts o unlisted capital improvement projects o COT's issuance of municipal revenue bonds for water system and o any and all rules and regulations including water consumption for use of water • Mandatory votes are binding on Tigard by the parties, member-at-large vote is not binding. Mandatory votes are required on the following: o expanding service area service outside of existing service area and service by a wholesale contract o municipal revenue bonds for new service area o contractor partnership with new water provider except a mutual aid or emergency situation o valuation of a separate party's ownership share o sale or purchase of real property and proposal to mortgage part of the system o assignment sale or conveyance that will transfer another party's rights to any other person Intergovernmental Water Board Minutes November 92,2009 4 • The IWB will finish going through the entire IGA, then will submit the IGA to their respective legal councils. Commissioner Scheiderich will fix things discussed tonight and send out the changes made within a week. February is the target date for each respective city's lawyer's comments to be complete. The IWB will have a joint meeting with Tigard City Council to address any questions or concerns. Tigard's workshop meetings are the 3r� Tuesday of the month. The IWB stopped the discussion and will continue next month starting with (7) Ownership. 6. Informational Items a. Update from Commissioner Buehner on !rake Oswego/City of Tigard Oversight Committee activities. • Commissioner Buehner reported the Lake Oswego/City of Tigard Oversight Committee found someone they want to be the contract program manager, but it formally has to go to the Lake Oswego Council. The Council is going through a very detailed analysis of the proposals. The proposals came in with different numbers and assumptions, but all should be onboard within a month. The award of the contract needs to go to the Lake Oswego Council, which is scheduled this month, COT just pays the bill. • The contractor, Brown and Caldwell, should be in place to get started around December 1. The necessary staff has been hired and they have finished the discovery process of the case. It is appropriate for someone to file a summary judgment motion. Those will be happening through the end of December. The Administrative Law Judge will rule on those motions by the end of January. Mr. Koellermeler thinks the hearing date will be scheduled in early March. b. Term Expiration for Commissioners Carroll and Scheiderich • Commissioner Scheiderich will not run again for the member-at-large position. Commissioner Carroll asked Commissioner Scheiderich if he would be willing to moderate the discussion regarding the IGA until it is completed. The IWB will take applications for a new member-at-large, but it is only to the IWB's benefit to keep Commissioner Scheiderich until we get all the details worked out and complete the final draft. Commissioner Scheiderich agreed to remain with a three-month maximum extension. Commissioner Carroll feels it will be completed by then. • Commissioner Carroll is resigning from Durham City Council the first part of the year. His intent is to have the Council reappoint him until the agreement is signed. Then he will resign and Durham City Council will appoint a replacement for him. Commissioner Carroll will request his proposed replacement attend IWB meetings for few months prior to his resignation for a smoother transition. • Mr. Koellermeier inquired if the Board would like us to start advertising for the member- at-large position while keeping Commissioner Scheiderich on as a consultant. The Board wants COT to start advertising for the position using the COT volunteer process, the website, putting notices in each jurisdictions newspapers, the Tigard Times and the Oregonian. Intergovernmental Water Board Minutes November 12,2009 5 c. Burnham Street Update Mr. Koellermeier informed the Board that the COT has finally started the major construction project, which will rebuild Burnham Street end to end. It will significantly widen and make the street pedestrian friendly. This is part of the catalyst project for the downtown project and is anticipated to be an18-month construction project. The orange fence is a visual boundary, the contractor has one side and the property owner has the other. 7. Non-Agenda Items: Tualatin Valley Water District (TVWD) and COT Water Service Boundaries • COT has been in negotiations with TVWD about adjusting boundaries. Mr. Goodrich stated that in 1973, TWD and Metzger had boundary changes occur because some customers wanted higher water pressure, wanted to be on Portland water, or did not want to be on Clackamas water. Through an agreement, they changed isolated valves and adjusted customer billing, but did not change boundaries due to a revenue bond they were collecting at that time. Since then, the bonds have been paid. • Tigard approached TVWD regarding the housekeeping that should take place regarding property annexed in,the COT. The area is by Hunziker Road down 72nd to Sequoia Parkway. COT serves this area that is currently in TVWD boundary area. • On November 17, Mr. Koellermeier is meeting with City Council to discuss if they want to move forward. If Council does, there will be a public notice. Unfortunately, the only way to complete this is to do a formal withdrawal of territory. There will be a public hearing on December 8 and hopefully the City Council will hear comments and will adopt the 1 ordinance. COT bills these customers already. • There is a little area, called Rolling Hills, which will remain in TVWD territory. COT would have to do more than we are currently doing to serve this area because TVWD supplies water to this area and they are not willing to give up this portion. TVWD is sending a letter to the customers in the Rolling Hills area informing them they may hear of a boundary change in their area, but it does not affect them. • COT is legally withdrawing territory from TVWD putting it into COT. Approximately 435 customers are being withdrawn. Nothing is changing for the customers. • COT does not serve anything past Hwy 1-5. Mr. Koellermeier originally suggested Highway 217 as a physical boundary, however, TVWD does not want to go there cooperatively since we would be taking revenue away and we have no reason to start a non-cooperative withdrawal. This area is within the COT boundary, TVWD serves the northern 1/3 of Tigard. There is a legal precedence (House Bill 122)for a hostile takeover. If customers are in the city boundaries and the city can supply water, they can do a hostile takeover and serve the area. COT has not looked at this area; we would have to do a cost/benefit analysis. We have a reservoir on Baylor that could serve the area. Part of a hostile withdrawal process is taking over assets so Titan reservoir, etc. would go to COT. COT is not interested in pursuing a hostile takeover. 8. Future Agenda Items • PGE is driven by PGE's timeline. • We are continuing to work on the Tenancy4n-Common agreements (doing survey work, getting property descriptions) and checking legal description. The Board returned to Item 5. Intergovernmental Water Board Minutes November 12,2009 6 9. Next Meeting: ■ December 9, 2009 at 5:30 p.m. Tigard Public Works Building, 8777 SW Burnham Street, Tigard, Oregon 10. Adjournment At 7:17 p.m., Commissioner Winn motioned to adjourn the meeting; Commissioner Carroll seconded the motion. The meeting was adjourned by unanimous vote of the Commissioners present, with Commissioners Buehner, Carroll, Henschel, Scheiderich and Winn voting yes. IWB Chair Kathy Mollusky, 1WB Recorder Date: - V2, - �0 Intergovernmental Water Board Minutes November 12,2009 7