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05/14/2007 - Packet TIGARD WATER DISTRICT BOARD OF COMMISSIONERS MEETING Serving the Unincorporated Area Monday May 14, 2007 7:00 PM Tigard Public Library Second Floor Conference Room 13500 SW Hall Blvd. Tigard, Oregon . , _. REVISED AGENDA as of St *O ; Y x TIGARD WATER DISTRICT BOARD of COMMISSIONERS MEit Serving the Unincorporated Area Tigard Public Library Second Floor Conference Room 13500 SW Hall Blvd. Tigard, Oregon Monday, May 14, 2007, 7:00 p.m. 1. Call to Order, Roll Call and Introductions 2. Approval of Minutes—April 23, 2007 3. Visitor Comments 4. Discussion of Responses to Questions with Attorney Balfour 5. Water Supply Update—Dennis Koellermeier 6. IWB Update—George Rhine/Janet Zeider 7. Non-Agenda Items 8. Set next meeting date—June 25, 2007, at 7:00 p.m. at Tigard Public Works - ANNEX, 9020 S.W. Burnham Street., Tigard (corner of Burnham Street and Ash Avenue) 9. Adjournment Executive Session: The Tigard Water District Board may go into Executive Session under the provisions of ORS 192.660(2)(d), (e), &(h)to discuss labor relations,real property transactions,and current and pending litigation issues.If an Executive Session is called to order, the appropriate ORS citation will be announced identifying the applicable statute.All discussions within this session are confidential; therefore nothing from this session may be disclosed by those present.Representatives of the news media are allowed to attend this Session, 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 (IWB) Meeting Minutes May 9, 2007 Tigard Water Building 8777 SW Burnham Street Tigard, Oregon Members Present: Gretchen Buehner Representing the City of Tigard (arrived 5:32 p.m.) Patrick Carroll Representing the City of Durham George Rhine Representing the Tigard Water District Bill Scheiderich Member at Large Dick Winn Representing the City of King City Members Absent: None Staff Present: Water Quality/Supply Supervisor John Goodrich City Attorney Tim Ramis IWB Recorder Greer Gaston Note:Agenda items are recorded in the minutes in the order they were considered. This order varies from the agenda, thus the discrepancy in numbering. 1. Call to Order, Roll Call and Introductions Commissioner Scheiderich called the meeting to order at 5:29 p.m. 2. Approval of Minutes --April 11, 2007 Commissioner motioned to approve the April 11, 2007, minutes; Commissioner seconded the motion. The motion was approved by unanimous vote. 3. Public Comments Julie Russell, 12662 SW Terraview, expressed concerns about declaring the Canterbury property surplus and transferring ownership of the water building. She questioned whether the Tigard Water District (TWD) had decided or voted on the matter. She also expressed concern over the lack of public involvement associated with these transactions. Commissioner Rhine responded, with regard to the water building, the TWD had agreed to pursue the "tenants in common" proposal and to use this as a model for other property issues. intergovernmental Water Board Minutes April 11,2007 1 Ken Henschel, 14530 SW 144th Avenue, expressed confusion over the IWB considering a resolution on the Canterbury property when the TWD had not voted on the matter. The Commissioners and audience members discussed procedural issues, and what action the TWD had taken or might take regarding declaring a portion of the Canterbury property surplus. Mr. Koellermeier clarified disposition of the property was an IWB action and whether the TWD Board had voted was immaterial. Commissioner Buehner explained when the IWB was created by intergovernmental agreement (IGA) in the early 1990's, each of the IWB members were to be assigned a share of the former TWD assets. This assignment of assets never occurred. The IWB's actions related to the disposition of property are in accordance with the IGA and are akin to housekeeping measures. With the exception of entering into a long-term water contract, IWB Commissioners can vote on an issue, whether or not that issue had been discussed with the entity they represent. Mr. Henschel questioned implementing housekeeping measures thirteen years after the original IGA and requested a more public process. 2. Approval of Minutes — February 14, 2007 Commissioner Buehner motioned to approve the February 14, 2007, minutes; Commissioner Carroll seconded the motion. The motion was approved by unanimous vote. 5. Consider a Resolution Regarding the Tualatin Basin Water Supply Project (Hagg Lake Dam Raise) Title Transfer Mr. Koellermeier explained this was a resolution of support to advocate for the title transfer of property related to the Tualatin Basin Water Supply Project. The proposal is to transfer the property from the federal government to a local agency. Local ownership is expected to expedite the project and reduce costs by eliminating federal bureaucracy. A title transfer would not commit the IWB to any action. Mr. Koellermeier and Tigard City Manager Prosser, along with other delegates, will be going to Washington, D.C. to lobby for the title transfer. IWB RESOLUTION NO. 07-01 -A RESOLUTION OF THE INTERGOVERNMENTAL WATER BOARD TO INVESTIGATE POTENTIAL TRANSFER OF TITLE OF ALL LANDS, FACILITIES AND OTHER ASSETS-OF THE UNITED STATES BUREAU OF RECLAMATION TUALATIN PROJECT TO LOCAL OWNERSHIP Intergovernmental Water Board Minutes April 11,2007 2 Commissioner Carroll motioned to adopt the resolution regarding the Tualatin Basin Water Supply Project (Hagg Lake Dam Raise) Title Transfer; Commissioner Buehner seconded the motion. IWB Resolution No. 07-01 was approved by unanimous vote. 6. Consider a Resolution to Recommend that a Portion of the Canterbury Property be Declared as Surplus Mr. Koellermeier noted a revised version of the resolution had been prepared based on edits from Commissioner Scheiderich. The revised resolution and a map, labeled Exhibit 1, were distributed to the IWB and audience members. Commissioner Carroll remarked the resolution reflected exactly what the IWB had discussed. The IWB talked about the section of proposed surplus property leased by the John Tigard House. Via the appraisal process, the value of this leased property would be established. The appraised value would reflect the fact this area is not useable as long as the John Tigard House is situated there. The IWB discussed the easement in the southeast corner of the proposed surplus property. This easement could be used for a future aquifer storage and recovery (ASR) site and needs to be located as far away from the existing Canterbury ASR well as possible. The IWB discussed placing another easement across the property to link the easement in the southeast corner to the Canterbury water facility. Because this easement might lower the property value and an alternative connection could be accomplished by way of Murdock Street and an alley running along the west side of the property, the consensus of the Board was not to pursue a second easement. IWB RESOLUTION NO. 07-02 -A RESOLUTION OF THE INTERGOVERNMENTAL WATER BOARD (IWB) RECOMMENDING TO THE TIGARD CITY COUNCIL THAT A PORTION OF THE CANTERBURY PROPERTY BE DECLARED SURPLUS AND ADDRESSING OTHER ISSUES RELATED TO THE DISPOSITION OF THE PROPERTY Commissioner Carroll motioned to adopt the resolution recommending to the Tigard City Council that a portion of the Canterbury property be declared surplus and addressing other issues related to the disposition of the property; Commissioner Winn seconded the motion. Commissioner Scheiderich called for public comment and discussion. Intergovernmental Water Board Minutes April 11,2007 3 Julie Russell, 12662 SW Terraview, requested the record be left open until the next meeting to allow for public comment. She added the current public record does not show the TWD has authorized the sale of the property. She suggested three appraised values be obtained on the property. Commissioner Scheiderich advised the IWB's resolution was a recommendation to the Tigard City Council and the disposition of surplus Canterbury property had been under consideration for a long time. He suggested concerns about the TWD proceedings be directed to that Board. With regard to the following statement in the resolution: WHEREAS, the Tigard Water District (TWD), owner of record for the Canterbury property, has authorized the sale of the property, at not less than the appraised value, to the City of Tigard for the purpose of constructing a park; and Ken Henschel, 14530 SW 144th Avenue, questioned whether the TWD had authorized the sale of the property and whether the property would be sold to the City of Tigard. Commissioner Rhine responded the minutes detailing the TWD's discussion of the sale of the property had not been approved yet. It was noted a "whereas clause" was not legally binding, this part of the resolution generally relays background information. Items detailed in the section numbers of the resolution show what the Board resolves to do and contain the actual substance of the document. Commissioner Scheiderich pointed out that although the City of Tigard has the first right to buy the property at the appraised value, the property could be sold to another party if this sale did not work out. Commissioner Carroll added the 1993 IGA, which established the IWB, deeded this property to the members of the IWB, but the paperwork was never completed. The IGA remains a legally binding contract and the TWD has no authority to stop the sale of the property as each IWB member owns a share of this asset. Regarding Section 6 of the resolution: Any proceeds from the sale of the Property shall be credited to the Water Capital Improvement Project Fund. Mr. Henschel asked why proceeds from the sale of the property would not be divided among IWB members. The Commissioners responded the IWB had decided to place any proceeds•from the sale of water assets into the Water Capital Improvement Fund. This fundis managed by Tigard for the benefit of all of the members and will offset the cost of future water system improvements. Intergovernmental Water Board Minutes April 11,2007 4 IWB Resolution No. 07-02 was approved by unanimous vote. 7. Building/Asset Discussion Continued from February 14, 2007 Responses to Questions from Attorney Ramis Attorney Tim Ramis sent a memo to the IWB requesting clarification on the following points related to the disposition of the water building: 1. Is immediate purchase the preferred alternative by the City of Tigard, or is some form of joint ownership preferred until the time comes to dispose of the property? The Board confirmed the following points: • The water building should be transferred into the names of each of the entities (Durham, King City, Tigard and the Tigard Water District) based upon their respective joint ownership interest as tenants in common. • Mr. Koellermeier reported he has provided Mr. Ramis with an allocation formula. • The water building is being deeded, but not sold. 2. In the event that a form of joint ownership is preferred, will the decision to dispose of the property: (1) Rest in the control of a majority of the ownership (based on ownership percentage); (2) Require agreement of all owners; or (3) Be based on some other form of control such as a majority of the entities with an interest? Commissioner Buehner asserted one entity should not be able to block the wishes of the other members. The Board concurred and decided three of the four entities, with the member at large abstaining, would need to reach agreement on the disposition of the property. Mr. Koellermeier said Mr. Ramis should now have all the information he needs and the Board should have a document to review at their next meeting. 4. Update on Water Supply Options Mr. Koellermeier provided the following updates: Hagg Lake Dam Raise (Tualatin Basin Water Supply Project) Intergovernmental Water Board Minutes April 11,2007 5 • Draft Environmental Impact Study is due in June, followed by a 90-day comment period. • Then partners will decide on which option to pursue and who will participate in the project. Lake Oswego Expansion & Water Partnership • A joint meeting between the IWB, and Lake Oswego and Tigard City Councils might be scheduled in the near future. The Lake Oswego Council is focusing on water conservation efforts. Willamette River Treatment & Transmission Improvement Project • WaterWatch filed an appeal regarding water right permits. This creates a contested case hearing situation, which should be a 90-day process. • The Water Resources and Fish and Wildlife Departments are expected to side with the Willamette River Water Coalition (WRWC) since the Coalition is following their recommendations. • With the enactment of a new law, the State appears to be granting in- stream rights for fish while circumventing established water rights. • The Willamette River has enough flow to accommodate fish, with very little impact on WRWC water rights. Recent indications are the Tualatin Valley Water District (TVWD) may be leaning toward the Joint Water Commission's (JWC's) Hagg Lake Dam Raise project as opposed to the Willamette River Improvement Project. Tigard and the TVWD have equal positions with regard to water access within the JWC partnership, but the TVWD already has the infrastructure to transport the water; Tigard does not. Mr. Goodrich reported the following: • Water customers are currently using about 4.4 million gallons per day (mgd). This is comparable to last year's consumption. • 206 million gallons (mg) of water are stored in the City's aquifer storage and recovery (ASR) wells. With some operational adjustments, the plan is to inject another 50 mg within the next month. By purchasing and storing additional non-contract water, there is a potential cost savings of$61,000. • A test well will be drilled at the ASR 3 site in the next month. The viability of the well will be determined in the next six months. 8. Informational Items In response to an inquiry, Mr. Koellermeier reported construction of the new reservoir will begin in late July or early August. The earth-work needs to be done by fall and should take about a month. • Executive Session — Real Property Transactions Intergovernmental Water Board Minutes April 11,2007 6 Commissioner Carroll motioned for the Board to go into executive session; Commissioner Buehner seconded the motion. The motion was approved by unanimous vote. At 6:30 p.m., the Board went into executive session to discuss real property transactions under ORS 192.660(2)(e). The Board came out of executive session at 6:36 p.m. 9. Non-Agenda Items: None 10.Next Meeting —Wednesday, May 9, 2007, 5:30 p.m. Tigard Public Library, 2nd Floor Conference Room, 13500 SW Hall Blvd., Tigard, Oregon 11.Adjournment At 6:36 p.m. Commissioner Carroll motioned to adjourn the meeting; Commissioner Rhine seconded the motion. The motion was approved by unanimous vote. Greer A. Gaston, 1WB Recorder Date: Intergovernmental Water Board Minutes April 11,2007 7 TIGARD WATER DISTRICT BOARD OF COMMISSIONERS Serving the Unincorporated Area Tigard Public Works-Annex 9020 SW Burnham Road,Tigard Monday,April 23,2007 7:00 p.m. Members Present Beverly Froude, George Rhine,Janet Zeider,and Charles Radley Members Absent None Staff Present Dennis Koellermeier,Brian Rager,Michelle Wareing, Roger Dawes, and Joy Koss Visitors: Ken Henschel, Barbara Sherman,Isador Morgavi, Virginia Babcock,Lisa Hamilton-Treick,and Julie Russell 1. Call to Order,Roll Call and Introductions The Tigard Water District meeting was called to order by Chairperson Froude at 7:00 p.m. All board members were in attendance. 2. Approval of Minutes res-January 22,2007 The minutes of the January 22,2007 meeting were unanimously approved by the board. 3. Visitors Comments Ken Henschel- 14530 SW 144th Avenue (unincorporated area of Bull Mountain) Mr.Henschel was concerned there was a misrepresentation of a decision and vote regarding the Canterbury property by the Tigard Water District (FWD)representative at the February 14,2007 Intergovernmental Water Board(IWB)meeting. He said the process is very important and it needs to be followed carefully. Chair Froude indicated that the TWD board could come back to that topic later in the meeting. Lisa Hamilton-Treick- 13565 SW Beef Bend Road(unincorporated area of Bull Mountain) Ms.Hamilton-Treick provided TWD board members with a copy of a letter she submitted in January 2006,wherein she asked both the TWD and the IWB boards to consider leasing the Canterbury property to the City of Tigard. She asked Mr. Koellermeier to provide the IWB board with copies and asked both boards to consider this letter before moving forward. Tigard Water District 1 April 23, 2007 Draft Copy 4. Beginning of Budget Process Management Analyst Michelle Wareing led the discussion. Financial Operations Manager Roger Dawes will be covering for Michelle at the May 14,2007 TWD budget meeting. Prior to the meeting,Ms.Wareing prepared a memo and a proposed budget indicating total resources for the fiscal year 2007-2008 to be$105,768.00. Discussion continued about line items and cost projections. Ms.Wareing indicated the TWD board needs to submit a proposed budget to the Budget Committee for the May 14,2007,meeting and then approve the budget. Ms.Wareing responded to questions Commissioner Radley posed regarding expense line items (staff time and attorney fees) and appropriation funds. Commissioner Radley raised concerns about the accounting and timing of the Canterbury transaction,and how to reconcile this budget with that transaction. Mr.Koellermeier anticipates the transaction will be completed mid June,including the partition of the property,and that transaction would show up in Miscellaneous Revenues. To assist Ms.Wareing,Mr. Koellermeier asked the board if last year's budget was consistent with how the board wants to budget this year. Commissioner Rhine did not see any problem with the general approach,but thought more money should be allocated for the increased costs proposed for staff support and attorney services. Ms.Wareing explained the board has the freedom to move funds between various line items. Mr.Koellermeier indicated that board members taking office in July 2007 might incur additional attorney costs by remodeling current practices and procedures. Commissioner Radley raised questions about appraisal costs. If the board wanted to contest the appraisal done by the City of Tigard on the Canterbury transaction,Mr. Koellermeier recommended projecting$3,000 for appraisal fees. Appraisals done this year would come out of this year's Miscellaneous fund. Commissioner Radley asked if the board pays an auditor when these accounts are audited. Ms.Wareing indicated the accounts are not audited because of the size of the budget, but two required filings are done with the State. The budget is filed with the State and the fiscal year-end is filed with State Auditors. Ms.Wareing and Mr. Koellermeier discussed proposed expenditures with the board. Commissioner Rhine suggested the board use the 2006-2007 adopted budget as a start and make some adjustments. Based on what is decided about the sharing of the Canterbury property, Ms.Wareing will allocate the additional revenue in 2007-2008. Ms.Wareing indicated she would make adjustments to the budget and have the recording secretary send it to the board members for review. This would occur before the budget was presented at the May 14, 2007,meeting. • Select Budget Officer Commissioner Rhine was selected to be the Budget Officer for the 2007-2008 budget. • Tigard Water District 2 April 23, 2007 Draft Copy • • Appoint Budget Commissioner Rhine motioned to accept the three volunteers for the open positions on the TWD Citizen Budget Committee and Commissioner Zeider seconded the motion. In addition to the existing members,the board voted unanimously to appoint Julie Russell,Virginia Babcock, and Ken Henschel to the TWD Citizen Budget Committee. • Present Budget Calendar Ms.Wareing reviewed the following dates and activities of the Budget Calendar with the TWD Board: April 2,2007: TWD meetings were advertised as required by law. April 23, 2007: The Budget Officer was selected,Budget Committee appointed and proposed budget discussed. May 14, 2007: Budget Committee will debate and discuss the proposed budget. The TWD board will need to make a motion, second and vote to approve the budget. May 21,2007: Public Hearing Notice&Summary of Approved Budget will be submitted for the adoption of the budget for publication on June 14, 2007. June 25, 2007: TWD board will adopt the approved budget,make any appropriations or minimal changes,and adopt the budget by resolution,which Ms.Wareing will prepare for board members to sign. • Discuss Proposed Budget In addition to the previous discussions,the board opened the discussion for public comment as follows: Ken Henschel-Mr.Henschel asked for a brief clarification of the responsibility of the Budget Committee and its role. Ms.Wareing explained that by Oregon law a budget committee has to be set up for any special district municipality and is made up of equal numbers of the board and citizen members. Budget Committee members review the proposed budget and approve it. That approved budget is then sent to the board for adoption. Julie Russell, 12662 SW Terraview Drive (unincorporated area of Bull Mountain) Ms.Russell inquired who she should ask if she had questions about a particular budget item. Mr.Koellermeier replied she could come to him with any questions. 5. Alpha Community Development Request-Brian Rager Mr.Rager referred to his April 13, 2007,memo that was mailed to board members prior to the meeting. This memo addressed properties that historically had homes on them. Later these properties were purchased by a developer who redeveloped the land into a subdivision. There is no further need for the existing water line easement and no reason for the historic water connection agreement between the previous homeowners and the old Tigard Water District that existed when those homes were built. In order for the developer to move ahead and record the final plat,the old easements and old agreements have to be cleared. Tigard Water District 3 April 23, 2007 Draft Copy Mr.Rager has looked at this information and forwarded it to Clark Balfour,the attorney for the TWD Board. There were no issues. Mr. Balfour recommended a different release document entitled Statutory Quitclaim Deed that refers to the two documents: the easement and the water connection agreement. Commissioner Radley motioned to approve the Statutory Quitclaim Deed and authorize the Chair to sign this recording,Commissioner Zeider seconded, and the motion was unanimously approved. 6. Pending Asset Transfers-Dennis Koellermeier Chair Froude had previously asked Mr.Koellermeier to put this topic on the agenda. She asked him to answer questions and disseminate information about actions taken,or not taken,on the Canterbury property. She also wanted him to discuss other potential actions being considered on the Water District Building by this board and the IWB. Chair Froude asked Mr.Koellermeier to provide some background history for visitors and she asked Commissioner Rhine to speak from an IWB perspective on this topic. As background information and a basis for action,Mr.Koellermeier provided copies of the Intergovernmental Agreement of 1994,Clark Balfour's legal opinion memo dated April 21,2006,and the Intergovernmental Water Board Resolution No.07-02. Mr.Koellermeier said the City of Tigard Public Works Department completed a process of determining park needs and identified the neighborhood near the Canterbury property as park deficient,meaning there are no parks within a half a mile radius of area residents. The Tigard Water District,prior to 1994,acquired a five-acre parcel that was partially developed. A no-cash discussion started about declaring that property surplus for use by the City of Tigard to develop as a park. Based on a legal opinion,the City of Tigard has to go through a process to declare the property surplus. The body that actually makes that decision is the IWB,because the Canterbury property is declared a system asset. Procedurally,the IWB resolution recommended this property be declared surplus by the Tigard City Council. An appraisal will be done on the parcel,along with a minor partition,and then the City of Tigard has been granted first right of refusal to purchase that property at market value to develop a park. The IWB su :ested the cash be put back into the capital fund,recognizing that all of the members of the IWB have a very large capital bill pending as a water source is developed. The IWB vote was unanimous to move ahead with this process. Historically,this process began in 2005. The TWD board was asked to table any decision on this issue by advocates of the new City of Bull Mountain because there was a question: What does it mean to have an asset of the Tigard Water District in the formation of the new City of Bull Mountain?" Commissioner Rhine indicated the IGA that formed the Tigard Water Service Area states that if property is declared surplus,it reverts back to ownership of the entity that it is in. Mr.Koellermeier concurred. In 1994,assets were categorized as "system"or"other"assets. Other assets clearly become the property of the political entity in which they are located. System assets are generally needed by all the members of the agency to provide water. Clark Balfour's legal opinion memo concludes the Canterbury property is a system asset. Mr.Koellermeier believes when this property is declared surplus,by definition of the agreement,it would Tigard Water District 4 April 23, 2007 Draft Copy automatically go to the City of Tigard. This would not be without compensation,so Mr.Koellermeier recommended to the Tigard City Council that an appraisal be completed. Commissioner Rhine reiterated what Mr.Koellermeier said regarding the IWB position. He then remarked to Ken Henschel that he did represent to the IWB that the TWD board had voted on this issue. After checking the minutes,he found he was in error. Commissioner Radley thanked Commissioner Rhine for this clarification. Commissioner Radley brought copies of a Special Districts Association letter dated Januaty 28,2005 that includes some public contracting laws regarding disposing of surplus property. Commissioner Radley questioned if the TWD Board is properly covered by these laws,as the law changed in March of 2005. Mr.Koellermeier said that the City of Tigard adopted rules prior to the change,so it did not fall under the recommended changes by the Attorney General. By not adopting rules,the IWB board needs to operate under the recommended Attorney General rules. Commissioner Radley had several questions about how a percentage could be assigned to TWD. Mr.Koellermeier pointed out the Intergovernmental Agreement says the IWB members have undetermined interests. Commissioner Radley referenced the formula within the agreement and Mr.Koellermeier indicated the model was not setup to establish percentage ownerships for system assets. Commissioner Rhine remarked the IWB has,in fact,looked at this model. Mr.Koellermeier stated the IWB chose not to distribute the assets. Commissioner Radley wanted to figure out the legal rights and obligations of the parties and wondered if the Clark Balfour letter was enough. Mr.Koellermeier stated the TWD attorney has said it is not a Tigard Water District decision. It is an IWB decision. They recommend to the City Council. City of Tigard rules are being used regarding the surplus property process. The decision of the proceeds was clearly in the purview of the IWB and their decision was unanimous. The IWB recommends financial issues regarding the water operations to the City of Tigard. Discussion about determining the value of an asset continued among board members and Mr.Koellermeier. Chair Froude summarized it was Water District property and this transaction is just changing the use. The funds are still in the Tigard Water Service Area capital fund. Mr.Koellermeier indicated in 1994 it ceased being Tigard Water District property;it became a system asset with an undetermined ownership interest by four members. The deed still says Tigard Water District and that is where the misunderstanding is. Commissioner Rhine asked how the transaction would be handled from an accounting point of view. Should Tigard exercise the right to purchase the property,Mr.Koellermeier would su •est a journal entry(an expense line item from the City's park development fund resulting in an income line item for the capital fund). In response to Commissioner Rhine's question about the size of the capital fund this year,Mr.Koellermeier estimated$7-$8 million. Commissioner Radley expressed concern about potential liability and thought Mr. Balfour should draft a resolution to address this. Mr.Koellermeier su :ested to Chair Froude that TWD board members and visitors submit any questions in writing,so they can be distributed to the attorney for a written response. April 30,2007 was established as the date for submission of questions. The results will be distributed to interested parties. Tigard Water District 5 Apri123, 2007 Draft Copy The board opened the discussion for public comment as follows: Ken Henschel-Mr.Henschel expressed his interest is to ensure a clear process is followed and can withstand legal challenges. Mr.Henschel su rested the board make a motion to formally call for the written questions previously discussed. Mr.Henschel had a procedural question regarding the IWB Resolution No.07-02. When the IWB voted on the resolution,it is based on the"Whereas"leading to the resolution. Since the IWB went on to pass this resolution based on the fourth"Whereas"that was incorrect,he thought it was in the best interest of all parties to inform the IWB,in writing,that one of the "Whereas" clauses was in error. Mr.Henschel indicated he was confused about the"Whereas"that says"not less than the appraised value." Mr.Koellermeier clarified that the Canterbury property has never been appraised. Mr. Henschel thought an above-board appraisal needed to be done. Mr.Koellermeier sult:ested questions such as these need to be put in writing. Commissioner Radley inquired if the Tigard contracting rules set forth how many appraisals are needed. Mr.Koellermeier stated the City of Tigard's process only asks for one appraisal;purchasing procedure includes a Level I Environmental Assessment and a title search of the property. Julie Russell-Ms.Russell asked Mr.Koellermeier if the$1 million in the proposed budget for the City of Tigard was an estimate,and what happens if the property appraisal is more than that? Mr.Koellermeier said those dollars are estimates and stated there are funds identified for park acquisition this fiscal year and next. The City Council makes final decisions related to park expenditures. Ms.Russell asked if there would be a public process. Mr.Koellermeier indicated the declaration of surplus property is a process that will happen at a Tigard City Council meeting and that date has not yet been determined. Ms.Russell said questions were brought up at the last IWB meeting whether or not representatives there represented the boards and councils. She wondered if the representatives can vote anyway they want,even if it differs from the boards or city council vote. Mr.Koellermeier said the forming document only requires a confirming vote by the individual boards. Representatives to the IWB can represent in any form they choose. Whether they go back and ask their boards for guiding principles before they vote is an internal issue with their boards as to how they are empowered to act on the IWB. Isador Morgavi, 15145 SW 119t Avenue(unincorporated area of Bull Mountain) Mr.Morgavi su*rested the TWD board consider making a contribution to review security at the Thalatin-Tigard School District. Both Chair Froude and Commissioner Radley thought that was a great idea,but it should be brought up with the City of Tigard. Under state law,this District can only deal in water and can only spend money on water related issues. Pending Asset Transfers(continued)-Dennis Koellenneier Mr.Koellermeier provided an update on the Water Building issue. Since the Water Building is a system asset,and still being partially used for water system purposes,it would be inappropriate to sell the asset to the City of Tigard. Because of the mixed use in that facility and distribution of remodel costs,the Tigard attorney has been asked to create a new deed that describes this system asset with undetermined ownership by the various members. An operating agreement that establishes leases Tigard Water District 6 April 23,2007 Draft Copy based on commercial rates(possibly as an amendment),or amendments to the Intergovernmental Agreement,would be used to distribute the costs on a square footage basis for those non-water functions using the building. Most likely,these documents will be presented to the IWB on May 9, 2007. Commissioner Rhine asked about the form of the deed and Commissioner Radley asked about the amendment authorizing the operating agreement. Mr.Koellermeier did not have answers to these questions,as the attorney has not completed his review. Mr.Koellermeier did indicate the term of this lease will probably be the same term as the agreement which terminates in 2018. Ken Henschel- In regard to lease rates,Mr.Henschel expressed his concern that all transactions be independent. He recommended an outside party determine a fair lease rate for all parties,and that would be indexed yearly and the square footage reviewed yearly to avoid the appearance of impropriety. Chair Froude indicated the IWB representative would likely speak to that in May and su 4.ested that Mr. Henschel sign up to speak at that meeting. Commissioner Rhine asked if Mr.Koellermeier generally determines lease rates. Mr.Koellermeier said there has never been a situation with a lease. Because it is rather complicated, the city attorney will be at the May 9,2007,IWB meeting. Mr.Koellermeier will be out-of-state and will not attend that meeting. Chair Froude commented that Tim Ramis,who wrote the original agreement,will be at the May 9,2007,meeting. Julie Russell-Ms.Russell asked if the TWD is the current deed owner,does the TWD have to vote on that issue. Mr.Koellermeier indicated the name on the deed is immaterial,because it has been modified by the IGA. The Tigard Water District is obligated by their signature to the IGA. Ken Henschel asked if Mr.Koellermeier was saying it is the old Tigard Water District deed,not the new Tigard Water District deed. Mr.Koellermeier responded,in essence,it is the same District that never deformed. Commissioner Rhine indicated that it was not exactly the same. The structure of the organization is completely different. The old TWD actually ran the water system and owned assets,managed people,etc. Commissioner Radley asked if the contracting rules say anything about what the procedure would be for figuring out rent. Mr.Koellermeier said he was not sure,but he would guess that it does not. He would have to look at that. 7. Water Supply Update-Dennis Koellermeier For the sake of time,Mr.Koellermeier did not discuss the water supply update. 8. IWB Update-George Rhine/Janet Zeider Commissioner Rhine indicated this topic had been addressed earlier under other agenda discussions. He plans to communicate to the IWB the comment about the"Whereas" and that he was in error when he made that comment. He also plans to communicate that the TWD is in the process of developing questions that will be directed to Clark Balfour for his response. 9. Non-Agenda Items Commissioner Radley raised the question of filling the vacancy on the board. Other board members concurred it was not worth bringing in a new member for the remaining two meetings. Tigard Water District 7 Apii!23,2007 Draft Copy Commissioner Rhine commented he thought the TWD needs to take a leadership position by doing a study and creating a plan to provide water for areas 63 and 64. Commissioner Radley indicated the county is responsible for planning those areas and they have a$900,000 budget from Metro. He su ;ested that TWD should engage the county to become a party on the stakeholders group that would be determining how that area is going to be planned. The board opened the discussion for public comment as follows: Ken Henschel-Mr.Henschel agreed that it would be a waste of time to fill the vacancy;however,his concern again is with the process. TWD bylaws say should a vacancy occur on the board,that vacancy will be filled in the manner prescribed by the ORS rule. Mr.Henschel wants to make sure the Tigard Water District is not in violation of its own bylaws. He wanted to state for the record that he is not interested in being elected or appointed short-term to such a position. Commissioner Radley thought he should take a look at that ORS rule for a timeline by which the vacancy must be filled. 10. Set Next Meeting Date-May 14,2007,7:00 p.m.at Tigard Public Irary, 2°'Floor Conference Room,13500 SW Hall Blvd.,Tigard 11. Adjournment Commissioner Rhine motioned to adjourn,Commissioner Zeider seconded the motion,and the board voted unanimously to adjourn the meeting at 9:17 p.m. Joy Koss,TWD Recording Secretary Date: Tigard Water District 8 April 23, 2007 Draft Copy 1 TENANCY IN COMMON AGREEMENT THIS AGREEMENT is made and effective the day of , by CITY OF TIGARD ("Owner"), CITY OF DURHAM ("Owner"), CITY OF KING CITY, ("Owner"), and TIGARD WATER DISTRICT, ("Owner"). CITY OF TIGARD, CITY OF DURHAM, CITYOF KING CITY, and TIGARD WATER DISTRICT, collectively known as the IN 1'ERGOVERNMENTAL WATER BOARD, are hereinafter referred to as the "Owners". The Owners agree as follows: 1. Acquisition of Property. The Owners have acquired certain real and personal property commonly known as THE WATER BUILDING, located at 8777 SW Burnham Street, Tigard, Oregon, and more particulary described as Exhibit "A" attached hereto and incorporated by this reference (the "Property"). 2. Co-Tenancy. The Property has been improved as The Water Building, a building suitable for water district and other public works offices. The intent of the Owners is to enter into a Lease with the CITY OF TIGARD. 3. Business Name. The business of the cotenancy shall be conducted under the name "INTERGOVERNMENTAL WATER BOARD (IWB)". An application for registration of a fictitious business name shall be filed and published as provided by law. 4. Declaration of Ownership. The owners as described intend that their relationship with respect to the Property shall be a tenancy in common. The Owners intend that no provision of this Tenancy In Common Agreement shall be construed as establishing a partnership,joint venture,or any other form of business entity. 5. Ownership Interest. The names of the Owners and their percentage of undivided interests in the Property are as follows: Name Percentage Ownership Tigard Water District City of Tigard City of Durham City of King City The Property has been acquired by the cotenancy. The Owners shall be responsible for payment of Page 1 -TENANCY IN COMMON AGREEMENT c:\nnnargard\Rea►Estate\ws DocumentsJJWBTenancy in CommonAg.doc all financial obligations of the cotenancy in the proportion of their ownership interests. 6. Expenses. The expenses incurred with respect to the Property shall be the obligation of the Owners. Anticipated expenses include, but are not limited to: cost of repairs, maintenance, debt service, taxes, assessments, insurance and property management, and as provided for in the Intergovernmental Agreements. In the event of a conflict between or among the agreements with respect to this Tenancy In Common, this Agreement will prevail. Periodically, the Owners shall determine the extent, if any,of additional funds necessary to provide for the payment of expenses. Each Owner shall pay a portion of the amount necessary to pay expenses equal to the Owners' undivided interests in the Property. Payment shall be made within thirty(30)days for receipt by the Owner of notice of the amount due. 7. Improvements. In the event the Owners shall further improve the Property,each Owner shall be obligated for the costs of such improvements in an amount proportionate to the Owner's undivided interest in the Property, except as may otherwise be provided for in the Lease. The Owners shall determine whether to assess the cotenants for the amount required for said improvements,or to finance said amount as a joint debt of the cotenants. In the event an assessment is made, payment shall be made within thirty (30) days of receipt by the Owner of notice of the amount due. 8. Default. In the event an Owner shall fail to pay his or her obligations within the time prescribed above in the amount due under the terms of this Agreement,the undivided interest of the nonpaying Owner shall be subject to a lien in the amount of the deficiency. The provisions of Section 18 of this Agreement relating to liens shall be applicable to an unpaid obligation of an Owner. 9. Revenue,Expenses and Deductions. Subject to the Management Agreement and to Section 12,the revenues,expenses and deductions from the operation and any sale of the Property shall be shared by the Owners in proportion to their respective undivided interest in the Property. 10. Disbursements. The Owner shall determine if funds are available for disbursement from the operations of the Property and shall direct the Manager hereinafter described to pay said amounts to the Owners in proportion to their respective undivided interests in the Property, subject to the provisions of the Lease and the Intergovernmental Agreement. 11. Proceeds from Sale or Refinance. Proceeds received from any sale or refinancing of the Property,or from the condemnation or destruction of the Property,to the extent that the proceeds are not needed for debt service, anticipated expenses, and reasonable reserves for contingencies as determined by the Owners, shall be disbursed to the Owners in proportion to their respective, undivided interests in the Property. Notwithstanding the foregoing,the Owners may determine to use part or all of said proceeds to reduce or repay any mortgage indebtedness, contract, or other liability incurred in connection with the Property,and to disburse the remaining balance of proceeds, subject to the provisions of the Lease and Intergovernmental Agreement. Page 2 -TENANCY IN COMMON AGREEMENT c:\mnnargard\Rea,Estate\IWB DocnmentsuWBTenancy in CommonAg.doc 12. Management. The Owners have each engaged the CITY OF TIGARD.("Tigard")to manage the property under terms and conditions contained in the Intergovernmental Agreement and the Water Building Lease. The Owners agree that Tigard may enter into a separate off-site management agreement with a management company of Tigard's choice as it may approve, for management of the Property. 13. Duties of Property Manager. The City of Tigard shall be responsible for performance of all services and duties as specified in the Water Building Lease. None of the Owners, their agents or representatives,shall be entitled to any compensation for management or other services rendered to or for the Property unless such compensation is expressly authorized by the Owners, and subject to the Lease, and Intergovernmental Agreement. 14. Allocation of Purchase Price on Sale or Other Distribution of Property. The allocation of the purchase price received for any sale of the Property as between real property, improvements and personal property, shall be determined by the IWB and the accountant for the co-tenancy, in consultation with the Owners, who shall be bound by said determination. 15. Liens and Encumbrances. Any lien or encumbrance on an Owner's undivided interest in the Property,including but not limited to,any judicial attachment,any judgment lien,any lien arising out of the order or judgment of any court,any lien in connection with taxes claim due any governmental unit,any lien arising under federal or state bankruptcy or insolvency laws,and any lien arising from non-payment by an Owner of amounts pursuant to the terms of this Agreement,shall be discharged by said Owner, and the undivided interest released, within ten (10) days after the lien is filed or otherwise becomes effective. Failure to discharge the lien and obtain release of the undivided interest within the stated time shall constitute a default of this Agreement. During the term of the default, interest shall accrue on any unpaid balance due the cotenancy at the rate of____ percent °o)per annum. All amounts due,plus interest thereon, shall be immediately due and payable without further demand and notice. In addition to the foregoing,the remaining Owners may agree to revoke the right of the defaulting Owner to vote and manage the affairs of the cotenancy. Any cash distributions which may become payable to a defaulting Owner shall be reduced by the outstanding amounts due plus interest thereon. The remaining Owners shall have the right, but not the obligation,to pay the deficient amount and to obtain release of the lien and to receive reimbursement for the amount of the deficiency plus interest as provided above,from any cash distributions which may become payable to the defaulting Owner. 16. Bonding of Liens. An Owner whose interest in the Property is subject to a lien may,within days after the lien is filed or otherwise becomes effective, deposit with the remaining Owners cash, a corporate surety bond, or other security satisfactory to the remaining Owners,in an amount sufficient to discharge the lien and all costs,attorneys'fees and other charges which could accrue as a result of a foreclosure or sale under the lien. Upon making said deposit,the Owner shall not be considered in default of this Agreement. Page 3 - TENANCY IN COMMON AGREEMENT c:\muniTigard\Real Estate\IWB Documents'dWBTenancy in CommonAg.doc 17. Waiver of Right of Partition. Each Owner irrevocably waives the right to directly or indirectly maintain an action or petition in any court for a partition of the Property. 18. Restrictions on Sale of the Property. An Owner may sell, convey or transfer the Owner's undivided interest in the Property only in compliance with the terms of this section 19, the Intergovernmental Agreement, and the Water Building Lease (granting first right of refusal to the City of Tigard). Upon the withdrawal of an Owner from the IWB,the remaining Owners shall have authority to act on behalf of the withdrawn Owner. 18.1 Right of First Refusal. No Owner shall sell or transfer the Owner's undivided interest in the Property except as set forth herein and in the Water Building Lease. In no event shall the "selling" Owner offer to sell less than all of the undivided interest. The other Owners shall have a period of thirty(30)days after their actual receipt of the notice to give notice to the selling Owners that they wish to acquire such interest, and sixty (60) days after giving such notice in which to acquire such interest at the price and upon the same terms determined through the process described herein. If the other Owners elect to purchase the interest,they must purchase all and not part of the interest. Each Owner(other than the"selling"Owner)shall have the right to purchase that portion of the offered interest which the non-selling Owner's interest bears to all interests excluding the offered interest. If any Owner or Owners do not elect to purchase a full proportionate share of the interest, the other Owners desiring to purchase may purchase the non-purchasing Owner's share proportionate to their respective interests. The non-selling Owners shall have sole responsibility to determine who shall acquire the offered interest and in what proportions that interest shall be acquired. 18.2 Price. [specify appraisal process] 18.3 Sale of Water Building. Subject to the provisions of the Water Building Lease,the Owners may sell the Water Building upon an affirmative vote of three of the representative Owner jurisdictions. 19. Sale of the Property. Upon the vote of three of the Owners,the Property shall be sold and the net proceeds distributed to the Owners under the terms of Section 11 above. 20. Votes of the Owners. Each Owner shall have a vote equal to the Owner's percentage of undivided interest in the Property. The entire undivided interest of an Owner shall be voted as one unit. 21. Percentage Required for Determinations. All determinations to be made by the Owners under the terms of this Agreement shall be by a vote of the Owners. Unless specifically provided otherwise,an affirmative vote of three or more of the jurisdiction Owners shall be required for any action to be taken,any determinations to be made,or any authorizations to be given by the Owners under the terms of this Agreement. 22. Manner of Voting. All determinations to be made by the Owners shall be made at meetings Page 4 -TENANCY IN COMMON AGREEMENT c:Unun,\Tigard\Rea►EstateVWB DocumentsUWBTenancy in CommonAg.doc or by telephone conferences. However,the Owners may make determinations without a meeting or telephone conference by obtaining the signed, written vote of each Owner. 23. Events of Termination. The cotenancy Agreement shall continue until terminated by the occurrence of one of the following events: the sale of the Property, the majority agreement of the Owners and of the Trust to terminate this Agreement,or the majority Agreement of the Owners and of the Trust to divide and separate the Property among themselves. 24. Effect on Obligations. Termination shall not affect the rights or obligations of the Owners which arise prior to the termination. 25. Notices. All notices shall be in writing and shall be given by registered or certified mail, postage prepaid,addressed to each Owner at the Owner's permanent address,or at such other address as any Owner may hereafter designate in writing delivered to the other Owners. 26. Attorney Fees. In the event of suit, action or arbitration to interpret or enforce any of the terms of this Agreement, including any action under the Bankruptcy laws of the United States, the prevailing party or parties shall be awarded such sum as the court or arbitrator may adjudge reasonable as attorney fees in such suit,action or arbitration and in any appeal or review therefrom. 27. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of each of the Owners,their respective heirs,executors,administrators,legal representatives,successors and assigns. 28. Amendment. This Agreement may be amended at any time by the Owners in the same manner as they make any other determination under paragraphs 22 and 23 of this Agreement. 29. Integration. This Agreement contains the entire Agreement of the Owners and supercedes all prior and contemporaneous agreements between them with respect to the cotenancy. Except as fully set forth herein,there are no presentations,agreements,or understandings,oral or written,among the Owners relating to the cotenancy,except for the Intergovernmental Agreements, and the Lease. 30. Severability. If any term or provision of this Agreement shall to any extent be invalid or unenforceable, the remainder of this Agreement shall not be affected thereby, and each term or provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 31. Governing Law. This Agreement shall be subject to,and governed by,the laws of the state of Oregon. The parties have executed this agreement as of the date first written above. By: By: Page 5 -TENANCY IN COMMON AGREEMENT c:'nun,\Tigard\Real Estate\JWB Documents1MBTenancy m CommonAg.doc AFTER RECORDING,RETURN TO: Attn: Timothy V. Ramis Ramis Crew Corrigan,LLP 1727 NW Hoyt Street Portland, OR 97209 BARGAIN AND SALE DEED The TIGARD WATER DISTRICT,("Grantor")conveys to the TIGARD WATER DISTRICT, CITY OF TIGARD,CITY OF DURHAM, and CITY OF KING CITY, ("Grantees"), as tenants in common,according to the following proportionate percentages of ownership: CITY OF TIGARD CITY OF DURHAM CITY OF KING CITY ) TIGARD WATER DISTRICT %, the Water Building property, legally described as: Property Description to be Attached (4.05 acres) Subject to any easements,rights of way,and reservations as the same may exist or appear of record. The true consideration for this conveyance is Zero dollars and other valuable consideration.($0) THIS INSTRUMENT WILL NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY APPROVED USES AND TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR FOREST PRACTICES AS DEFINED IN ORS 30.930. Dated this day of GRANTOR: Page 1-BARGAIN AND SALE DEED G:\MUNI\TIGARDREAL ESTATBIWB DOCUMENTS\WATERBUILDINGBARGAIN&SALE DEED.DO0/99} DRAFT FIRST AMENDMENT TO INTERGOVERNMENTAL AGREEMENT BETWEEN THE CITY OF TIGARD AND THE FOR DELIVERY OF WATER SERVICE TO TERRITORY WITHIN THIS FIRST AMENDMENT TO THIS INTERGOVERNMENTAL AGREEMENT (this "Amendment") is made and entered into as of , 2007, by and between the CITY OF TIGARD, an Oregon municipal corporation, (hereinafter "Tigard") and the Tigard Water District, a domestic water supply district existing under ORS Ch. 264, (hereinafter "District", referred to herein as "the Parties". RECITALS A. The Parties previously entered into that certain INTERGOVERNMENTAL AGREEMENT BETWEEN THE CITY OF TIGARD AND THE TIGARD WATER DISTRICT FOR DELIVERY OF WATER SERVICE TO TERRITORY WITHIN THE DISTRICT BOUNDARIES dated December 23, 1993 (the "Original IGA") relating to the Parties' cooperative effort to serving the long term water supply needs of the residents in the original District. The term "IGA" means the Original IGA as amended by this Amendment. B. The Parties hereto desire to amend the Original IGA: to further ensure consistency across the jurisdictions among rates and services, to clarify the TWD/IWB votes required to change ownership of District assets, to memorialize a new lease between the District and the City of Tigard, of the District's Water Building, to establish a process for calculating and recording prorated expenses and revenues, and to allow the District/IWB to use proceeds from sales of assets for expenses in addition to capital improvements. AGREEMENT NOW THEREFORE, in consideration of the terms and conditions contained herein, the receipt and adequacy of which are hereby acknowledged, the Parties hereby amend the Original IGA as follows: 1. Paragraph 5. Asset Ownership/Water Rates/Revenues , B., is replaced with the following: B. The fees, rates and charges charged by Tigard for providing water services to properties, residences and businesses in District shall be the same as those charged within Tigard, and rates shall be consistent among those receiving water services from the District under FIRST AMENDMENT TO INTERGOVERNMENTAL AGREEMENT TIGARD/WATER DISTRICT Page 1 of 2 this IGA Notwithstanding the foregoing, Tigard may impose higher fees, rates and charges for providing water service to properties, residences and businesses when the cost of providing such service is greater due to unusual circumstances, including, but not limited to additional cost to pump water up hill to reach customers. Any higher fees, rates and charges imposed for providing water service shall be reviewed by the Intergovernmental Water Board prior to taking effect and shall be limited to covering the actual additional costs of providing such service. When higher fees, rates and charges are imposed, they shall be consistently applied in both Tigard and the remainder of the original District, except that at the request of the District, Tigard will collect on behalf of the District additional charges imposed by the District. 2. Paragraph 5. Asset Ownership/Water Rates/Revenues C. (2) Moneys/Revenues, is replaced with the following: (2) Moneys transferred to Tigard as a result of the division of assets after withdrawal from the original District by Tigard which were previously dedicated by the District to system capital improvements shall be used solely for system capital improvement by Tigard in accordance with subsection 5.D, except that the District/IWB may at its discretion, and consistent with voting requirements in Paragraph 3.D. of this IGA, determine that said moneys may be used for other purposes. 3. Paragraph 5., Asset Ownership/Water Rates/Revenues, G. Accounting, is added to as follows: (3) In fulfillment of the IGA intent of reliably and methodically accounting for expenses and revenues, Exhibit B showing allocation of ownership interests is attached hereto and incorporated thereby as the model for documenting the use of assets by the City of Tigard. 4. Paragraph 3. Intergovernmental Water Board. D., shall be amended as follows: D. A quorum of the Board shall be three (3) members. All actions of the board shall require at least three (3) votes, excluding abstentions. Notwithstanding prior agreements no more than three (3) jurisdiction's votes will be required to purchase, sell, or otherwise act with respect to the District's real property assets. FIRST AMENDMENT TO INTERGOVERNMENTAL AGREEMENT TIGARD/WATER DISTRICT Page 2 of 2 DRAFT COMMERCIAL LEASE Date: , 2007 Between: INTERGOVERNMENTAL WATER BOARD ("Landlord") 8777 SW BURNHAM STREET TIGARD, OR 97223 And: CITY OF TIGARD ("Tenant") 13125 SW HALL BLVD. TIGARD, OR 97223 RECITALS 1. The City of Tigard is leasing the Water Building property from the other entities in the IWB and during the period of the lease will pay rents and also assume responsibility for the maintenance of the property. 2. The City of Tigard is performing and paying for certain necessary tenant improvements to the Water Building property. 3. In further consideration of the City of Tigard's contributions to the Intergovernmental Water Board and the Intergovernmental Agreement,the City of Tigard shall retain the First Right of Refusal if the Water Building property is designated as surplus and for sale by the IWB. AGREEMENT Landlord leases to Tenant and Tenant leases from Landlord the following described property(the"Premises") on the terms and conditions stated below: See Attached Exhibit"A" Section 1. Occupancy 1.1 Original Term. The term of this lease shall commence 2007, and continue through December 31,2018, unless sooner terminated or renewed as hereinafter provided. 1.2 Possession. Tenant's right to possession and obligations under the lease shall commence on 2 1.3 Renewal Option. If the lease is not in default at the time each option is exercised or at the time the renewal term is to commence,Tenant shall have the option to renew this lease for? successive terms of ? years each, as follows: (1) Each of the renewal terms shall commence on the day following expiration of the preceding term. (2) The option may be exercised by written notice to Landlord given not less than 120 days prior to the last day of the expiring term. The giving of such notice shall be sufficient to make the lease binding for the renewal term without further act of the parties. Landlord and Tenant shall then be bound to take the steps required in connection with the determination of rent as specified below. (3) The terms and conditions of the lease for each renewal term shall be identical with the original term except for rent and except that Tenant will no longer have any option to renew this lease that has been exercised. Rent for a renewal term shall be the greater of(a)the rental during the preceding term or(b) a reasonable market rent. (4) If the parties do not agree on the rent within 90 days after notice of election to renew,the rent shall be determined by a qualified,independent real property appraiser familiar with comparable commercial rental values in the area. The appraiser shall be chosen by Tenant from a list of not fewer than five such individuals submitted by Landlord. If Tenant does not make the choice within five days after submission of the list,Landlord may do so. If Landlord does not submit such a list within 10 days after written request from Tenant to do so,Tenant may name as an arbitrator any individual with such qualifications. Within 30 days after his [her] appointment,the appraiser shall return his [her) decision,which shall be final and binding upon both parties. The cost of the appraisal shall be borne equally by both parties. Include this or not? Section 2. Rent 2.1 Base Rent. At the commencement of term,Tenant shall pay to Landlord $ ,monthly payments due and payable on the f day of each month. 2.2 Additional Rent. All taxes,insurance costs,utility charges that Tenant is required to pay by this lease,and any other sum that Tenant is required to pay to Landlord or third parties shall be additional rent. Section 3. Use of the Premises • -2 - 3.1 Permitted Use. The Premises shall be used for municipal government offices and related activities, and for no other purpose without the consent of Landlord, which consent shall not be withheld unreasonably. 3.2 Restrictions on Use. In connection with the use of the Premises, Tenant shall: (1) Conform to all applicable laws and regulations of any public authority affecting the premises and the use, and correct at Tenant's own expense any failure of compliance created through Tenant's fault or by reason of Tenant's use,but Tenant shall not be required to make any structural changes to effect such compliance. (2) Refrain from any activity that would make it impossible to insure the Premises against casualty, would increase the insurance rate, or would prevent Landlord from taking advantage of any ruling of the Oregon Insurance Rating Bureau, or its successor, allowing Landlord to obtain reduced premium rates for long-term fire insurance policies,unless Tenant pays the additional cost of the insurance. (3) Refrain from any use that would be reasonably offensive to other tenants or owners or users of neighboring premises or that would tend to create a nuisance or damage the reputation of the premises. (4) Refrain from loading the electrical system or floors beyond the point considered safe by a competent engineer or architect selected by Landlord. (5) Refrain from making any marks on or attaching any sign,insignia,antenna, aerial, or other device to the exterior or interior walls,windows, or roof of the premises without the prior written consent of Landlord. 3.3 Hazardous Substances. Tenant shall not cause or permit any Hazardous Substance to be spilled, leaked, disposed of, or otherwise released on or under the Premises. Tenant may use or otherwise handle on the Premises only those Hazardous Substances typically used or sold in the prudent and safe operation of the business specified in Section 4.1. Tenant may store such Hazardous Substances on the Premises only in quantities necessary to satisfy Tenant's reasonably anticipated needs. Tenant shall comply with all Environmental Laws and exercise the highest degree of care in the use,handling,and storage of Hazardous Substances and shall take all practicable measures to minimize the quality and toxicity of Hazardous Substances used, handled, or stored on the Premises. Upon the expiration or termination of this Lease, Tenant shall remove all Hazardous Substances from the Premises. The term Environmental Law shall mean any federal, state, or local statute,regulation, or ordinance or any judicial or other governmental order pertaining to the protection of health,safety or the environment. The term Hazardous Substance shall mean any hazardous,toxic,infectious or radioactive substance, waste, and material as defined or listed by any Environmental Law and shall include,without limitation,petroleum oil and its fractions. Review the following in red and make any desired changes: ' - Section 4. Obligations 4.1 Landlord's obligations. Landlord shall be under no obligation to make or perform any repairs, maintenance, replacements, alterations, or improvements on the Premises. 4.2 Tenant's Obligations. The following shall be the responsibility of Tenant: (1) Repair of interior walls, ceilings, doors,windows, and related hardware, light fixtures, switches, and wiring and plumbing from the point of entry to the Premises. (2) Any repairs necessitated by the negligence of Tenant,its agents, employees, and invitees, except as provided in Section 7.2 dealing with waiver of subrogation, but including repairs that would otherwise be the responsibility of Landlord under Section 5.1. (3) Ordinary maintenance of the heating and air conditioning system and any repairs necessary because of improper maintenance. (4) Any repairs or alterations required under Tenant's obligation to comply with laws and regulations as set forth in Section 4.2(1). (5) All other repairs to the premises which Landlord is not required to make under Section 5.1. Alternative Provision 5.2 5.2 Tenant's Obligations. Tenant, at its expense,shall keep the Premises (including without limitation the roof and exterior paint) in first-class repair, operating condition, working order,and appearance. 5.3 Landlord's Interference with Tenant. In performing any repairs, replacements, alterations,or other work performed on or around the Premises,Landlord shall not cause unreasonable interference with use of the Premises by Tenant. Tenant shall have not right to an abatement of rent nor any claim against Landlord for any inconvenience or disturbance resulting for Landlord's activities performed in conformance with the requirement of this provision. 5.4 Reimbursement for Repairs Assumed. If either party fails or refuses to make repairs that are required by this Section 5,the other party may make the repairs and charge the actual cost of repairs to the first party. Such expenditures by Landlord shall be reimbursed by Tenant on demand together with interest at the rate of % per annum from the date of expenditure by Landlord. Such expenditures by Tenant may be deducted from rent and other payments subsequently becoming due or, at Tenant=s election, collected directly from Landlord. Except in an emergency creating an immediate risk of personal injury or property damage,neither party may perform repairs which are the obligation of the other party and charge the other party for the resulting expense unless - 4 - at least 110-45] days before work is commenced, and the defaulting party is given notice in writing outlining with reasonable particularity the repairs required, and such party fails within that time to initiate such repairs in good faith. 5.5 Inspection of Premises. Landlord shall have the right to inspect the Premises at any reasonable time or times to determine the necessity of repair. Whether or not such inspection is made,the duty of Landlord to make repairs shall not mature until a reasonable time after Landlord has received from Tenant written notice of the repairs that as required. Section 5. Alterations 5.1 Alterations Prohibited. Tenant shall make no improvements or alterations on the Premises of any kind without first obtaining Landlord's written consent. All alterations shall be made in a good and workmanlike manner, and in compliance with applicable laws and building codes. As used herein, "alterations"includes the installation of computer and telecommunications wiring, cables, and conduit. Section 6. Insurance 6.1 Insurance Required. Landlord shall keep the Premises insured at Landlord's expense against fire and other risks covered by a standard fire insurance policy with an endorsement for extended coverage. Tenant shall [bear the expense of any][carry similar] insurance insuring the property of Tenant on the Premises against such risks [but shall not be required to insure]. 6.2 Waiver of Subrogation. Neither party shall be liable to the other (or to the other's successors or assigns) for any loss or damage caused by fire or any of the risks enumerated in a standard fire insurance policy with an extended coverage endorsement, and in the event of insured loss, neither party's insurance company shall have a subrogated claim against the other. This waiver shall be valid only if the insurance policy in question expressly permits waiver of subrogation or if the insurance company agrees in writing that such a waiver will not affect coverage under the policies. Each party agrees to use best efforts to obtain such an agreement from its insurer if the policy does not expressly permit a waiver of subrogation. Section 8. Taxes; Utilities 8.1 Property Taxes. Tenant is a municipal government and statutorily exempt from property taxes, except as may be assessed by appropriate special districts and collected by the county assessor. Tenant shall pay as due all taxes on its personal property located on the Premises, if any. Tenant shall pay as due all real property taxes and special assessments if any, levied against the Premises. As used herein,real property taxes includes any fee or charge relating to the ownership,use, or rental of the Premises, other than taxes on the net income of Landlord or Tenant. 8.2 Special Assessments. If an assessment for a public improvement is made against the Premises, Landlord may elect to cause such assessment to be paid in installments, in which case all of the installments payable with respect to the lease term shall be treated the same as general real property taxes for purposes of Section 8.1. 8.3 Contest of Taxes. Tenant shall be permitted to contest the amount of any tax or assessment as long as such contest is conducted in a manner that does not cause any risk that Landlord's interest in the Premises will be foreclosed for nonpayment. Landlord shall cooperate in any reasonable manner with such contest by Tenant. 8.4 Proration of Taxes. If applicable, Tenant's share of real property taxes and assessments for the years in which this lease commences or terminates shall be prorated based on the portion of the tax year that this lease is in effect. 8.5 New Charges or Fees. If a new charge or fee relating to the ownership or use of the Premises or the receipt of rental therefrom or in lieu of property taxes is assessed or imposed, then,to the extent permitted by law, Tenant shall pay such charge or fee. Tenant,however, shall have no obligation to pay any income,profits, or franchise tax levied on the net income derived by Landlord from this lease. 8.6 Payment of Utilities Charges. Tenant shall pay when due all charges for services and utilities incurred in connection with the use, occupancy, operation, and maintenance of the Premises, including (but not limited to) charges for fuel, water, gas, electricity, sewage disposal, power,refrigeration, air conditioning,telephone, and janitorial services. If any utility services are provided by or through Landlord, charges to Tenant shall be comparable with prevailing rates for comparable services. If the charges are not separately metered or stated,Landlord shall apportion the charges on an equitable basis, and Tenant shall pay its apportioned share on demand. Section 9. Damage and Destruction 9.1 Partial Damage. If the Premises are partly damaged and Section 9.2 does not apply,the Premises shall be repaired by Landlord at Landlord's expense. Repairs shall be accomplished with all reasonable dispatch subject to interruptions and delays from labor disputes and matters beyond the control of Landlord and shall be performed in accordance with the provisions of Section 5.3. 9.2 Destruction. If the Premises are destroyed or damaged such that the cost of repair exceeds [25-501% ? of the value of the structure before the damage,either party may elect to terminate the lease as of the date of the damage or destruction by notice given to the other in writing not more than? days following the date of damage. In such event all rights and obligations of the parties shall cease as of the date of termination,and Tenant shall be entitled to the reimbursement of any prepaid amounts paid by Tenant and attributable to the anticipated term. If neither party elects to terminate, Landlord shall proceed to restore the Premises to substantially the same form as prior to the damage or destruction. Work shall be commenced as soon as reasonably possible and thereafter shall proceed without interruption except for work stoppages on account of labor disputes and matters beyond Landlord's reasonable control. - 6 - 9.3 Rent Abatement. Rent shall be abated during the repair of any damage to the extent the premises are untenantable, except that there shall be no rent abatement where the damage occurred as the result of the fault of Tenant]. 9.4 Damage Late in Term. If damage or destruction to which Section 9.2 would apply occurs within one year before the end of the then-current term, Tenant may elect to terminate the lease by written notice to Landlord given within 30 days after the date of the damage. Such termination shall have the same effect as termination by Landlord under Section 9.2. Section 11. Liability and Indemnity 11.1 Liens. (1) Except with respect to activities for which Landlord is responsible,Tenant shall pay as due all claims for work done on and for services rendered or material furnished to the Premises, and shall keep the Premises free from any liens. If Tenant fails to pay any such claims or to discharge any lien, Landlord may do so and collect the cost as additional rent. Any amount so added shall bear interest at the rate of % ?per annum from the date expended by Landlord and shall be payable on demand. Such action by Landlord shall not constitute a waiver of any right or remedy which Landlord may have on account of Tenant's default. (2) Tenant may withhold payment of any claim in connection with a good-faith dispute over the obligation to pay, as long as Landlord's property interests are not jeopardized. If a lien is filed as a result of nonpayment, Tenant shall, within 10 days after knowledge of the filing, secure the discharge of the lien or deposit with Landlord cash or sufficient corporate surety bond or other surety satisfactory to Landlord in an amount sufficient to discharge the lien plus any costs, attorney fees, and other charges that could accrue as a result of a foreclosure or sale under the lien. 11.2 Indemnification. Tenant shall indemnify and defend Landlord, and Landlord shall indemnify Tenant, from any claim, loss, or liability arising out of or related to any [negligent] activity of Tenant on the Premises or any condition of the Premises in the possession or under the control of Tenant including any such claim, loss, or liability that may be caused or contributed to in whole or in part by Landlord's own negligence or failure to effect any repair or maintenance required by this lease. Landlord shall have no liability to Tenant for any injury, loss, or damage caused by third parties, or by any condition of the Premises. 11.3 Liability Insurance. Before going into possession of the Premises, Tenant shall procure and thereafter during the term of the lease shall continue to carry the following insurance at Tenant's cost: comprehensive general liability insurance in a responsible company with limits of not less than$ - $ for injury to one person,$ $ for injury to two or more persons in one occurrence, and $ -$ for damage to property. Such insurance shall cover all risks arising directly or indirectly out of Tenant's activities on or any condition of the premises. Such insurance shall protect Tenant against the claims of Landlord on account of the obligations assumed by Tenant under Section 11.2, and shall name Landlord as an additional insured. Certificates evidencing such insurance and bearing endorsements requiring 10 days' written notice to Landlord prior to any change or cancellation shall be furnished to Landlord prior to Tenant's occupancy of the property. Section 12. Quiet Enjoyment; Mortgage Priority 12.1. Landlord's Warranty. Landlord warrants that it is the owner of the Premises and has the right to lease them free of all encumbrances except those set forth on the attached schedule entitled "Exceptions to Title". May or may not need this. Landlord will defend Tenant's right to quiet enjoyment of the Premises from the lawful claims of all persons during the lease term. 12.3 Estoppel Certificate. Either party will, within 30 days after notice from the other, execute and deliver to the other party a certificate stating whether or not this lease has been modified and is in full force and effect and specifying any modifications or alleged breaches by the other party. The certificate shall also state the amount of monthly base rent, the dates to which rent has been paid in advance, and the amount of any security deposit or prepaid rent. Failure to deliver the certificate within the specified time shall be conclusive upon the party from whom the certificate was required that the lease is in full force and effect and has not been modified except as represented in the notice requesting the certificate. Section 13. Assignment and Subletting No part of the Premises may be assigned, mortgaged, or subleased,nor may a right of use of any portion of the property be conferred on any third person by any other means,without the prior written consent of Landlord. This provision shall apply to all transfers by operation of law. Landlord may in its sole and arbitrary discretion not unreasonably withhold or condition such consent. Section 14. Default The following shall be events of default: 14.1 Default in Rent. Failure of Tenant to pay any rent or other charges within 10 days after written notice that it is due. 14.2 Default in Other Covenants. Failure of Tenant to comply with any term or condition or fulfill any obligation of the lease(other than the payment of rent or other charges)within 15 days after written notice by Landlord specifying the nature of the default with reasonable particularity. If the default is of such a nature that it cannot be completely remedied within the day period,this provision shall be complied with if Tenant begins correction of the default within the 15 day period and thereafter proceeds with reasonable diligence and in good faith to effect the remedy as soon as practicable. 14.3 Insolvency. Insolvency of Tenant; an assignment by Tenant for the benefit of creditors; the filing by Tenant of a voluntary petition in bankruptcy; an adjudication that Tenant is bankrupt or the appointment of a receiver of the properties of Tenant;the filing of any involuntary petition of bankruptcy and failure of Tenant to secure a dismissal of the petition - 8 - within 30 days after filing; attachment of or the levying of execution on the leasehold interest and failure of Tenant to secure discharge of the attachment or release of the levy of execution within 10 days shall constitute a default. If Tenant consists of two or more individuals or business entities, the events of default specified in this Section 14.3 shall apply to each individual unless within 10 days after an event of default occurs, the remaining individuals produce evidence satisfactory to Landlord that they have unconditionally acquired the interest of the one causing the default. If the Iease has been assigned,the events of default so specified shall apply only with respect to the one then exercising the rights of Tenant under the lease. 14.4 Abandonment. Failure of Tenant for ? days or more to occupy the Premises for one or more of the purposes permitted under this lease,unless such failure is excused under other provisions of this lease. Section 15. Remedies of Default 15.1 Termination. In the event of a default the lease may be terminated at the option of Landlord by written notice to Tenant. Whether or not the lease is terminated by the election of Landlord or otherwise, Landlord shall be entitled to recover damages from Tenant of the default, and Landlord may reenter,take possession of the premises, and remove any persons or property by legal action or by self-help with the use of reasonable force and without liability for damages and without having accepted a surrender. 15.2 Reletting. Following reentry or abandonment, Landlord may relet the Premises and in that connection may make any suitable alterations or refurbish the Premises, or both, or change the character or use of the Premises, but Landlord shall not be required to relet for any use or purpose other than that specified in the lease or which Landlord may reasonably consider injurious to the Premises, or to any tenant that Landlord may reasonably consider objectionable. Landlord may relet all or part of the Premises, alone or in conjunction with other properties, for a term longer or shorter than the term of this lease, upon any reasonable terms and conditions, including the granting of some rent-free occupancy or other rent concession. 15.3 Damages. In the event of termination or retaking of possession following default, Landlord shall be entitled to recover immediately,without waiting until the due date of any future rent or until the date fixed for expiration of the lease term,the following amounts as damages: (1) The loss of rental from the date of default until a new tenant is, or with the exercise of reasonable efforts could have been, secured and paying out. (2) The reasonable costs of reentry and reletting including without limitation the cost of any cleanup,refurbishing,removal of Tenant's property and fixtures, costs incurred under Section 15.5, or any other expense occasioned by Tenant's default including but not limited to, any remodeling or repair costs, attorney fees, court costs, broker commissions,and advertising costs. (3) Any excess of the value of the rent and all of Tenant's other obligations under this lease over the reasonable expected return from the premises for the period commencing on the earlier of the date of trial or the date the premises are relet,and continuing through the end of the term. The present value of future amounts will be computed using a discount rate equal to the prime loan rate of major Oregon banks in effect on the date of trial. 15.4 Right to Sue More Than Once. Landlord may sue periodically to recover damages during the period corresponding to the remainder of the lease term, and no action for damages shall bar a later action for damages subsequently accruing. 15.5 Landlord's Right to Cure Defaults. If Tenant fails to perform any obligation under this lease, Landlord shall have the option to do so after 30 days written notice to Tenant. All of Landlord's expenditures to correct the default shall be reimbursed by Tenant on demand with interest at the rate of ? %per annum from the date of expenditure by Landlord. Such action by Landlord shall not waive any other remedies available to Landlord because of the default. 15.6 Remedies Cumulative. The foregoing remedies shall be in addition to and shall not exclude any other remedy available to Landlord under applicable law. Section 16. Surrender at Expiration 16.1 Condition of Premises. Upon expiration of the lease term or earlier termination on account of default, Tenant shall deliver all keys to Landlord and surrender the Premises in first- class condition and broom clean. Alterations constructed by Tenant with permission from Landlord shall not be removed or restored to the original condition unless the terms of permission for the alteration so require. Depreciation and wear from ordinary use for the purpose for which the Premises are leased shall be excepted but repairs for which Tenant is responsible shall be completed to the latest practical date prior to such surrender. Tenant's obligations under this section shall be subordinate to the provisions of Section 9 relating to destruction. 16.2 Fixtures (1) All fixtures placed upon the Premises during the term,other than Tenant's trade fixtures, shall, at Landlord's option, become the property of Landlord. If Landlord so elects,Tenant shall remove any or all fixtures that would otherwise remain the property of Landlord, and shall repair any physical damage resulting from the removal. If Tenant fails to remove such fixtures, Landlord may do so and charge the cost to Tenant with interest at the legal rate from the date of expenditure. (2) Prior to expiration or other termination of the lease term Tenant shall remove all furnishings, furniture, and trade fixtures that remain its property. If Tenant fails to do so,this shall be an abandonment of the property, and Landlord may retain the property and all rights of Tenant with respect to it shall cease or, by notice in writing given to Tenant within? days after removal was required, Landlord may elect to hold Tenant to its obligation of removal. •If Landlord elects to require Tenant to remove,Landlord may effect a removal and place the property in pubic storage for Tenant's account. Tenant shall be liable to Landlord for the cost of - 10- • removal, transportation to storage, and storage,with interest at the legal rate on all such expenses from the date of expenditure by Landlord. 16.3 Holdover (1) If Tenant does not vacate the Premises at the time required, Landlord shall have the option to treat Tenant as a tenant from month to month, subject to all of the provisions of this lease except the provisions for term and renewal,to eject Tenant from the Premises and recover damages caused by wrongful holdover. Failure of Tenant to remove fixtures, furniture, furnishings, or trade fixtures that Tenant is required to remove under this lease shall constitute a failure to vacate to which this section shall apply if the property not removed will substantially interfere with occupancy of the Premises by another tenant or with occupancy by Landlord for any purpose including preparation for a new tenant. (2) If a month-to-month tenancy results from a holdover by Tenant under this Section 16.3, the tenancy shall be terminable at the end of any monthly rental period on written notice from Landlord given not less than ? days prior to the termination date which shall be specified in the notice. Tenant waives any notice that would otherwise be provided by law with respect to a month-to-month tenancy. Section 17. Miscellaneous 17.1 Nonwaiver. Waiver by either party of strict performance of any provision of this lease shall not be a waiver of or prejudice the party's right to require strict performance of the same provision in the future or of any other provision. 17.2 Attorney Fees. If suit or action is instituted in connection with any controversy arising out of this lease,the prevailing party shall be entitled to recover in addition to costs such sum as the court may adjudge reasonable as attorney fees at trial,on petition for review,and on appeal. 17.3 Notices. Any notice required or permitted under this lease shall be given when actually delivered or 48 hours after deposited in United States mail as certified mail addressed to the address first given in this lease or to such other address as may be specified from time to time by either of the parties in writing. 17.4 Succession Subject to the above-stated limitations on transfer of Tenant's interest,this lease shall be binding on and inure to the benefit of the parties and their respective successors and assigns. 17.5 Recordation. This lease shall not be recorded without the written consent of Landlord. 17.6 Entry for Inspection. With at least 24 hours prior notice to Tenant,Landlord shall have the right to enter upon the Premises to determine Tenant's compliance with this lease,to make necessary repairs to the building or to the Premises,or to show the Premises to any prospective tenant or purchaser,and in addition shall have the right,at any time during'the last two months of the term of this lease,to place and maintain upon the Premises notices for leasing or selling the Premises. 17.7 Interest on Rent and Other Charges. Any rent or other payment required of Tenant by this lease shall,if not paid within '? days after it is due, bear interest at the rate of ? %per annum (but not in any event at a rate grater than the maximum rate of interest permitted by law) from the due date until paid. In addition, if Tenant fails to make any rent or other payment required by this lease to be paid to Landlord within days after it is due, Landlord may elect to impose a late charge of cents per dollar of the overdue ? payment to reimburse Landlord for the costs of collecting the overdue payment. Tenant shall pay the late charge upon demand by Landlord. Landlord may levy and collect a late charge in addition to all other remedies available for Tenant's default, and collection of a late charge shall not waive the breach caused by the late payment. 17.8 Proration of Rent. In the event of commencement or termination of this lease at a time other than the beginning or end of one of the specified rental periods,then the rent shall be prorated as of the date of commencement or termination and in the event of termination for reasons other than default, all prepaid rent shall be refunded to Tenant or paid on its account. 17.9 Time of Essence. Time is of the essence of the performance of each of Tenants obligations under this lease. 17.10 Oregon Tort Claims Act. Subject to the limitations of liability for public bodies set forth in the Oregon Tort Claims Act, (ORS 30.260 to 30.300)the Intergovernmental Water Board members shall hold harmless and indemnify each other and their Councilors, employees, agents and volunteers against all claims, damages, losses and expenses(including all attorney fees and costs) arising out of or resulting from the District's performance of this agreement when the loss or claim is attributable to the acts or omissions of the Districts,their Commissioners, employees, agents and volunteers. Section 18. Arbitration 18.1 Disputes to Be Arbitrated. If any dispute arises between the parties as to a matter which this lease says should be arbitrated, or as to any other question involving apportionment or valuation,either party may request arbitration and appointment as an arbitrator an independent real estate appraiser having knowledge of valuation of rental properties comparable to the premises. The other party shall also choose an arbitrator with such qualifications, and the two arbitrators shall choose a third. If the choice of the second or third arbitrator is not made within 10 days of choosing the prior arbitrator,then either party may apply to the presiding judge of the judicial district where the premises are located to appoint the required arbitrator. 18.2 Procedure for Arbitration. The arbitrator shall proceed according to the Oregon statutes governing arbitration,and the award of the arbitrators shall have the effect therein provided. The arbitration shall take place in the county where the leased premises are located. Costs of the arbitration shall be shared equally by the parties,bu teach party shall pay its own attorney fees incurred in connection with the arbitration. - 12 - Section 19. First Right of Refusal No Owner shall sell or transfer the Owner's undivided interest in the Property except as set forth herein in this Water Building Lease. In the event that three (3) out of four (4) of the representative jurisdiction Owners vote to sell the Water Building property,the City of Tigard as Tenant in this Lease shall have the First Right of Refusal, and an appropriate appraisal shall be performed to establish a purchase price. LANDLORD: Intergovernmental Water Board Member Jurisdictions CITY OF TIGARD CITY OF DURHAM CITY OF KING CITY TIGARD WATER DISTRICT TENANT: CITY OF TIGARD Can add 11 warranties regarding ability to lease premises, and another clause limiting LL arranties except regarding the premises for leasing,. G:Muni\Tigard\W ater Building Lease.doc jo. l w T) NOTICE TO MORTGAGEE,LII // OR SELLER THE TIGARD DEVELOPMENT CODE REQU 7 y /D eke L ? NOTICE, 111111 v IT SHALL BE PROMPTLY FORWARDED TO 1 PUBLIC HEARING NOTICE NOTICF IS HEREBY GIVEN THAT THE TIGARD CITY COUNCIL. AT A MEETING ON TUESDAY, MAY 22, 2007 AT 7:30 PM, IN THE TOWN HALL OF THE TIGARD CIVIC CENTER, 13125 SW HALL BOULEVARD,TIGARD,OREGON 97223 WILL CONSIDER THE FOLLOWING APPLICATION: FILE NO.: ZONE CHANGE ANNEXATION (ZCA) 2007-00001 FILE TITLE: SUNRISE LANE ANNEXATION APPLICANT/ DR Horton,Inc,- Portland APPLICANT'S WRG Design,Inc. OWNER: c/o J/T Smith Companies REP.: 5415 SW Westgate Drive,Suite 100 4386 SW Macadam,Suite 305 Portland,OR 97221 Portland,OR 97239 APPLICANT'S Michael Robinson ATTORNEY: Perkins Coie,LLP 1120 NW Couch Street, 10th Floor Portland,OR 97209 REQUEST: The applicant is seeking approval for the Annexation of 19.95 acres into the City of Tigard. The applicant also requests approval of a zone change from Washington County's R-6 designation to the City of Tigard s R-7 zone. An additional 19.47 acres haze Ftri included by mans Tconsents by property ozerzls fir eight(8) additional panels and a portion 'Sunrise Lane right-qf ore, this annexation is for sezenta'n(17)pans gfland containing 39.4 acres. LOCATION: North of SW Bull Mountain Road at SW 150th Avenue and SW Sunrise Lane; WC;IM 2S105DD, Tax Lots 400, 500, 1000, 1100, 1300, 1400, 1500, 1600 and 1700. Additional panels indl• 2S105DD, Tax Lots 600/700/800/1800/2400; 2S105DB, Tax Lass 100/500; 2S 105CD, Tax La SunriseLaw CURRENT ZONING: Washington County R-6. PROPOSED ZONING: City of Tigard R-7:Medium-Density Residential District. The R-7 zoning district is designed to accommodate attached single-family homes, detached single-family homes with or without accessory residential units, at a minimum lot size of 5,000 square feet, and duplexes, at a minimum lot size of 10,000 square feet. Mobile home parks and subdivisions are also permitted outright. Some civic and institutional uses are also permitted conditionally. APPLICABLE RE VIE W CRITERIA: The approval standards for annexations are set out in Tigard Community Development Code Cana tern 18.320 and 18.390; Tigard Comprehensive Plan Policies 1, 2 and 10; Statewide Planning Goals 1,2, 11 &12; ORS Chapter 222;and Metro Code Chapter 3.09. THE PUBLIC HEARING ON THIS MAI"1ER WILL BE CONDUCTED IN ACCORDANCE WITH THE RULES OF CHAPTER 18390 OF THE COMMUNITY DEVELOPMENT CODE AND RULES OF PROCEDURE ADOPTED BY THE TIGARD CITY COUNCIL AND AVAILABLE AT CITY HALL. ASSISTIVE LISTENING DEVICES ARE AVAILABLE FOR PERSONS WITH IMPAIRED HEARING. THE CITY WILL ALSO ENDEAVOR TO ARRANGE FOR QUALIFIED SIGN LANGUAGE INTERPRETERS AND QUALIFIED BILINGUAL INTERPRETERS UPON REQUEST. PLEASE CALL 503-639-4171,EXT.2438 (VOICE)OR 503-684-2772 (TDD - TELECOMMUNICATIONS DEVICES FOR THE DEAF) NO LESS THAN ONE WEEK PRIOR TO THE HEARING TO MAKE ARRANGEMENTS. ANYONE WISHING TO PRESENT WRI I-1FN TESTIMONY ON THIS PROPOSED ACTION MAY DO SO IN WRITING PRIOR TO OR AT THE PUBLIC HEARING. ORAL TESTIMONY MAY BE PRESENTED AT THE PUBLIC HEARING. AT THE PUBLIC HEARING, THE CITY COUNCIL WILL RECEIVE A STAFF REPORT PRESENTATION FROM THE CITY PLANNER,OPEN THE PUBLIC HEARING,AND INVITE BOTH ORAL AND WRI Fi1N TESTIMONY. THE CITY COUNCIL MAY CONTINUE THE PUBLIC HEARING TO ANOTHER MEETING TO OBTAIN ADDITIONAL INFORMATION,OR CLOSE THE PUBLIC HEARING AND TAKE AC11ON ON THE APPLICATION INCLUDED IN THIS NOTICE IS A LIST OF APPROVAL CRITERIA APPLICABLE TO THE REQUEST FROM THE TIGARD COMMUNITY DEVELOPMENT CODE AND THE TIGARD COMPREHENSIVE PLAN. APPROVAL OR DISAPPROVAL OF THE REQUEST BY THE CITY COUNCIL WILL BE BASED UPON THESE CRITERIA AND THESE CRITERIA ONLY. AT THE HEARING IT IS IMPORTANT THAT COMMENTS RELATING TO THE REQUEST PERTAIN SPECIFICALLY TO THE APPLICABLE CRITERIA LISTED. ALL DOCUMENTS AND APPLICABLE CRITERIA IN THE ABOVE-NOTED FILE ARE AVAILABLE FOR INSPECTION AT NO COST OR COPIES CAN BE OBTAINED FOR TWENTY-FIVE CENTS (25 ) PER PAGE, OR THE CURRENT RATE CHARGED FOR COPIES AT THE TIME OF THE REQUEST. IF YOU WANT TO INSPECT THE FILE, PLEASE CALL AND MAKE AN APPOINTMENT WITH EITHER THE PROJECT PLANNER OR THE PLANNING IECHNICIANS. AT LEAST FIN TEEN(15) DAYS PRIOR TO THE HEARING, A COPY OF THE STAFF REPORT WILL BE AVAILABLE FOR INSPECTION AT NO COST,OR A COPY CAN BE OBTAINED FOR TWENTY-FIVE CENTS (25 ) PER PAGE,OR THE CURRENT RATE CHARGED FOR COPIES AT THE TIME OF THE REQUEST. FOR FURTHER INFORMATION PLEASE CONTACT THE CITY RECORDER OR STAFF PLANNER, GARY PAGENSTECHER AT 503-639-4171,TIGARD CITY HALL, 13125 SW HALL BOULEVARD,TIGARD,OREGON 97223,OR BY EMAIL TO garvpatigard-or.gov. JO:::::: !!'!:" !////IF � � t Z- VICINITY MAP . 11 �` &=-�_ �, 111111111// 1 ��i P- a �(.R r � ZCA2007-00001 11111 � _ --�3_ (' : ilUm�► ♦)r �/ ltrrrutnpi >. .n : 'iII I111W111111.Z/1!!/1 ��] ffil laf 7 �Y � 4 ��i . r C ,I LEGEND 1111111 V 1111//1mitiiKt . APP CATION m-:;''''5'.::}: :z,, -i,- ,',_I I`'F--,-I. - LEGENDc ',g'''':7i '"' " I. -.1t.,.. ;,,M„.^..7..'.'..'.'.'.'. . >,.- *I,.l.1.ia. ne - -� �ys uavlrEEs '-' '' �y :: - LEGEND /1.- e--' I///////!//7/1 AIGH7-0[iVAY )4. _ rye;*s 21 _ e ti. . gm” ,.,..,4, go - -_'.1. .`--- .7.-:-...:::::::!! ' 'ilAilmti; _ ,',..,' -......,-7 Ail) Milli '-'''' _____ _ ... , a..µ.., " IIII ,an ...-- ....=„rwa-,.oi.,-. IIP L 1 ' '-' .- ;=111 . .. ,,,,,,,,-• 1111,-emi I I RD li Tigard.OR 97223 ' -AI II 13125 SW Hall Blvd (503)839-4171 %.'W 'v Development Plot. %Apr 5.2007:C:Mag.c\MAGICO3.APR lak PRESS * I, a> asp.. � �' r> e ,,,,,i,'''.-,, //qt. &4. t „ . :mot OCIATION OF OREGON ,- I " - VITATIONAL ,} IRNAMENT R .4,, ....s at our 4th Annual Golf Tournament. n (Check in starts at 7:00 am) WY " located in West Linn, Oregon Cost: rnL,,.. a or a maximum of 2 members per District. I After May 15, partiwpation is open to additional members from your District. { A one-time donation of$20.00 enters you into a drawing, a hole- i. } ' in-one competition and purchases one mulligan (maximum of four mulligans per team). All proceeds will go to Make-A-Wish®- 4_'. Foundation of Oregon. . Return to: Special Districts Association of Oregon PO Box 12613; Salem, Oregon 97309-0613 ,"—`"t Fax: 503-371-4781 Email: mhigh@sdao.com r Questions: Jens Jensen or Mike Hackbart at(503) 670-7066 Email iiensen@sdao.com or mhackbart@sdao.com ; I'+ tr 4,0 .. , xLL Ali. ^ .gyp qNe H"1# .1 SDAO Rob West Invitational Golf Tournament 1 Golf_Lunch_ :ii ,E 1 Name/Title Golf_Lunch_ """ Name/Title _ a District Address City,State,Zip Phone j t Rental Clubs(circle one):Men's or Women's/Right-handed or Left-handed �j M' . : -41 �e,. Special Needs/Special Meals: 11'''47"-.. 147 N\I .s- ! t,,, S� .ry pew ' RE Si i [ rig .w. Office of the Secretary of State );-91•‘ Audits Division Bill Bradbury � �%,L,,i �� Charles A.Hibner,CPA ���, �. Secretary of State IQ r 13�� ,:;� Director Jean Straight + // 255 Capitol St.NE,Suite 500 Deputy Secretary of State � %'' Salem,OR 97310 18 5 9- (503)986-2255 fax (503)378-6767 RECEIVED April 30, 2007 MAY 0 2 2007 Public Works Admin. Board of Directors Tigard Water District C: n(/h m 671 13125 SW Hall Blvd. ab 5 fi/a." - Tigard, Oregon 97223 rile We have performed a review of the financial report submitted by the Tigard Water District for fiscal year July 1, 2005, to June 30, 2006. The review was performed in accordance with the requirements of Municipal Audit Law (ORS 297.435(2)). The review disclosed the following matters we wish to bring to your attention: • The Report In-Lieu of Audit was not received until December 27, 2006. Municipal Audit Law(ORS Chapter 297.435(2)(b))requires local governments to file reports within 90 days from the close of fiscal year. Please ensure future reports are submitted on time. We appreciate your efforts in fulfilling the reporting requirements of Municipal Audit Law. If you have any questions or concerns,please call Bill Rodriguez, Staff Auditor, or me at(503) 986-2255. Sincerely, OREGON AUDITS DIVISION, Philip . Hopkins, CPA Audit Manager CABLE HUSTON BENEDICT HAAGENSEN & LLOYD LLP ATTORNEYS AT LA SUITE 2000 1001 SW FIFTH AVENI PORTLAND,OREGON 97; la&L. TELEPHONE(503)224- FACSIMILE (503)224- CLARK BALFOUR May 11, 2007 --rhb5lottid ?0 n VIA ELECTRONIC MAIL Beverly Froude, President 6 Ti`=ard Water District c/o/Dennis Koelle:rmeier City of Tigard 13125 SW Hall Blvd. Tigard, OR 97223 Re: Canterbury Property Dear President Froude: Staff forwarded various emails from individuals regarding the Canterbury property and our letter to the Tigard Water District (TWD) dated April 21, 2006. Some of the questions were addressed in the April 21St letter, while others were beyond the scope of the letter or deal with facts or circumstances that have occurred since that time. At the outset, it is important to keep in mind what we said in our April 21, 2006 letter that the Intergovernmental Water Board Agreement ("IWGA" or"Agreement") is not the model of clarity and should be rewritten. Further, some of the questions asked are not addressed by the Agreement. With that in mind, this is an effort to answer questions as they can be best determined under the Agreement. Our April 21St letter was written from the standpoint that there are valid interpretations of the Agreement each way, but our conclusions were based upon a holistic reading of the agreement to trytry to synthesi the r i� on s along With a i;c ii„ of - n....._, :.f.i:i: :....,_ ai[ '�'. _.:C i:. .. ;re-.. 5 . ri � f.. tJj;;.. a:_J3: _. �.,....-. ..1 � .... ... used by courts when reviewing contracts and the parties past conduct to predict where we believe a reasonable and knowledgeable judge would land if presented with the issues. I. Recap of the April 21. 2006 Letter. The letter is attached for reference. On the Canterbury issue, we concluded: A. In 1994, the assets of the Tigard Water District were withdrawn by the Cities pursuant to ORS Ch. 222. The actual division of assets and deed transfers were not made. The Agreement stated that in lieu of a formal division, the parties agreed that all assets, including real property, withdrawn by the Cities would be pledged by the District and Cities to Tigard for operation, maintenance, repair, and replacement of the water system. Corvallis Office—582 NW Van Buren,Corvallis,OR 97330(541)754-7477 CABLE HUSTON BENEDICT HAAGENSEN&LLOYD LLP May 11, 2007 Page 2 B. The Canterbury property is a single tax lot upon which water system improvements are located. It is a system asset as set forth in the Tigard Water District's System Assets and Liabilities Final Report dated November, 1994 and prepared by Economist Engineering Services, Inc. ("Final Report"). "System Assets" and "Other Assets"were transferred and pledged. By definition, other assets become the sole property of the City in which they are located, subject to Tigard's obligation to manage them in a manner to deliver water service. We concluded the Canterbury property is a System Asset. C. The Intergovernmental Water Board may determine if a system asset continues to be necessary for the delivery of water. If not, it can be classified as an Other Asset by unanimous vote of the Board. If the vote is not unanimous, it remains a system asset. D. A unanimous vote on reclassification would appear to give a veto to a party. However, there is a duty of cooperation in the agreement that a court could find places a limitation on unfettered discretion by a party to object. For that reason, we stated that if a member of the IWB voted to decline to reclassify the asset to "Other," it would need to have a reasonable basis to do so such as the opinion of an engineer that the asset is necessary for water system delivery. Some questions are duplicative. We understand that Murray Smith & Associates has opined that a significant portion of the Canterbury property is no longer needed as a System Asset except for a potential Aquifer Storage and Recovery(ASR) area. The Intergovernmental Water Board Resolution No. 07-02 makes this finding,but reserves an easement area for an ASR well. II. Questions The questions received from various individuals are noted. Some questions contained statements that are not necessary to be restated in order to understand the question. For brevity, I deleted some of the narrative. Some questions are duplicative. A. Julie Russell. (1) Where does the IGA give the authority to the IWB to declare property surplus? As a matter of clarity,this question and others uses the word "surplus." The decision of the IWB in this instance is whether an asset is a System Asset or Other Asset. While the term "surplus"may be used from time to CABLE HUSTON BENEDICT HAAGENSEN&LLOYD LLP May 11, 2007 Page 3 time in the context that an asset is not needed, the IWB action here is really classification of an asset. There is no clear statement that the IWB has the power to reclassify one of the original assets from a System Asset to an Other Asset or vice versa. We concluded a year ago, that we believe a reasonable and prudent court would find the IWB has that power. It is not free from doubt,but I think that would be the result. First, TWD is starting from the position that its territory and infrastructure have already been withdrawn by each City in 1993. (See Section 1, Mission Statement and Recitals) But for the IWB Agreement, each City could have compelled the District to give up assets and make title transfers by deed except for those assets necessary for the continued functioning of the District's unincorporated service area. If a disagreement on division occurred, the Board of County Commissioners would have made a final, nonreviewable decision according to the statutory criteria of ORS 222.540. In lieu of this process, the parties executed the IWB and incorporated the division of assets methodology from the statute. Further, TWD commissioned the report by Economic and Engineering Services, Inc. (EES) report to study of the division of assets according to the statute. This study was concluded in November of 1994, and specifically approved by each IWB member. It tied to the IWB Agreement and the parties have treated this as one of the underlying documents for IWB operations. Under Section 5D(3), the IWB is specifically vested with power to classify capital improvements made subsequent to entering into the agreement as a System or Other Asset. If"Other" then it becomes the property of the situs jurisdiction subject to Tigard's management obligation_ If a System Asset is acquired after the date of the Agreement, then each City and the District obtains a proportional interest according to the 4D formula. Once again, the lack of clarity in the agreement comes to the fore. A court could look at this clause and say that the IWB was specifically vested with classification powers only for the improvements subsequent to the agreement. If so, then the Canterbury property could not be reclassified by IWB action. The parties would have to amend the Agreement to so provide. • On the other hand, a court could take the route that the IWB was vested with the power to classify subsequently acquired assets as well as those CABLE HUSTON BENEDICT HAAGENSEN&LLOYD LLP May 1l, 2007 Page 4 that were originally withdrawn and pledged for water system use. The court would review Section 5 D(3) along with the charge to the IWB: • to"consider and prepare plans for and make recommendations to the Council for a long range operation and management program" (3E(2)); • to "investigate and study means of affecting economies in operation and management" (3E(3)); • to "make recommendations to the Council relative to all of the above-mentioned matters and as to any other matters which the IWB may feel to be for the good of the water system, the over-all public interest, and for the benefit of the consumer" (3E(9)); • the Mission Statement which says that the parties to the IWB commit to working together to provide all of the residents and undeveloped property in the original district with a clean, economical water supply (Section I, Mission Statement). • Finally, section 5H allows removal or transfer of a system asset upon unanimous written approval. Removal can be construed to include reclassification. With the unanimous approval of Resolution 07-02 reclassifying the asset and reading the agreement as a whole, a reasonable court could find that the IWB has the power to reclassify assets, as there will always changing circumstances in water systems and this unanimous decision complies with Section 5H requiring approval by each member through its IWB representative. It is not free from doubt, but I think this is the result in a court test. (2) Does the IWB have the authority to declare the property surplus and sale [sic] it to Tigard without a vote by the TWD authorizing the IWB representative tc approve this transaction? ' As indicated, I believe a court would find the IWB has the power to reclassify an asset. I believe the vote of the TWD representative is sufficient for IWB action and to comply with Section 5H. The IWB has the right to rely upon the vote of each representative, and it is presumed that that person has the authority to bind its entity. If there is a question as to that, that is between the entity and its representative. There may be records from the TWB Board as to specific directives or powers it may have vested in its IWB representative. I have reviewed the TWD minutes of January 22, 2007. While a formal motion was not made, the minutes seem to reflect a consensus and direction to Commissioner Rhine.as to TWD's position on the Canterbury Property when acting as the IWB representative. The action taken at the April 11, 2007 IWB Board meeting CABLE HUSTON BENEDICT HAAGENSEN&LLOYD LLP May 11, 2007 Page 5 is consistent with the consensus direction from the January, 2007 TWD meeting. Consistent with Board policy, the representative is authorized to act on behalf of the District at official meetings. It appears at this point that the decisions made by the TWD representative to IWB was made consistent with Board policy and the January 22, 2007 Board minutes. (3) Would it be prudent to get more than one appraisal on the property before it is sold? That is a policy decision for the IWB members on whether multiple appraisals are necessary and worthy of the expense. The key is to have a current appraisal based upon highest and best use applying Uniform Standards of Professional Appraisal Practice (USPAP). (3)[sic] The IGA only allows for division of property after it has been withdrawn from the District so how will the assets be accounted for? By the IWB, withdrawal has already occurred (IWB Section 1 and Recital 2). The burden is then shifted to Tigard to utilize the asset to provide water services. The reclassification decision by the IWB is a determination of what is needed for water service. How funds or assets are tracked from an accounting or auditing perspective according to generally accepted accounting principles and the IWB Agreement is beyond our scope of work. The Agreement does not directly address the tracking of proceeds from disposition of property but it would be consistent to have proceeds be deposited in the Water Improvement Fund for the benefit of all members. (4) Since the IGA does not list the Water District building in the list of assets, does the IWB or Tigard have authority to sale[sic], declare surplus, divide this asset or change the owner of record on the deed? I assume this is the Administration or Headquarters building. The final Report of November, 1994,prepared by Economic & Engineering Services was adopted by all members of the IWB as a follow up to the Agreement. The report classified assets and as stated in our letter, this is the best evidence of the TWD assets in 1994 and the IWB parties so agreed. On page 14 of the Report, EES noted that at a May 2, 1994 meeting, the TWD Board concurred that the Headquarters Building and Satellite Buildings for offices, storage, workshops were facilities other than hydraulic. This places them in the list of other assets. Section 7E of the Agreement gives TWD a right of use for Board meetings alyd'to receive correspondence with a provision for compensation to Tigard. The same analysis of Canterbury would apply here. CABLE HUSTON BENEDICT HAAGENSEN&LLOYD LLP May 11, 2007 Page 6 Is it the property of the TWD and is required for the operation of the water system? A court would probably find it as an "Other Asset"based upon the Report that it is not hydraulic in nature. As an Other Asset it is not necessary for operation of the water system. (5) Can the TWD be forced to change the owner of record on the deed since per the IGA assets are only pledged to the City of Tigard? Section 5A states that TWD's ownership interest shall remain unless and until transferred to Tigard by agreement or question of law but shall be utilized by Tigard to provide water services. If a court concluded that the IWB action to reclassify complied with Section 5H, a deed could be compelled. If the agreement terminated, then by the agreement and operation of 222.540 a deed could be compelled. (6) Can the City of Tigard transfer resources from the Water Fund to the Parks Fund (by transferring first to the General Fund) to pay for the Canterbury purchase? This is a City issue. (7) Is the IWB Resolution 07-02 legal? We are not counsel to the IWB, only TWD. Based upon the minutes, in our opinion the actions of the TWD representative at the April 11, 2007 IWB meeting were consistent with the consensus and direction from the District Board meeting of January 22, 2007. (8) How does the sale of the Canterbury property affect the current leaser[sic], the Tigard Historical Society for the John Tigard House? Shouldn't they be notified that this transaction is being considered and have an opportunity to publicly comment on the sale? We have not reviewed the lease or other documents allowing use by the Historical Society. The agreement would control issues of notification, comment, and appraisal. We can review that document if the Board wishes. (9) How do you reconcile the sale of the Canterbury property with The_ statement in the IGA,page 11, asset ownership/water rates/revenues—H. The parties of this agreement shall not have the right to transfer ownership CABLE HUSTON BENEDICT HAAGENSEN&LLOYD LLP May 11, 2007 Page 7 of or remove system assets or any interest therein received or kept as a result of the City's withdrawal from the original district or any interest in system assets acquired during the term of this agreement without the written consent of the other party? I have always maintained that the Agreement is not the model of clarity. I think the answer is set forth in A(1) and A(2) above. (10) What is your legal opinion of the intent of the IGA regarding the division of assets when property is sold? Is it to use the same formula as the division of assets when they[sic] property is withdrawn from the District? The Agreement does not speak to that. I believe a court would rely on the proportionate interest formula/allocation of the Agreement under Section 4D and the EES Final Report unless the parties agreed otherwise. (11) Is the TWD in violation of its own bylaws since they require all meetings to be properly posted and advertised in the media, except in case of an emergency? We do not have sufficient facts to answer this question. B. Charles Radlev (1) The 1994 IGA (Intergovernmental Agreement)between TWD and CoT states that the TWD has an "undetermined" share in surplus property(such as the Canterbury facility, the Main Water Building and the Menlor property). Does this also imply a corresponding liability? For example, the TWD never passed any contracting rules since 1994, so after the March 2005 effective change to ORS-279, the TWD is now operating under the default "model rules",which impose constraints on disposal of surplus public property. I don't find the reference to the "undetermined" share in surplus property. This question should be answered by EES. The EES Final Report concludes the TWD share of assets and liabilities is 21.05% in 1994. The proportionate interest is set at 17.59% (see p. 17). The System Asset to Liability Allocation is 21.05%(cover letter). We are not in a position to explain these conclusions. CABLE HUSTON BENEDICT HAAGENSEN&LLOYD LLP May 11, 2007 Page 8 (a) Does the structure of the proposed transactions (Ref sales of Canterbury, Main Water Building, and Menlor) each conform to the default "model rules" per ORS-279? If not, then: I assume the "Model Rules" you refer to are the Attorney General's Model Rules under ORS Chapter 279. The Rules are not applicable to TWD in this instance. Intergovernmental Agreements regarding real property are exempt from public contracting requirements. The parties to the IWB may determine to transfer property upon terms and conditions they see fit. If transferred to the City, then what action the City takes must be determined according to rules applicable to the City. (b) In what respects does each proposed transaction deviate from the model rules? For example, I believe the model rules might require public auction. See B (1)(a). (c) Since TWD has no contracting rules, is it permissible for TWD to approve of giving Tigard first refusal to purchase the surplus properties, without public auction? See B (1)(a). (d) What corrective actions must the TWD take, and what form do those actions need to take, to bring it into compliance with the March 2005 ORS-279? No action necessary because the Rules do not apply. See B(1)(a). (e) Must the sale of the surplus property be deferred until such corrective actions above have been implemented? No. It is a City of Tigard issue. See B(1)(a). (f) What are the potential consequences upon TWD if the IWB insists on proceeding with the transactions before TWD has an opportunity to bring itself into compliance with ORS-279? No action necessary. See B(1)(a) CABLE HUSTON BENEDICT HAAGENSEN&LLOYD LLP May 11, 2007 Page 9 (2) The IWB has proposed that the proceeds of the "sale" of the surplus property be transferred into a city of Tigard (CoT) Water Capital Improvement Fund (a) Does the IWB have authority to appropriate the TWD share of the proceeds of the transactions and deposit those funds with the CoT without consent of the TWD? The Agreement is not clear on the issue. The closest provision is Section 5(c)(2)which states that money transferred to Tigard as a result of division of assets after withdrawal shall he dedicated and used solely by Tigard for system capital improvements in accord with 5D. It would also be consistent that the proceeds of an asset would be managed by Tigard for the water system. See 4B. Finally, the TWD representative had the authority to and did consent on behalf of the TWD Board consistent with the direction of the January 22nd meeting. (b) Do individual board members of the IWB (appointed to the IWB by their respective host government IWB members) have the authority to obligate their host governments without prior authority or without discussion with the host government? For example, do the IWB board members have the power to allocate their host government's share of sale proceeds to the Tigard Capital Water Improvement fund without authorization and/or without discussion with their host government who has a financial interest in the proceeds of the sale? This is discussed in the answer to Russell Question A(2). The January 22, 2007 minutes of the TWD Board show a discussion and apparent Board consensus for Mr. Rhine to carry 10 the J.,ATB meeting. It appears this plan was approved by the TWD, a least from the minutes. We have not listened to the meeting tape. (c) If the TWD were to approve of the funds from the proceeds of sales being transferred to the CoT, what form of document or deed or contract needs to be drawn up and executed to authorize transfer of such funds? Who would be the parties to such contract or deed? Is it sufficient that the TWD representative can verbally present such authorization to the IWB with no other documentation? Resolution 07-02 was passed by the IWB. If accepted by,Tigard, it would be the better practice to execute an agreement detailing the conditions to clarify the lack of specific language in the IWB. CABLE HUSTON BENEDICT HAAGENSEN&LLOYD LLP May 11, 2007 Page 10 Other possibilities are available. The parties could amend the IWB to clarify all these issues. The parties could execute deeds vesting proportionate interests in all along with a Tenancy in Common Agreement for use and disposition. (d) If the transactions (sales to Tigard)were to proceed, how must the TWD account for the income and outlay in the financial accounts and reports of the district? Can the transaction be ignored from the perspective of the TWD accounting and budgeting books, i.e. omitted? The IWB needs to be followed as applicable. Otherwise, all accounting must be done according to generally accepted accounting principles and auditing requirements. C. Lisa Hamilton-Treick (1) Would there be any legal obstacles to leasing land or buildings to the City of Tigard (i.e., the Canterbury property)? If the parties agree, a lease could be used. Leases are a well tested method for property use in the public and private sectors. (2) What is the legal process for changing the title of the Tigard Water District property and adding the other members of the IWB? A new deed would need to be recorded in the County records and each entity would need to "accept"the conveyance according to charter or statute. Presumably, this would follow a resolution by the IWB or amendment to the IWB agreement to modify the agreement as to joint title. See B(2)(c) above. (3) If the City of Tigard has stated that they may see a need in the future to place an ASR well on the portion of the Canterbury property that is being considered for surplus, can the property still be subdivided, considered surplus and sold or transferred? Presumably, the area for the ASR would be carved out if it is deemed potentially necessary for system operation. It is part of the reclassification and determination of what is needed for the system. D. Bert Comick CABLE HUSTON BENEDICT HAAGENSEN&LLOYD LLP May 11, 2007 Page 11 (1) Does the corporation Charter and Bylaws allow the Board of Directors to give away property without compensation to the TWD, and if so, could you please site[sic] the exact document that allows for this? TWD is a special district and unit of local government. It has the power to negotiate contracts and real property transactions on such grounds as it deems necessary and appropriate considering the interests of its ratepayers. ORS 264.210. There may be situations that the Board finds property should be transferred for non-monetary consideration or for reduced or zero consideration. Each situation is evaluated and the decision is in the discretion of the Board. III. Conclusion These questions are difficult because the Agreement language does not provide complete guidance. It appears that the structure of the reclassification and how the proceeds would be used was discussed and consensus reached at the District January 22, 2007 meeting. The TWD representative voted consistently with the TWD Board action at the IWB meeting on April 11, 2007. I believe a court would find the IWB has the power under the Agreement to conduct this transaction although there are contrary arguments. Our conclusion is that it is probable that a court would confirm the actions of TWD and the IWB. The TWD Board could always ratify all prior acts of the IWB representative to remove all doubt. Finally, we renew our call to amend the Agreement to clarify how the parties will proceed on these and other matters for the remaining term and beyond. Very truly yours, Clark Balfour CIB:mjs \\dc03\prolawdocs\27351.001\146930.doc Tigard Water District Proposed Budget Fiscal Year 2007-08 Actual Actual Actual Actual Adopted Account# Est Actual Proposed Approved Adopted FY 2002-03 FY 2003-04 FY 2004-05 FY 2005-06 FY 2006-07 Resources FY 2006-07 FY 2007-08 FY 2007-08 FY 2007-08 Revenues $13,125 $13,091 $13,310 $13,116 $14,500 One Percent Water Sales $15.475 $15,500 1.609 1,179 2,123 2,334 2,500 Interest Earnings 3.800 3,700 $14,734 $14,270 $15,433 $15,450 $17,000 Total Revenues $19,275 $19,200 $0 $0 57,794 67,851 79,217 89,815 94,836 Beginning Balance 90,076 86,568 $72,528 $82,121 $94,650 $105,265 $111,836 Total Resources $109,351 $105,768 $0 $0 Expenditures $0 $0 $0 $0 $0 Total Personal Services $0 $0 $0 $0 Materials and Services $780 $0 $0 $3,362 $20,000 Attorney $2,000 $20.000 O 0 0 0 10,000 Consultant Services 0 10,000 O 0 0 0 0 Financial Reveiw 0 0 O 0 0 0 0 Engineering Services 0 0 494 1,304 1,684 8,883 12,000 Meeting/Staff Support 14.573 12,000 1,274 1,304 1,684 12,245 42,000 601000 Professional/Contractual Svcs 16.573 42,000 0 0 1,152 0 1,442 0 0 Election Costs 3.500 0 0 0 O 0 0 0 63,316 Misc 0 56.998 1,152 0 1,442 0 63,316 613000 Special Department Expense 3,500 56.998 0 0 O 42 0 0 300 620000 Office Supplies&Expenses 50 300 777 100 150 155 150 Meeting Notice 200 200 O 0 0 500 2,500 Public Relations 500 2,500 777 100 150 655 2,650 621000 Advertising&Publicity 700 2,700 0 0 O 0 0 20 20 622000 Fees&Licenses 20 20 120 120 120 120 150 Special District Assoc Dues 120 150 120 120 120 120 150 623000 Dues&Subscriptions 120 150 0 0 54 38 49 59 600 624000 Travel/Food&Lodging 75 600 O 0 0 0 500 625000 SDAO Annual Conference 0 500 1.300 1,300 1,390 2,090 2,300 632000 Insurance 1,745 2.500 $4,677 $2,904 $4,835 $15,189 $111,836 Total Materials and Services $22,783 $105,768 $0 $0 O 0 0 0 Total Capital Outlay 0 0 $4.677 $2,904 $4,835 $15,189 $111,836 Total Expenditures $22,783 $105,768 $0 $0 O 0 0 0 0 Contingency 0 0 0 0 $4,677 $2,904 $4,835 $15,189 $111,836 Total Appropriations $22,783 $105,768 $0 $0 67,851 79,217 89,815 90,076 0 Ending Fund Balance 86,568 0 0 0 Total Appropriations and Ending $72,528 $82,121 $94,650 $105,265 $111,836 Fund Balance $109,351 $105,768 $0 $0 5/14/2007 2:06 PM Sign-in Sheet for Tigard Water District Meeting May 14, 2007 Name and Address Would you like to (Please Print) / speak to the Board? h Cn.f /7 -A(5e 4e /ys Sc /4 r rAve : 7 Y 7/34) �1n‘. aiccLk /4-52( SW 7i17)f r7 17di �`X r• iv/ 7 /5522. sit/11(5T -i- CA-FA (12 67224- Wt&i, t)-1(62- s ri 7 �tvdw✓ '71?/) (, 4' /' 4I4C f c1/ yes loot £ StlA SQIk 2000 l 7,?0 / Ti ar ^Wa r D!strict-Board- em="er .E`�_ to : � sre�= -. . .. .. ,,. ..:xd_..,•.,' .t, ^.'.,.: - .ems!- •t<l',k:, v�'tT _:. Ll.gC,r )-gv4a,+.«,ex• +._y`i .a,..t i.. .:"=S'4 < +z; }. ryyyy, -, .. , «,.:, :h , >�lam ,... , . �.. � , ./elC�dt'fl � - ,, A�;P i��BCF';;"'���}�'�P, it�rl' '=t-Q :,�,,. '� ..��`= Ate. � ;� Beverly Froude 12200 Bull Mountain Road (503) 639-2529 (home) #5 June 30, 2007 Tigard, OR 97224 (4-yr. term) Charles Radley 15729 SW Colyer Way (503) 579-4686 (home) #2 June 30, 2007 Tigard, OR 97224 (530) 578-6358 (fax) (2-yr. term) cfrilrCa.amail.com (503) 223-5600 x7820 (work) George Rhine 15361 SW Ashley Drive (503) 590-0336 (home) #1 June 30, 2007 Tigard, OR 97224 (503) 624-4830 (work) (2-yr. term) aeoraerhine a.cnsnw.com (503) 639-3276 (fax) (503) 860-3998 (cell) Janet Zeider 13100 SW Summit Ridge St. (503) 620-2485 (home) #3 June 30, 2007 Tigard, OR 97224 (503) 807-6062 (cell) (4-yr. term) 5 zelder1 verizon.net Joy Koss 9020 SW Burnham Street (503) 639-4171 x 2591 Staff Recording Executive Tigard, OR 97223 (503) 718-2401 (fax) Secretary .... .o •aov J Y(a�tigard-or I:\pw\twd\phonelst.doc