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Lake Oswego - Joint Water Supply Plan l .-7c) I FIFTH AMENDMENT TO INTERGOVERNMENTAL AGREEMENT REGARDING WATER SUPPLY FACILITIES, DESIGN, CONSTRUCTION, AND OPERATION THIS FIFTH AMENDMENT to Intergovernmental Agreement Regarding Water Supply Facilities, Design, Construction and Operation (Fifth Amendment) is effective this -° �-+`'day of���� 2018, by and between the City of Lake Oswego (Lake Oswego) an Oregon municipal corporation, and the City of Tigard (Tigard), an Oregon municipal corporation. Lake Oswego and Tigard may also be referred to individually herein as a "Party" and collectively as "Parties." Recitals WHEREAS, on August 6, 2008 the Parties executed an Intergovernmental Agreement Regarding Water Supply Facilities, Design, Construction and Operation, and which was subsequently amended by the First Amendment, Second Amendment, Third Amendment and Fourth Amendment, (the agreement with all amendments is referred to herein as the "Agreement." ); and WHEREAS, the Agreement requires that within a time certain after the Initial Expansion is constructed, property interests held in the name of Lake Oswego are to be conveyed to Tigard in proportion to its allocation of water supply capacity; and WHEREAS, the Agreement provides that from time to time exhibits may be revised or new exhibits added based upon further evaluation and studies; and WHEREAS, further evaluation and studies have occurred and the Parties agree that certain text amendments and a new Exhibit 8 should be added to clarify proportionate ownership and to reflect the final reconciliation of costs owed by Tigard to acquire its proportionate interest in real property held in the name of Lake Oswego; and NOW, THEREFORE, THE PARTIES AGREE TO THIS FIFTH AMENDMENT TO THE AGREEMENT AS FOLLOWS: Section 1. Addition of Exhibit. Exhibit 8 (Tigard Buy-In Final Reconciliation) is added to the Agreement in the form attached to this Fifth Amendment as Attachment 1. Section 2. Payment of Costs Due. Within thirty days after the effective date of this Fifth Amendment, Tigard will pay the City of Lake Oswego $311,312 representing full and final reimbursement of costs for real property interests acquired by Tigard. Section 3. Section 4.2 of the Agreement is amended as follows (deleted text str+Eken, new text bolded and double-underlined): 4.2 Anticipated Ownership FIFTH AMENDMENT TO INTERGOVERNMENTAL AGREEMENT REGARDING WATER SUPPLY FACILITIES, DESIGN, CONSTRUCTION AND OPERATION 1 � At the completion of the Initial Expansion, the Parties' percentage ownership shall be allocated as set forth in €xhi Exhibits 6 and 8 attached hereto and incorporated by reference. Where assets are listed on both Exhibits 6 and 8 the allocations in Exhibit 8 shall control. Section 4. Section 5.1 of the Agreement is amended as follows (deleted text StFieken, new text bolded and double-underlined): 5.1 Creation of Common Ownership Title to or easements rights to all properties over, under or upon which Supply Facilities are or shall be located (Property) shall remain in the name of Lake Oswego until the conclusion of the Initial Expansion. Tigard shall have an equitable interest as if it were a vendee under a land sale contract. Within 90 30 days following substantial completion of the Initial E the effective date of the fifth amendment to this Agreement, Lake Oswego will, by Warranty Deed for fee interests) and assignment (for easement rights), convey to Tigard an undivided proportionate interest as tenant in common in the Property as set forth on €+fait Exhibits 6 and 8, attached hereto and incorporated by reference. Where assets are listed on both Exhibits 6 and 8, the allocations in Exhibit 8 shall control. The Parties agree the Property owned by Lake Oswego as of the date of this Agreement shall be valued in 2008 dollars. Property acquired after the date of this Agreement shall be acquired proportional to ownership according to the purchase price paid. Closing costs for the Lake Oswego transfer to Tigard shall be shared equally. Section 5. Section 5.2.2.2 of the Agreement is amended as follows (deleted text StFieken, new text bolded and double-underlined): Following transfer, Lake Oswego and Tigard shall be responsible for all costs related to the Property in proportion to their respective interests as set forth on €xhib*t :7 Exhibits 6 and 8. Where assets are listed on both Exhibits 6 and 8, the allocations in Exhibit 8 shall control. Such costs shall be included in the monthly invoices under Section 7.1.4. Section 6. Entire Agreement. Except a specifically amended by this Fifth Amendment, the Agreement remains in full force and effect. SIGNATURE LINES TO FOLLOW FIFTH AMENDMENT TO INTERGOVERNMENTAL AGREEMENT REGARDING WATER SUPPLY FACILITIES, DESIGN, CONSTRUCTION AND OPERATION 2 1 P � g °.- IN WITNESS WHEREOF the Parties have dated and signed this Agreement City of Lake Oswego City of Tigard Mayor Dated Mayor Dated ATTEST: ATTEST: 7-2lwvl City Recorder Dated City Recorder Dated APPROVED AS TO FORM: APPROVED AS TO FORM: City Attorney Dated City Attorney Dated FIFTH AMENDMENT TO INTERGOVERNMENTAL AGREEMENT REGARDING WATER SUPPLY FACILITIES, DESIGN, CONSTRUCTION AND OPERATION 31 L y C R � Y 00 R M M N M IcC R 69 69 69 b9 n a0 ..y 69 69 69 � T Y N 00 01 � M p M a1 10 1- n 01 00 O 000 V o0 00 "J 1p 7 N .Mr � R N ^ ^ 6M9 M L 69 6A 69 (A 69 6R 69 69 sq C C L 00 R W CD 00 00 00 00 tt N C 0 OC p 00 00 00 00 00 00 •.p C ^ C ^ V1 C O oo vl 111) l- l— � p O N M M 7 a kn Vi n C V 7 N l— C\ v 'O p N 6M9 66H 669 �^6N9 S Z L V 69 6Ns �D Q a 69 0 0 o c 0 0 M M O O M M R R R M Z L O O 69 6A 69 41 Q r O J C u o J_ C C., U u cV t � � 00 00 Z a` V7 (� ' bU 7 O, M M N o O R �O �O �O � UM1 091 p M 00I W Q .YrA CIA 00 r Q` 00 r �p R V V U V U V ~ J Z 0 u X LL Z CL y p WZ E v u O O O O O -- y = Q O m d C 07 N [,7� O C O N N +�- k u R a p u vi � L d R E d F C q v E i Q A v o C 'C cQ � � •C k R c a a a v e C ca c� t R R � X33 L_ R a. ti 7 C cC L O O 'o R U iC O H rq � L O p V 7 '�' y •C k R R R l worn( FOURTH AMENDMENT TO INTERGOVERNMENTAL AGREEMENT REGARDING WATER SUPPLY FACILITIES, DESIGN, CONSTRUCTION, AND OPERATION THIS FOURTH AMENDMENT to Intergovernmental Agreement Regarding Water Supply Facilities, Design, Construction and Operation (Fourth Amendment) is effective this 251h day of October, 2016, by and between the City of Lake Oswego (Lake Oswego) an Oregon municipal corporation, and the City of Tigard (Tigard), an Oregon municipal corporation. Lake Oswego and Tigard may also be referred to individually herein as a "Party" and collectively as "Parties." Recitals WHEREAS, on August 6, 2008 the Parties executed an Intergovernmental Agreement Regarding Water Supply Facilities, Design, Construction and Operation (Agreement); and WHEREAS, since the execution of the original Agreement, the Parties have identified the need for an additional capital project to replace a roof on an existing water storage reservoir ("WR1"); and WHEREAS, the Parties have concluded that it is in the best interests of both to share in the cost to replace the roof and to jointly fund the ongoing operating and maintenance cost of WR1; and WHEREAS, Exhibit 7 to the Agreement setting forth an allocation of system improvement costs to the parties requires adjustment reflecting the changes described in these recitals; NOW, THEREFORE, THE PARTIES AGREE TO THIS FOURTH AMENDMENT AS FOLLOWS: Section 1. Revision of Exhibits. Exhibit 7 (Allocation of System Improvement Costs to the Parties) is revised to read as set forth in attached Exhibit 7. Section 2. Entire Agreement. Except a specifically amended by this Fourth Amendment, the Agreement dated August 6, 2008 as subsequently amended by the First Amendment, Second Amendment, and Third Amendment remains in full force and effect. SIGNATURE LINES TO FOLLOW Fourth Amendment to IGA— Lake Oswego-Tigard Water Partnership 11 Page IN WITNESS WHEREOF the Parties have dated and signed this Agreement City of Lake Oswego City of Tigard 10(Z'o o (6 Mayor Dated ayor Dated ATTEST: ATTEST: City Recorder Dated City Recorder Dated APPROVED AS TO FORM: APPROVED AS TO FORM: as 1 City Attorney Dated Ci Attorney Dated Fourth Amendment to IGA—Lake Oswego-Tigard Water Partnership 21 Page EXHIBIT 7 ALLOCATION OF SYSTEM IMPROVEMENT COSTS TO THE PARTIES Lake Oswego Tigard Cost of Improvements Allocation(%) Share($) Allocation(%) Share($) Project Costs* Water Treatment Plant -38 mgd Expansion $74,966,399 37.16% $27,857,514 62.84% $47,108,885 River Intake Pump Station $12,932,668 20/38 $6,806,667 18/38 $6,126,001 Raw Water Pipeline $24,540,330 20/38 $12,915,963 18/38 $11,624,367 Finished Water Pipeline $52,856,778 -WTP to South Side of Oswego Lake $25,583,609 20/38 $13,465,057 18/38 $12,118,552 -South Side of Oswego Lake to North Side of Oswego Lake $9,732,139 12/30 $3,892,856 18/30 $5,839,283 -North Side of Oswego Lake to Waluga Reservoir** $13,466,442 0% $500,000 100% $12,966,442 -Waluga Reservoir to Bonita Pumping Station $4,074,588 0% - 100% $4,074,588 Waluga Reservoir#2 $8,329,497 1.7/3.5 $4,045,756 1.8/3.5 $4,283,741 Bonita Pumping Station $8,273,901 0% 100% $8,273,901 Waluga Reservoir#1-Roof Replacement $2,903,000 50% $1,451,500 50% $1,451,500 Sub-Totals $184,802,573 38.20% $70,935,313 61.80% $113,867,260 Program Costs Program Management,Permitting,Construction Management $34,696,785 38.20% $13,254,172 61.80% $21,442,613 Sponsor/Staff Cost(wages,transfers,materials&services,testing) $13,257,000 38.20% $5,064,174 61.80% $8,192,826 SCADA System Services $1,861,684 38.20% $711,163 61.80% $1,150,521 Legal,Land Use/ROW and Other Professional Services $9,644,000 38.20% $3,684,008 61.80% $5,959,992 Construction Contingency $8,437,000 38.20% $3,222,934 61.80% $5,214,066 Sub-Totals $67,896,469 38.20% $25,936,451 61.80% $41,960,018 Total Costs $252,699,0421 38.20% $96,871,764 61.80% $155,827,278 * Project costs include design,construction,and mitigation contingency and are presented in 2014 dollars(assumed mid-point of construction). ** -Lake Oswego's half of cost to upsize this reach of FWP to 36-inch so that existing 18-inch can be retired;otherwise, LO pays 0%of new pipe in this reach. Amendment 4 to Intergovernmental Agreement THIRD AMENDMENT TO INTERGOVERNMENTAL AGREEMENT REGARDING WATER SUPPLY FACILITIES, DESIGN, CONSTRUCTION, AND OPERATION THIS THIRD AMENDMENT to Intergovernmental Agreement Regarding Water Supply Facilities, Design, Construction and Operation (Third Amendment) is effective this 19th day of December 2013, by and between the City of Lake Oswego (Lake Oswego) an Oregon municipal corporation, and the City of Tigard (Tigard), an Oregon municipal corporation. Lake Oswego and Tigard may also be referred to individually herein as a "Party" and collectively as "Parties." Recitals WHEREAS, on August 6, 2008 the Parties executed an Intergovernmental Agreement Regarding Water Supply Facilities, Design, Construction and Operation (Agreement); and WHERAS, since the execution of the original Agreement, the scope of the Project under the Agreement has changed from beginning with an "Initial Expansion" of Supply Facilities to provide Capacity of 32 million gallons of water per day (mgd), to instead encompass the full contemplated "Long Term Expansion," with a Capacity of 38 mgd; and WHEREAS, the Parties have concluded that it is in the best interest of both to adjust the allocation of Capacity from the expanded water supply facilities to transfer 4 mgd of Capacity from Lake Oswego to Tigard, resulting in 20 mgd being allocated to Lake Oswego and 18 mgd being allocated to Tigard; and WHEREAS, the shift in allocation, plus the addition of Mapleton Drive properties as assets under the Agreement and correction of original "buy-in" calculations, necessitates a payment from the City of Tigard to the City of Lake Oswego based on new costs share applied to costs paid by Lake Oswego on the 4mgd to date and the additional "buy-in" amount for the Mapleton Drive properties; and WHEREAS, Exhibit 6 to the Agreement outlining Tigard's buy-in costs, and Exhibit 7 to the Agreement setting forth an allocation of system improvement costs to the parties, require adjustments reflecting the changes described in these recitals; and WHEREAS, the Parties desire to expedite the timeframe for reviewing the Agreement to consider whether changes are necessary or desirable to reflect the transition from an agreement regarding construction to an agreement regarding long term operations; NOW, THEREFORE, THE PARTIES AGREE TO THIS THIRD AMENDMENT AS FOLLOWS: Section 1. Updating References and Eliminating Inconsistencies. The Agreement is amended to refer to a single Expansion having 38 mgd Capacity, in place of all references to an Initial Expansion or a Long Term Expansion. Section 2. Allocation of Capacity. The Agreement is amended to adjust any statements of allocations of Capacity to state an allocation of 20 mgd to Lake Oswego and 18 mgd to Tigard. Specifically, and without limiting the foregoing, Section 4.3 of the Agreement is amended to read as follows: 4.3 Allocation of Capacity At the completion of the Expansion, Tigard's allocation of Capacity shall be 18 million gallons of water per day, and Lake Oswego's allocation shall be 20 million gallons per day. Section 3. Payment. Within 60 days following the execution of this Third Amendment, Tigard shall pay Lake Oswego the sum of Five Million One Hundred Thirty One Thousand Three Hundred Ninety Dollars ($5,131,390), consisting of$1,272,846 as an additional "buy-in" amount that results from adding the Mapleton Properties to the Agreement assets and correcting original buy-in calculations, plus $3,858,544 to reimburse Lake Oswego for costs paid to date by reason of the 4 mgd of Capacity that is transferred to Tigard pursuant to Section 2 of this Third Amendment. Section 4. Sales to Others. Article XI of the Agreement is amended to read as follows: Article XI Sales to Others In addition to the Existing Wholesale Customers, Retail Customers of any Party, existing mutual aid agreements, or extension of service to service areas identified in the Carollo Report, either Party may contract for the sale or use of water within that Party's allocation of Capacity to any other person, provided that the contract is on a surplus basis. Any additional sale of water contracts that are not on a surplus basis, or any other contracts for sale or use of the Supply Facilities, shall require the approval of the other Party and compliance with the terms of this Agreement. Any revenues derived from the sale of water to another entity shall be paid to the Managing Agency. Net proceeds from such sales shall be credited back to the Parties based on a method as mutually agreed. Net proceeds shall be those proceeds remaining after expenses, renewals and replacements and contingencies are paid. Section 5. Modifications to Governance and Management Structure. Section 15.1 of the Agreement is amended to read as follows: 15.1 Modification to Agreement Within one year after approval of this amendment, the Oversight Committee shall undertake a review of all agreements to date to consider any modifications to the terms and conditions of this Agreement that may be necessary or desirable, including any modifications needed to transition from an agreement regarding construction to an agreement regarding long term operations. Matters that may be considered include, but are not limited to, changes in ownership, water rights limitations, conditions of approval and legal settlements, governance and management structure. At the recommendation of the Oversight Committee, the Councils for the parties may consider: 15.1.1 Modification of the existing Agreement(s); 15.1.2 Replacement of existing Agreement(s) with a new Agreement: 15.1.3 Creation of a Supply Agency under ORS Chapter 190. Section 6. Revision of Exhibits. Exhibit 6 (Determination of Tigard Buy-In)and Exhibit 7 (Allocation of System Improvement Costs to the Parties) are revised to read as set forth in attached Exhibits 6 and 7. Section 7. Entire Agreement. Except a specifically amended by this Third Amendment, the Agreement dated August 6, 2008 as subsequently amended by the first Amendment and the Second Amendment remains in full force and effect. IN WITNESS WHEREOF the Parties have dated and signed this Agreement City of Lake Oswego City of Tigard -x'/.1 /, ,91,3 I / Mayor Dated Mayor Dated ATTEST: ATTEST: City Reco r DateT City Recordef Dated APPROVED AS TO F APPROVED TO F M: V City Attorney Dated (( City Attorney Dated EXHIBIT_6_ AMENDED AND CORRECTED TIGARD BUY-IN Net Original Cost Reproduction Tigard Tigard Share Asset Tax Map Tax Lot Clackamas Co.Deed Cost Allocation Clackamas River Intake&Pump Station $ 1.911,733 $ 1,832.454 0.00% $ - Clackamas River Intake Land" 2 2E 20CA 15001 Bk 173,Pg 900-902 $ 10,450 $ 260,000 14/38 $ 95,789 Computer System/Software $ 214,222 $ 72,311 14/38 $ 26,641 Finished Water Transmission $ 2,111,711 $ 5,440,227 0.00% $ - General Plant $ 61,500 $ 15,561 14/38 $ 5,733 Raw Water Transmission $ 612,137 $ 2,460,521 14/38 $ 906,508 Waluga Reservoir $ 1,281,427 $ 1,960,196 0.00% $ Subtotal $ 1,034,671 Waluga Reservoir:Land Reservoir Property 2 IE 07 AD 03100 Doc 72-06414 n/a $354,508 14/38 $ 130,60R Waluga Res 41* 2 1E 07AD 00700 Doc 76-36977 n/a $1,407,287 14/38 $ 518,474 4800 Carmen Dr" 2 lE 07AD 00900 Doc 92-063461 $ 323,300 $945,353 14/38 $ 348,288 Vacant Parcel* 2 1 E 07AD 01000 Doc 92-063461 $ 323,300 $945,353 14/38 $ 348,288 Water Treatment Plant $ 9.731,005 $ 11.704,894 0.00% $ - Water Treatment Plant Land 4260 Kenthorpe Way-parcel 1" 2 1 24BD 00300 Bk 688,Pg 581 n/a $2,425,478 14/38 $ 893,597 4260 Kenthor Way-parcel 2" 1 2 1 E 24BD 1 00401 1 Doc 79-35248 1 n/a $271,975 14/38 $ 100,201 Subtotal $2.339.456 I 4245 Mapleton Dr.*(RMV) 2 IE 24BD 01200 Doc 89-10200 S 85,000 $ 509,554 18/38 $241,368 4305 Mapleton Dr.*(RMV) 2 1E 24BD 01300 Doc 95-33429 $ 190,000 $ 504,459 18/38 $238,954 4315 Mapleton Dr.`(RMV) 2 1E 24BD 01400 Doc 89-13210 $ 116,000 $ 504,459 18/38 $238,954 xxxx Mapleton Dr.` RM 2 1E 24BD 01500 Doc 89-13210 $ - Totals *less 2006-108190 $ 16,971,785 $ 31,614,589 Subtotal $719,276 'Net reproduction cost for these properties are based on an appraisal conducted by Integra Realty Resources(July 2008). Total S 4,093,404 Corrected Tigard Buy-in Mapleton Property Total= $719,276 Other WTP property total= $2.339,456 All non-property totals= $1.034,671 Total Tigard Allocation= $4,093,404 Prior Paid by Tigard= (52,820,558) Balance Due= S1,272,846 EXHIBIT 7 ALLOCATION OF SYSTEM IMPROVEMENT COSTS TO THE PARTIES Cost of Lake Oswego Tigard Improvements Allocation(%) Share($J Allocation(%) Share($) Project Costs* Water Treatment Plant -38 mgd Expansion $ 74,966,399 37.16% $ 27,857,514 62.84% $ 47,108,885 River Intake Pumping Station $ 12,932,668 20/38 $ 6,806,667 18/38 $ 6,126,001 Raw Water Pipeline $ 24,540,330 20/38 $ 12,915,963 18/38 $ 11,624,367 Finished Water Pipeline $ 52,856,778 WTP to South Side of Oswego Lake $ 25,583,609 20/38 $ 13,465,057 18/38 $ 12,118,552 South Side of Oswego Lake to North Side of Oswego Lake $ 9,732,139 12/30 $ 3,892,856 18/30 $ 5,839,283 North Side of Oswego Lake to Waluga Reservoir $ 13,466,442 0% $ 500,000** 100% $ 12,966,442 Waluga Reservoir to Bonita Pumping Station $ 4,074,588 0% $ - 100% $ 4,074,588 Waluga Reservoir $ 8,329,497 1.7/3.5 $ 4,045,756 1.8/3.5 $ 4,283,741 Bonita Pumping Station $ 8,273,901 0% $ - 100% $ 8,273,901 Sub-Totals $ 181,900,000 38.20% $ 69,483,813 61.80% $ 112,415,760 Program Costs Program Management,Permitting,Construction Management $ 34,696,785 38.20% $ 13,254,172 61.80% $ 21,442,613 Sponsor/Staff Cost(wages,transfers,materials&services,testing) $ 13,257,000 38.20% $ 5,064,174 61.80% $ 8,192,826 SCADA System Services $ 1,861,684 38.20% $ 711,163 61.80% $ 1,150,521 Legal,Land Use/ROW and Other Professional Services $ 9,644,000 38.20% $ 3,684,008 61.80% $ 5,959,992 Construction Contingency $ 8,437,000 38.20% $ 3,222,934 61.80% $ 5,214,066 Sub-Totals $ 67,896,000 38.20% $ 25,936,000 61.80% $ 41,960,000 Total Costs $ 249,796,000 38.20% $ 95,419,800 61.80% $ 154,375,800 -Project costs include design,construction,and mitigation contingency and are presented in 2014 dollars(assumed mid-point of construction). -Lake Oswego's half of cost to upsize this reach of FWP to 36-inch so that existing 18-inch can be retired;otherwise,LO pays 0%of new pipe in this reach. FIRST AMENDMENT TO INTERGOVERNMENTAL AGREEMENT REGARDING WATER SUPPLY FACILITIES, DESIGN, CONSTRUCTION, AND OPERATION THIS FIRST AMENDMENT to Intergovernmental Agreement Regarding Water Supply Facilities, Design, Construction, and Operation (First Amendment) is effective this q 9 day of Ote- , 2008, by and between the City of Lake Oswego (Lake Oswego), an Oregon municipal corporation, and the City of Tigard (Tigard), an Oregon municipal corporation Recitals WHEREAS, on August 6, 2008, the Parties executed the Intergovernmental Agreement Regarding Water Supply Facilities, Design, Construction, and Operation (Agreement), and WHEREAS, the Agreement contained various exhibits setting forth current assets and values thereof, as well as identification of assets to be constructed and construction cost estimates, and WHEREAS, the Agreement provides that from time to time the exhibits would be revised based upon further evaluation and studies and specifically that the valuation of existing assets would be conducted, and WHEREAS, the valuation of certain assets has occurred and the Parties agree that certain exhibits should be amended to reflect this updated valuation and also that some existing assets should be deleted from the exhibits, and WHEREAS, based upon the revised exhibits,the Parties further agree to amend the amount of the initial payment to be made by Tigard to Lake Oswego to acquire ownership in the existing supply facilities reflecting the updated valuation information, and being fully advised, NOW, THEREFORE, THE PARTIES AGREE TO EXECUTE THIS FIRST AMENDMENT AS FOLLOWS Section 1 Amendment of Exhibits 1, 6, and 7 The Parties agree to adopt Exhibits 1, 6, and 7, attached hereto and incorporated by reference The assets set forth in these Exhibits are the assets subject to the Agreement The Parties agree that the Mapleton Drive properties (21E24BD Tax Lots 01200, 01300, 01400, and 01500) (Mapleton Properties) are not included as assets subject to this Agreement, but shall be added in the future if any permitting authority requires improvements or dedications of any kind on the Mapleton Properties as a condition of approval of Project improvements to the Water Treatment Plant Facilities or if the Mapleton Properties should otherwise become necessary to be utilized as part of the Project If the Mapleton Properties are added, appraisals will be performed and the exhibits shall be modified as necessary to include the Mapleton Properties at the appraised value Upon the addition of the Page- I FIRST AMENDMENT TO INTERGOVERNMENTAL AGREEMENT REGARDING WATER SUPPLY FACILITIES,DESIGN, CONSTRUCTION AND OPERATION Mapleton Properties, Tigard shall pay Lake Oswego a sum equaling the percentage of the appraised value of those properties that equals Tigard's percentage of ownership of those properties as stated in the original Exhibit 7 to this Agreement Addition of other assets and valuation thereof may be made by subsequent agreement of the Parties and amendment of applicable exhibits Section 2 Section 4.1, System Ownership The Parties agree that Section 4 1, System Ownership, shall be amended to read as follows "4.1 System Ownership On or before June 30, 2009, Tigard shall pay to Lake Oswego the principal amount of Two Million Eight Hundred Twenty Thousand, Five Hundred Fifty-Seven Dollars ($2,820,557 00), together with interest on the principal amount at the rate Lake Oswego would have received if said principal was invested in the Local Government Investment Pool from the date of this First Amendment to the date of payment Lake Oswego agrees to dedicate the amount paid as working capital to the Project Upon payment, Tigard shall be granted by this Agreement an equitable interest in the Supply Facilities as if it were a vendee under a land sale contract. Title shall transfer upon completion of the Initial Expansion of the existing Supply Facilities The Parties shall each then own undivided interests in the Supply Facilities and Property Such ownership shall be a percentage ownership in the Supply Facilities component as set forth in the exhibits in this Agreement The existing assets shall be valued as shown on Exhibit 1 and the contributing partner shall receive a credit for the asset value If the Initial Expansion is not constructed, Lake Oswego shall refund the amount of Tigard's payment to Lake Oswego plus interest at the LGIP rate within 30 days of the decision to abandon the Project and Tigard shall have no further ownership or equitable interest in the Lake Oswego Supply Facilities and Property Tigard will execute any document required by Lake Oswego to convey any interest Tigard may have in Lake Oswego Supply Facilities and Property Tigard's purchase of its percentage share of the Supply Facility assets shall be by capital contribution, mutually approved in kind contributions or payment of design, permitting and construction costs for the system expansion so that upon completion of the Initial Expansion, Tigard's contribution shall equal its percentage ownership as shown in Exhibit 7. Lake Oswego's percentage as shown in Exhibit 7 is based on its contributed assets, financial contribution to the Initial Expansion mutually approved in kind contributions and other mutually agreed factors." Section 3 Section 5.1, Creation of Common Ownership The Parties agree that Section 5.1, Creation of Common Ownership, should be amended as follows: Page-2 FIRST AMENDMENT TO INTERGOVERNMENTAL AGREEMENT REGARDING WATER SUPPLY FACILITIES,DESIGN,CONSTRUCTION AND OPERATION 5.1 Creation of Common Ownership Title to or easements rights to all properties over, under or upon which Supply Facilities are or shall be located(Property) shall remain in the name of Lake Oswego until the conclusion of the Initial Expansion. Tigard shall have an equitable interest as if it were a vendee under a land sale contract. Within 90 days following substantial completion of the Initial Expansion, Lake Oswego will, by Warranty Deed, convey to Tigard an undivided proportionate interest as tenant in common in the Property as set forth on Exhibit 6, attached hereto and incorporated by reference The Parties agree the Property owned by Lake Oswego as of the date of this Agreement shall be valued in 2008 dollars Property acquired after the date of this Agreement shall be acquired proportional to ownership according to the purchase price paid Closing costs for the Lake Oswego transfer to Tigard shall be shared equally " Section 4 Entire Agreement In all other respects, the Agreement dated August 6, 2008, is in full force and effect except as may be specifically amended by this First Amendment. IN WITNESS WHEREOF the Parties have dated and signed this Agreement. CITY OF LAKE OSWEGO CITY OF TIGA 6t�ljxzllr! - , 44� 1 Mayor Mayor 12-a6- OK fi-"5-,e 9' X Dated Dated //�� Attest Attest ���&e-4z� City R corder City Recorder IV &,e--. - Dox, Date§ Dated City Attorney City Attorney Page-3 FIRST AMENDMENT TO INTERGOVERNMENTAL AGREEMENT REGARDING WATER SUPPLY FACILITIES,DESIGN,CONSTRUCTION AND OPERATION I Inteilm supply to Lake 0-9. (not allocated) 2 Raw Watez Intake (not allocated) 3 Raw Wa er Tran,ml 4 Water Treatment Plant Land 5 Watei Treatment Plant Structure, 6 Equipment (not allocated) 6 Fana,hed Tzanamin elon Mal: (not alloca C ed) 7 Walu9a Reeervoli Land it see rvolr Property) 8 Wa1u9a Renervoar St...turee s Equipment (not allocated) 9 Sonata Pump Station (not allocated) 10 Comp.[ r SY,[em/So E[ware 11 General Plant Exhibit 1 Existing Real Property Supply Facility Components and Valuation Currant Year 2008 Assumed Escalation 585 Ma 2008 ENR CCI 8190 Au ust 2008 ENR CCI 8,32 July Acquisition Acquisition Original 2008 Today Acquisition Useful Ufe Depreciation Allocation Asset Descrt tion Date Amount ENR CCI CCI Amount in ears Amount Value Today Water Treatment Plant Land 1 165 8 362 4 Plant Site 6/3011968 $ 83 797 $ 606 676 Land $ $ 606 676 Sub Total $ 83 797 $ 606 676 $ $ 606 676 Raw Water Transmission 1 269 8362 3 Raw Water Transmission 6/30/1969 $ 590137 $ 3 B88 673 100 $ 1 516 582 $ 2 372 090 3 Piplelme Easements 6/30/1969 $ 22 000 $ 144 968 100 $ 56 537 $ 88 430 Sub Total $ 612137 $ 4033640 $ 1 573120 $ 2 460 521 Distribution Storage 7 Reservoir Property 629/1980 $ 3 237 8 362 $ Land $ $ Waluga Reservoir 3/30/1983 $ 1 281 427 4 066 8362 $ 2 635 340 100 $ 658 835 S 1 976 505 Sub Total $ 1 281 427 $ 2636340 $ 658 835 $ 1 976 505 CgrilDUier$VSiem6/$Olhyafe 10 SCADA System Upgrade 6/30/1991 $ 180 722 4 835 8 362 $ 312 554 20 $ 265 671 $ 46 883 10 Scads Software Upgrade SM/1999 $ 33 500 6 059 8 362 $ 46 233 20 $ 20 805 $ 25 428 Sub Total $ 214 222 S 158 787 $ 286 476 $ 72 311 General Plant 11 Other 6/8/1982 $ 17 000 3 825 8 362 $ 37 164 20 $ 37 164 $ 11 Vehidas 618/1986 $ 24 000 4 295 8 362 $ 46 726 20 $ 46 726 $ 11 Vehicles 6/30/1999 $ 20 500 6 059 83 62 $ 28 292 20 $ 12 731 $ 15 561 Sub Total $ 61 500 $ 112 182 $ 96 622 $ 15 561 Land Additions July 2008 OLV(land Only with upward adjustment per parcel by amendment) 7 Waluga Res 01 TL 700 1876 $ $ 1359685 Lend $ $ 1359585 7 4800 German or TL 900&1 DOG 1992 $ 323,000 $ 1 826 618 Lend $ $ 1 826 618 7 Vacant Parcel 0 66 ac cf TL3100 2008 $ $ 342 491 Lend $ $ 342 491 4 4260Kerithorpe Way-TL 300 1966 $ $ 2 343 796 Land $ $ 2 343 796 4 WTP PropertyTL 401 1979 $ $ 262 815 Land $ $ 262 815 4 4989 $ 88,000 ($3821661 Land $ ($382166) 4 4895 $ 190,000 ($378$44) Land $ ($378344) 4 4889 $ 116000 ($378344) Lentl $ ($378344) 4 x889 $ 116000 ($149o45) Lard $ ($149045) Clackamas River Intake 8 Pump Station Clackamas"tar Iraake Land 71811967 $ 10450 1 074 $ 260 000 Land S $ 260 000 Structure &30/1969 $ 121 980 1 269 8 362 $ 803 780 6o $ 522 457 5 281 323 Pumps&equipment &3011969 $ 50 826 1 269 0362 $ 334 908 40 $ 326 536 $ 8 373 Piping and Valves 613011969 $ 20 330 1 269 8362 $ 133 963 60 $ 87076 $ 46 887 Electrical i&C HVAC 613011969 $ 10 166 1 269 8362 $ 66 982 40 $ 65 307 $ 1 675 Seismic Upgrades 1980 $ 131 000 6 538 8362 $ 167 547 60 $ 78 189 $ 89 358 Pumps 1980 $ 40000 3 237 8362 $ 103 330 40 $ 72 331 $ 30 999 Pumps No 4 2002 $ 153 833 6 538 8 362 $ 196 750 40 $ 29 513 $ 167 238 Intake Fish Screen. 2002 $ 1 352 600 6538 B 362 $ 1 729 954 20 $ 518 986 $ 12109 8 Piping and Valves 1980 $ 10 000 3 237 8 362 $ 25 833 60 $ 12 055 $ 13 777 Electrical and HVAC 1980 $ 21 000 3 237 8 362 $ 54 248 40 $ 37 974 $ 16 275 Water Treatment Plant Site Work &3011969 $ 155 915 1 269 8 362 $ 1 027 393 60 $ 667 805 $ 359 587 Concrete and Buildings 613011969 $ 479 739 1 269 8 362 $ 3 161 212 60 $ 2 054 788 $ 1 106 424 Pumps 6/30/1969 $ 4 197 1 269 8 362 $ 27 656 40 $ 26 964 $ 691 Mechanical Equipment 6/30/1969 $ 125 931 1 269 B 362 $ 829 815 40 $ 809 069 $ 20 745 Piping and Valves 6/30/1969 $ 191 695 1 269 8362 $ 1 264 481 60 $ 821 912 $ 442 568 Electrical I&C HVAC 6/30/1969 $ 191 895 1 269 8 362 $ 1 264 481 40 $ 1 232 869 $ 31 612 "It.Media and Undenlrams &3011969 126S 8 362 $ 40 $ $ Chemical Addit.I &3011969 1 269 8 362 $ 40 $ $ Clear Well &3011969 1269 8362 $ 60 $ $ Solids Dewatering Faait— 6/30/1969 1 269 8 362 $ 60 $ $ Mlacdlaneoua 613&1969 $ 11 993 1 269 8 362 $ 79 027 20 $ 79 027 $ Engmeermg &30/1969 1 269 8 362 $ 60 $ $ Expansion 1980 $ $0,221 3 237 8 362 $ 207 231 60 $ 96 708 $ 110 523 Site Work 1998 $ 510 000 5 920 8 362 S 720 375 60 $ 120 063 $ 600 313 Expansion 1980 $ 333,224 3 237 8 362 $ 860 803 60 $ 401 708 $ 459 095 Sel.mic/ADNCode 2000 $ 498,498 6 221 8 362 $ 670 060 60 $ 89 341 $ 580 718 Expansion 1980 $ 86 391 3 237 B 362 $ 223 170 60 $ 104 146 $ 119 024 Pumps antl Equipment 1999 $ 507 925 6 059 8 362 $ 700 985 40 $ 157 722 $ 543 263 Expansion 1980 $ 67 879 3 237 0362 $ 175 349 60 $ 81 829 $ 93 519 Mechanics) 2001 $ 641 126 6 343 8 362 $ 845 199 40 $ 147 910 $ 697 289 Expansion 1980 $ 357 906 3 237 8 362 $ 924 563 60 $ 431 463 $ 4931 0 Expansion 1980 S 178 954 3,237 8 362 $ 462 284 60 $ 215 733 $ 246 551 Eta mcal 1999 $ 66 247 6 059 0362 $ 91 427 40 $ 20 571 $ 70 856 Electrical&Instrumentation 2001 $ 568 564 6 343 8 362 $ 749 540 40 $ 131 169 $ 618 370 Expansion 1960 $ 63,923 3 237 8362 $ 216 795 60 $ 101 171 $ 115 624 I'll.&Structural Work 2001 $ 416 886 6 343 8 362 $ 549 582 40 $ 96 177 $ 453 405 Sodium Hypochlorde System 1998 $ 282,793 5920 8 362 $ 399 445 40 $ 99 861 $ 299 584 Lune Satragaipaed System 1998 $ 1000,150 5 920 8 362 $ 1 412 723 40 $ 353 181 $ 1 059 542 CO2 St- age/Feed System 1998 $ 238 357 5 920 8 362 $ 336 679 40 $ 84 170 $ 252 509 Alum Sotm9e/Feed System ISO$ $ 522 800 5,920 8 362 $ 738 455 40 $ 184 614 $ 553 841 Clear Well Elam' 1996 $ 107 293 5 622 8 362 $ 159 585 40 $ 47 875 $ 111 709 Solids Dewatering Lagoons 1999 S 1 084 518 6 059 8 362 $ 1 496 739 40 $ 336 766 $ 1 159 972 Expenalon 1980 $ 45,664 3 237 8 362 $ 117 962 60 $ 55 049 $ 62 913 Engineering 1998 $ 311,460 5 920 B 362 $ 439 937 60 $ 73 323 $ 366 614 Engmeenng 1999 $ 120 000 6 059 8 362 $ 165 611 60 $ 24 842 $ 140 770 Engmeermg 2000 $ 126,653 6 221 8362 $ 170 242 6o $ 22 699 $ 147 543 Engmeermg 2001 $ 332,000 6,343 8 362 $ 437 677 60 $ 51 062 $ 386 615 $ 9 731 005 $ 11 704 894 Finished Water Transmission 24 Inch Finished Water Main 8/30/1969 $ 473 456 1 269 8 362 $ 3 119 810 100 $ 1 216 726 $ 1 903 084 WTP Transmission Main 6130/1969 $ 42 618 1 269 8 362 $ 280 829 100 $ 109 523 $ 171 306 North Shore Iron Mtn Pipelines 6/30/1970 $ 534 142 1 381 8 362 $ 3 234 247 100 $ 1 229 014 $ 2 005 233 Upper Dr Iron Mm 24 Inch Pipekn 6/3071986 $ 575 398 419S 8 362 $ 1 146 955 100 $ 263 800 $ 883 156 Cathodic Protection System 4112000 $ 466 097 6,221 8 362 $ 653 391 40 $ 130 678 $ 522 713 Sub Total $ 24 325 904 $ 38 086 415 $ 13 921 751 $ 35 869 557 Calculated Total Current Acouisibon Value 2008 Value Depreciation Value TOTAL ASSETS $ 26 678 987 $ 45 833 040 $ 16 536 804 $ 41 001 130 EXHIBIT_6_ DETERMINATION OF TIGARD BUY-IN Net 1 igard Oripmal Cost Reproduction Wocation I igard Share ILS%ct Fax Map Tax 1 of Clackamas Co Deed Cost % (la(kamas Rti er Intake t Pump Station $ 1 911 73' S 1 832 454 000% $ - ( tacl.amas Rtvc r Intake I anti* 2 2f 20CA I ii)()1 131. 173 Pg 900-902 S 10 450 $ 260 000 14/38 S 95,789 C-csmput'i S 21422' b 72311 14,38 S 26611 I tiiishGd it atci h an"Imssion J 2'1 11 711 S 5440,227 000% $ - Cencial'1'lant S 61'500 $ 15 561 14!38 $1 5,733 Raii \lfYau Transunbsion $ 612 137 $ 2 460 521 14/38 $ 906 508 �k aluga Reservoir S 1 281 427 $ 1 960 196 000% $ - %V aluga Reservoir-Land Rescr%olr Properiy 2 1107 AD 03100 Doc 72-06414 1L'a $ 342491 14/38 $ 126 181 Waluga Re,it I* 2 11'07AD 00700 Doc 76-36977 n/a $ 13i9 585 11/38 -S 500 900 4800 Gmmcn DI# 2 1L-07AD 00900 Doc 92-063461 S 323 300 S 913 309 14,38 $ 336 482 Vacant Parcel* 2 11-07AD 01000 Doe 92-063461 S 323 300 $ 913 309 14/38 $ 336,482 Water I reatmcnt Plant S 9 731 005 $ 11 704 89.1 000% S - Water Treatment Plant Land 4260 Kuithotlx.Wax -patfel 1" 2 11 24131) 00300 131.688,Pe 581 11"d S 2 343 796 1-1,'38 $ 863,504 4260 Kenthorlx Wav-parcel 2* 2 1 F 24131) 00401 Doi 79-35248 n/a S 262 815 14/38 $� 96 827 424q424qllopletoo-_nr* 2-43-2$111) 04gOO Po-f-99402-00 $ 13-,,,'100 `$--3$2,,!1.16 L'm'=��nn'-r••r799) 430-5 Mapleton D-r-* t���.i.7AR�ll1 oq,-95 334 9 $ i(�11111111 T 01�(i0 _, $ 3�IIr344" {$1-39;3AU3 4.345-M.*eton-D9 2 ire„zAD 04400 t?ocu9 13230 $ 1-16000 y 378;304- 438 ($449,390) _cam=Mapleton-Qr! 2�I 9-1500 Doc 8'9 13'2! a $449'015 4” 1 of its *IcSS 2006-108190 $ 17 087 785 'S 31,169 368 S 2,820,158 '\,I seL (or tbs. condu,ted br Intei,ra Rwm Re---,0,1,20-81,Order%bqurdatmn Val—F-parccis nor+sr ri Lev Hereadlusi�d.p,—d bN.r F+ dmsntl ,11-1 nn°c bayed on Id mud M 3a rxd. pxns 11­ted to T,gard •'et Rrpn ducnan Cost uatudes escalauov b,LVk less depr aoo. EXHIBIT ALLOCATION OF SYSTEM IMPROVEMENT COSTS TO THE PARTIES Cost of Lake Oswego Tigard Improvement Allocation Allocation (in 2006$) * (%) Share ($) (%) Share($) Water Treatment Plant - Existing Plant n/a 10000% n/a 000% $ - - 32 mgd Expansion $ 39,430,000 2/16 $ 4,928,750 14/16 $ 34,501,250 - 3 8 mgd Expansion n/a 100% ** n/a 000% $ - Raw Water Intake and Pump Station $ 4,440,000 24/38 $ 2,804,210 14/38 $ 1,635,789 Raw Water Transmission Main $ 23,920,000 24/38 $ 15,107,368 14/38 $ 8,812,633 Finished Water Transmission Main -Reaches 7-10 $ 38,220,000 24/38 $ 24,138,947 14/38 $ 14,081,053 -Reaches 11-12 $ 17,020,000 8/22 $ 6,189,091 14/22 $ 10,830,909 Storage(MG) $ 4,010,000 1 0/25 $ 1,604,000 1 5/25 $ 2,406,000 Bonita Road Pumping Station $ 1,700,000 000% $ - 10000% $ 1,700,000 Total Costs $ 128,740,000 1 4254% $ 54,772,366 5746% $ 73,967,634 *-Project costs are presented in 2006 dollars Actual cost will depend on protect start and completion dates ** -Second(6 mgd)expansion is currently assigned to Lake Oswego Contract provides for potential reallocation by agreement INTERGOVERNMENTAL AGREEMENT REGARDING WATER SUPPLY FACILITIES, DESIGN, CONSTRUCTION,AND OPERATION DATED.. 14U.Sk b , 2008 BETWEEN THE CITY OF LAKE OSWEGO AND THE CITY OF TIGARD CADocuments and Settings\greer\Local Settings\Temporary Internet riles\Content.Outlook\12D82WYX\183039.doc I TABLE OF CONTENTS Page RECITALS ............................................................................................................... 1 ARTICLEI Definitions.............................................................................................3 ARTICLE 11 Warranties and representations of the Parties..................................... 1 l ARTICLE III Management........................................................................................ 12 ARTICLE IV System Ownership...:........................................................................... 19 ARTICLE V Property; Creation of Tenancy in Common.........................................21 ARTICLE VI Design and Construction of Supply Facilities.....................................24 ARTICLE VII Operation and Management................................................................28 ARTICLE VIII Supply Facilities.............................. ..32 ARTICLE IX Expansion .Rights and Requirements...................................................36 ARTICLEX Leasing................................................................................................40 ARTICLE XI Sales to Others............................................................:........................43 ARTICLE XII Operations Manual ..............................................................................44 ARTICLE XIII Withdrawal, Termination of Membership, Sale of Assets and Dissolution ..........................................................................................46 ARTICLE XIV Dispute Resolution..............................................................................51 ARTICLE XV Completion of Initial Expansion of the Supply Facilities................... 53 ARTICLE XVI Notices.................................................................................................54 ARTICLE XVII General Provisions..............................................................................55 i CADocuments and Settings\greer\Local Settingffemporary Internet Piles\Content.Outlook\]2D82WYx\183039.doc LIST OF EXHIBITS Exhibit 1 Existing Real Property, Supply Facility Components and Valuation - Exhibit 2 Service Areas Exhibit 3 Map of Supply Facilities Exhibit 4 Surface Water Rights Exhibit 5 Supply Facilities Capital Improvement Program (to be adapted by Councils) Exhibit 6 Determination of Tigard Buy-In Exhibit 7 Allocation-of System Improvement Costs to the Patties ii CADocuments and.Settings\greer\Local Settings\Temporary Internet Files\Content.Outlook\12D82WYX\183039.doc This Intergovernmental Agreement Regarding"" Water Supply Facilities, Design, Construction, And Operation is dated hm LLS t LG' , 2008 (the "Agreement"), by and between the City of Lake Oswego ("Lake Oswego"), an Oregon municipal corporation and the City of Tigard ("Tigard"), an Oregon municipal corporation. Lake Oswego and Tigard may also be referred to individually herein as a "Party" and collectively as the "Parties." RECITALS WHEREAS, the City of Tigard operates a municipal water supply utility under ORS 225, with transmission, storage and distribution facilities to deliver potable water to Customers within the area of the Cities of Tigard, King City, Durham, and the remainder of the Tigard Water District; WHEREAS, the City of Lake Oswego operates a municipal water supply utility under ORS 225, which treats and distributes potable water to Retail Customers and sells water at wholesale to the Lake Grove Water District, the River Grove Water District, Skylands Water Company, Glenmorrie Cooperative Association and Alto Park Water District (the "Existing Wholesale Customers"); WHEREAS, Lake Oswego has existing water intake and water treatment facilities, transmission, storage facilities (hereinafter "Supply Facilities") together with distribution facilities and water rights; WHEREAS, the Supply Facilities require capital improvements to repair and replace existing assets and to construct new improvements, all at a significant cost; WHEREAS, Tigard desires to acquire an ownership interest in the Supply Facilities to obtain a permanent source of raw water and treatment facilities for potable Page I —Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local Settings\Temporary Intemet Files\Content.Outlook\12D82wYx\183039.doc water and also needs to make capital improvements for storage and transmission facilities; and WHEREAS, the Parties jointly funded a study by Carollo Engineers known as the Lake Oswego and Tigard Joint Water Supply System Analysis dated July, 2007 ("Carollo Report"); and WHEREAS, the Parties agree that, based upon the Carollo Report, there are significant benefits by jointly taking action to perfect existing water rights, construct, repair, replace, expand and otherwise improve the Supply Facilities infrastructure necessary to supply that water to the Parties and to realize or mitigate potential environmental impacts and benefits; and WHEREAS, prior to the execution of this Agreement, the Parties worked in a collaborative, open, and participative manner to select an operating framework that best serves the needs of the Parties, and this Agreement incorporates those precepts; WHEREAS, the Parties agree that creation of this Intergovernmental Agreement and investment by the Parties shall provide the Parties with stability and local control over the source of supply, build ownership equity in the Clackamas River System, provide for flexibility in the use and allocation of water, provide for flexibility for management of water resources for enhanced costs and operation efficiency, create opportunities to share and trade staff resources, expertise and technological capabilities, and being fully advised, NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the Parties agree as follows: Page 2—Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local Settings\Temporary Internet Files\Content.Outlook\12D82WYX\l83039.doc ARTICLE I DEFINITIONS 1.1 Definitions As used in this Agreement; the following terms when capitalized shall have the following meanings: 1.1.1 Agreement—this Agreement 1.1.2 Book Depreciation Life — the years used to depreciate an asset in accordance with Generally Accepted Accounting Principles. 1.1.3 Capacity capability from the various ,components of the Supply Facilities to produce or deliver water; measured in cubic feet per second (cfs), gallons, gallons per day (gpd), gallons per minute (gpm), million gallons per day (mgd), or other comparable measurement and available based on current operating conditions consistent with generally accepted engineering and operating practices. 1.1.4 City of Lake Oswego — an Oregon Municipal Corporation in Clackamas, Multnomah, and Washington Counties, Oregon. 1.1.5 City of Tigard— an Oregon municipal corporation in Washington County, Oregon. 1.1.6 Clackamas River Intake Pump Station—an existing structure comprised of a reinforced concrete building and all equipment and materials contained therein or any future expansion, modification or replacement thereof that allows water to be withdrawn from the. Clackamas River and pumped through the raw water transmission line to the Water Treatment Plant Facilities. The Clackamas River Intake Pump Station ownership and its Page 3 —Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local Settings\Temporary Internet Files\Content.Outlook\l21)82VNX\l83039.doc agreed value. are more fully described in Exhibit 1 which, exhibit may be updated and revised by resolution of the Parties. 1.1.7 Curtailment Plan — A written plan developed for curtailment of water service in accordance with OAR Chapter 690 Division 86 rules. 1.1.8 Demand— the amount of water used or projected to be used by a Party and imposed on the Supply Facilities to serve a.Party's Retail Customers its Existing Wholesale Customers and ultimate service area measured in cfs, gallons, gpd, gpm, mgd, or other appropriate measurement. The basis for determining Demand may be waived ror modified by the Parties due to unusual circumstances such as a fire, emergency, etc. 1.1.9 Depreciated Replacement Cost Value —the value calculated in the current year by multiplying the original cost of the asset times the index in the Engineering News Record Construction Cost Index 20-City Average, 1913=100 as published in the Engineering News Record for the year of evaluation. The products shall be divided by Engineering News Record Construction Cost Index 20-City Average, 191.3=100 as published in the Engineering News Record for the year placed in service. The result shall then be depreciated from the year placed in service to the year of evaluation using the Book Depreciation Life. The formula* is expressed as follows: DRC —(CC*ENR' /ENR') *(1-(Ye-Y')/BDL)) Where: DRC =Depreciated Replacement Cost Value. Page 4—Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local Settings\Temporary Internet Files\Content.Outlook\12D82WYX\183039.doc b . CC = Construction cost. ENR'= Engineering News Record Construction Cost Index for the year of evaluation. ENR'- Engineering News Record Construction Cost Index for the year placed in service. Ye -Year of evaluation. Y°=Year placed in service. BDL = Book Depreciation Life. 1.1.10 Existing Wholesale Customers — the Lake Grove Water District, River Grove Water District, Skylands Water Company, Glenmorrie Cooperative Association, and.Alto Park Water District who are served at wholesale by Lake Oswego as if they were a Retail Customer of LO under the terms and conditions of this Agreement. The Cities of King City and Durham and the Tigard Water District are contractually served by Tigard and for purposes of this Agreement shall be defined as existing wholesale customers. The parties recognize that the status of these entities are contractual and may change over time as determined by the affected Party to this agreement and the existing wholesale customer. 1.1.11 Fiscal Year—the time period as defined under ORS 294.31 1(17). 1.1.12 Local Government Investment Pool (LGIP) — The Oregon State Treasurer's Local Govemment Investment Pool, subject to regulatory oversight by the Oregon Secretary of State and administered by the Oregon State Treasury. Page 5 —Lake Oswego-Tigard Water Supply Agreement C'\Documents and Settings\greer\Local Settings\Temporary Internet Files\Content.Outlook\12D82WYx\183039.doc 1.1.13 Municipal Bond Index — The rate as published by the State of Oregon Treasury Department entitled "Oregon Bond Index — Oregon A Rated 20 Year" for the first date after the beginning of the fiscal year. Should said rate cease to be published, then the Parties shall determine another comparable index. The date used for determination of the rate may be modified by the Parties in the event of unusual market circumstances (such as declaration of war by the United States). L 1.14 Planning Forecast-the document submitted by the Parties in accordance with Article 8.2 which shows the Demands of each Party to be imposed on the Supply Facilities and the Capacity owned or leased by each Party in such facilities. 1.1.15 Project — The design, permitting and construction of new and expanded Supply Facilities, as generally described in the City of Lake Oswego and Tigard Water Service Area Joint Water Supply System Analysis dated July, 2,007 by Carollo Engineers ("Carollo Report") to provide 32 million gallons per.. day capacity by 2016 (the Initial Expansion) with the capability to 'further expand up to 38 million gallons (Longterm Expansion) per day when it appears.the water demands of the Parties will exceed 32 mgd. At the completion of Initial Expansion, the Lake Oswego allocation shall be 18 million gallons per day and the Tigard allocation shall be 14 million gallons per day. 1.1.16 Property—Property shall be parcels of real property owned in fee simple, by easement or other interest over;, under or upon which the supply ,Page 6.—Lake:Oswego-Tigard Water Supply Agreement CADocuments and;Settings\greer\Local Settings\Temporary Internet Files Content.Outlook\12D82WYX\183039.doe Facilities are or will be located as part of the Initial Expansion or Long Term Expansion. Property currently held by Lake Oswego will remain in the name of Lake Oswego until completion of the Initial Expansion. Until completion of the Initial Expansion, Tigard shall have an equitable interest as if it were a vendee under a land sale contract. Additional properties acquired as part of the Initial Expansion or the Long Term Expansion shall be acquired as tenants in common in proportion to the Parties' allocation of capacity. 1.1.17 Retail Customers — A user within the Party's service area boundary to which users.may be added from time to time by annexation, extra- territorial extension of service, merger and/or consolidation or by intergovernmental agreement among the Parties pursuant to ORS 190. A municipal corporation or other entity, which purchases water for resale, shall not be considered a Retail Customer. 1.1.18 Service Area — The existing and future service area for each Party as identified in the Carollo Report, as set forth on Exhibit 2, and as may be modified by the Parties or pursuant to Section 17.8.3 of this Agreement. 1.1.1.9 Summer Period—June 1 through October 31. 1..1..20 Supply Facilities — the facilities utilized by the Parties identified in the. Carollo Report consisting of Water Treatment Plant Facilities, Transmission Facilities, Water Storage Facilities, and other facilities necessary for treatment and conveyance of potable water to the Parties. A map of the Supply Facility components is provided in Exhibit 3, which Page 7—Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local Settings\Temporary Intemet Files\Content.Outlook\12D82WYX\183039.doc exhibit may be updated and revised by resolution of`the_Parties. The map is for illustrative purposes only and shall not be considered a legal description of the Supply Facilities 1.1.21 Surface Water Rights—those water rights held by Lake Oswego registered with the State of Oregon Water Resources Department, which allow for diversion of water for use at the Water Treatment Plant Facilities. The Surface Water Rights are more fully described in Exhibit 4, which exhibit may be updated and revised by resolution of the Parties. 1.1_.22 Transmission Facilities — the raw water transmission line connecting the Clackamas River Intake Pump Station to the Water Treatment Plant Facilities and the finished water transmission line connecting the Water Treatment Plant Facilities to Lake Oswego's Waluga Reservoir as identified in the CarolIo Report. The Transmission Facilities, ownership and their agreed value are more fully described in Exhibit-I which, exhibit shall be updated and revised by resolution of the Parties. 1,.1.2.3Water Treatment Plant Facilities — the pumping stations and treatment plant, which treat raw water and produce potable water for conveyance by the Transmission Facilities. The Water Treatment Plant Facilities, ownership, and their agreed value are more fully described in Exhibit 1, which exhibit shall be updated and revised by resolution of the Parties .within 30 days after the execution of this Agreement, following completion of an updated appraisal. Page 8—Lake Oswego-Tigard Water Supply Agreement C:\Ncuments;and Settings\greer\Local Settings\Temporary Internet Files\Content:Outlook\I2D82\VMI83039.doe 1.1.24 Water Storage Facilities — the existing Waluga Reservoir which receives potable water from the Water Treatment Plant Facilities as conveyed through the Finished Water Transmission Facilities and any future expansion, modification or replacement thereof. The Water Storage Facilities, ownership, and their agreed value are more fully described in Exhibit 1; which exhibit shall be updated and revised by resolution of the Parties. 1.1.25 Winter Period—November 1 through May 31. 1.2 Interpretation In this Agreement, unless a clear contrary intention appears: (a) reference to any person includes such person's successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and reference to a person in a particular capacity excludes such person in any other capacity; (b) reference to any gender includes each other gender; (c) reference to any agreement (including this, Agreement), document or instrument means such agreement, document or instrument as.amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof; (d) reference to any Article, Section, Schedule or Exhibit means such Article, Section, Schedule or Exhibit to this Agreement, and references in any Article, Section, Schedule, Exhibit or definition to any clause means such clause of such Article, Section, Schedule, Exhibit or definition; (e) "hereunder," "hereof," "hereto," "herein," and words of similar import are references to this Agreement as a whole and not to any particular Section or other provision hereof, Page 9—Lake Oswego-Tigard Water Supply Agreement C.\Documents and Settings\greer\Local Settings\Temporary Internet Fit es\Content.Outlook\12D82WYX\183039.doc (f) relative to the determination of any period of time, "from" means "from and including," "to" means "to but excluding" and "through" means "through and .including"; (g)"including" (and with correlative meaning "include") means including without limiting the generality of any description preceding such term; (h) reference to any law (including statutes and ordinances) means such law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated hereunder; and (i) "will" and "shall" are mandatory terms. Page 10—Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local SettingsUemporary Internet Files\Content.Outlook\12D82\VM183039.doc ARTICLE II : WARRANTTES AND REPRESENTATIONS OF THE PARTIES 2.1 Warranties of the Parties The Parties hereto warrant and represent that they have the legal authority to enter into this Agreement. .2.2 Approval of the Governing Bodies The Parties to this Agreement hereby certify that they have undertaken the necessary public procedures to approve and authorize the signatories to this Agreement to act on behalf of the Party executing this Agreement. 23 Obligation of Good Faith and Fair Dealing The Parties each covenant to deal fairly and in good faith with the other to fulfill the covenants and requirements of this Agreement. Tigard has an existing water supply contract with'the City of Portland that expires on July 1, 2016 unless extended. Costs of water will increase after July 1, 201.6, because Portland is expected to embark on a large-scale capital improvement program and the rate to wholesale customers will increase to account for this capital construction. Also, the timing and method of withdrawal after July 1, 2016 will leave Tigard with less flexibility in extricating itself from the Portland contract. For these reasons, having the initial expansion project complete by July 1, 2016 is of paramount importance to Tigard. Lake Oswego recognizes Tigard's circumstances and agrees it will undertake its best efforts in good faith to meet this schedule for the initial expansion project. 'Page .11 —Lake Oswego-Tigard Water Supply Agreement .C.Abocuments,and Settings\greer\Local Settings\Temporary Internet Files\Content.Outlook\I 2D82wYX\183039.doc ARTICLE III MANAGEMENT 3.1 Managing Agency Lake Oswego shall be the Managing Agency to manage the operation, maintenance, repair and replacement of the existing Supply Facilities and to manage the planning, design and construction of the Initial Expansion of the Project. Lake Oswego shall be the contracting agency with consultants and contractors, and the named party on permits required from local, state, and federal regulatory agencies: Lake Oswego shall have the power to a) approve contracts and change orders subject to its purchasing rules, b) take such actions reasonably necessary during.an emergency and c) other such powers as may be granted by the Parties from time to time. Lake Oswego shall be responsible for conducting the day=to-day business affairs including: payment of invoices, accounting, budgeting, operation and- maintenance of the Supply Facilities, planning, project management, maintaining records, and other such duties as required. Tigard shall pay its share of costs in accord with the terms and conditions of this Agreement. 3.2 Technical Committee Each Party shall appoint two technical representatives to meet at intervals deemed appropriate for communication and coordination, and to keep the Project on schedule. The Technical Committee shall review all methods of contracting, requests for proposals, contracts, value engineering, designs, permit applications and costs. The Technical Committee will endeavor in good faith to make recommendations to the Managing Agency or Oversight Committee as the Technical Committee deems appropriate or where required by this Agreement. If Page 12 —Lake Oswego-Tigard Water Supply Agreement CADocuments;and Settings\greer\Local Settingffemporary Intemet Files\Content.Outlook\12D82\ Y X\183039.doc the Technical Committee cannot agree on a recommendation and is at impasse, the matter will be referred to the Oversight Committee. The Technical Committee must review and recommend to the Oversight Committee any proposal by Lake Oswego to retain an outside project manager. IS Oversight Committee, Lake Oswego and Tigard shall each appoint two persons to the Oversight Committee. The members shall serve at the pleasure of the appointing Council. The Committee shall meet as deemed necessary by the Managing Agency or Technical Committee to keep the Project on schedule, but in no event less often than quarterly. The Oversight Committee shall review and the individual members of the committee shall present to their respective Councils proposed projects as identified in the Carollo Report or other proposed projects and related matters and budgets or funding requests. The Oversight Committee will endeavor in good faith to make recommendations to the Managing Agency or to the City Councils as the Oversight Committee deems appropriate or where required by this Agreement. If the Oversight. Committee cannot agree by majority, then the tie vote shall be deemed a no vote so that no recommendation is made. The respective City Councils will then consider and vote on the matter. The Oversight Committee must review and approve any proposal to retain an outside project manager. Nothing herein shall be deemed a waiver of a Party's right to submit these matters to Dispute Resolution under Article XIV. The Managing Agency shall be responsible to staff and assist the Oversight Committee to comply with public meetings law and notice requirements as necessary. Page 13 -Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local Settingffemporary Internet Files\Content.Outlook\12D82wYX\183039.doc 3A Budgeting and Accounting The Managing Agency shall prepare a budget specific to the capital and operating deeds of the Supply Facilities for each Fiscal Year. The budget shall include an estimate of direct and indirect costs of personnel from either Party who are anticipated to provide services as part of the ultimately approved budget. A draft budget shall be prepared and distributed to the Technical Committee by March I" for comment. A draft budget shall be prepared and distributed by the Managing Agency to the Oversight Committee by April 30th. The final-budget must receive approval by each.Party by June,30th. If any Party-uses a biennial budget cycle, the dates above shall remain the same for the applicable budget preparation year and that Party shall update the budget amounts anticipated for the off year for the benefit of the other Party's budget process. EachParty's proportionate share of the expenses of operation and maintenance of the Supply Facilities; including reserves for repair and replacements, permitting, design and construction and other expenses as may be incurred, shall be estimated, and set forth in the annual budget, and the amount estimated shall be recommended to be included as operating expenses, in each Party's individual adopted budget. If the budget includes accumulation of funds designated for a particular purpose or future use, such amounts shall be accumulated in a restricted or earmarked fund. The Managing Agency shall maintain an independent budget control procedure and provide budget reports at least quarterly to each of the Parties not later than 30 days after the end of each quarter. This report shall show Page.14—Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local Settings\Temporary Urternet Files\Content.00tlook\12D82wYX\183039.doc expenditures and receipts by budget item for each 'transaction through the last working day of the preceding quarter. 3.5 Asset Managemeiit,Program Within one year following substantial completion of the Initial Expansion, the Managing Agency shall create a thorough inventory all of thee assets associated with the Supply Facilities, including physical facilities and real estate holdings. The inventory shall describe the current conditions of these Supply Facilities, their current value (replacement cost less depreciation), and repairs and replacements that may be necessary. The inventory shall include a schedule for repairs and replacement. The Technical Committee may propose policies to the Oversight Committee that guide, schedule and fund the repair and replacement of the assets and suggest amendments to the Supply Facilities Capital Improvement Program. The Oversight Committee shall then forward the draft inventory, any _proposed policies and amendments to the Supply Facilities Capital Improvement Program to the Council of each Party for its approval. The program and policies shall be based on prudent utility practices and industry standards. Annually, the inventory shall be reviewed for additions and deletions. 3.6 Council Decisions Approval by the Councils of each Party is required for: 3.6..1 Any sale, transfer, lease, exchange, or other disposition of any Property over, under, or upon Supply Facilities are located; 3.6.2 Entry to any mortgage, pledge, encumbrance or refinance of the Property or Supply Facilities; Page 15 —Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local Settings\Temporary Internet Piles\Content.Out]ook\12D82WYX\I83039.doe 3.6.3 Approval of any budget; 3.6.4 Approval of any nonemergency expenditure by the Managing Agency that has not previously been approved and budgeted and that exceeds the Managing Agency's authority under its purchasing rules to make the expenditure without the approval of its Council, or a capital improvement project not listed on the Supply Facilities Capital hnprovement Program. If a capital improvement project has been budgeted and is part of the supply Facilities Capital Improvement Program, the Managing Agency shall be authorized to contract for all work necessarily related to deliver a complete and functioning project; 3.6.5 Approval of any decision to burden the Property or Supply Facilities with additional easements, licenses, or other encumbrances or to use the property for non-water related purposes. 3.6.6 Approval of'any decision to change the usel or the operation of the Property or Supply Facilities beyond adopted operational protocols; 3.6.7 Approval of the Initial Expansion or Long Term Expansion; 3.6.8 Approval of amendment of the Agreement to allow a new Party to join; 3.6.9 Approval of modification, alteration or dissolution of this Agreement; 3.6.10 Approval of a Supply Facilities Capital Improvement Program and amendments. When adopted, it will become Exhibit 5 and made part of this Agreement. 3.7 Use of Employees Page 16—Lake Oswego-Tigard Water Supply Agreement C\Documents and Settings\greer\Local Settings\Temporary Internet Files\Content.00tlook\12D82WYX\183039.doc To the extent that any Party uses its own employees in the performance of its duties under this Agreement, that entity shall be responsible for complying with all applicable state and federal laws and for all employment related benefits and deductions, workers' compensation premiums and pension contributions. Decisions regarding employees shall be the sole responsibility of the Party who employs him or her. 3.8 Audit, Record Keeping; Access to Records The Managing Agency shall cause an annual audit to be conducted pursuant to the requirements of ORS 207.425, 297.455, 297.465 and 297.466. The Managing Agency shall maintain its books and records in such manner that the Supply Facilities and expenditures related thereto are separately stated and capable of review without being combined or mixed with the nonsupply facility assets. The Managing Agency shall maintain all fiscal records relating to the Supply Facilities and Project in accordance with generally accepted accounting principles. In addition, the Managing Agency shall maintain any other records pertinent to the Supply Facilities and Project in such a manner as to clearly document the Managing Agency's performance hereunder. All such fiscal records, books, documents, papers, plans, and writings shall be retained by the Managing Agency and kept accessible as required by law. The Managing Agency agrees that the other Party and its authorized representatives shall have access to all books, documents, papers and records of the Managing Agency which are directly related to the Supply Facilities and Page 17—Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local Settingffemporary Internet Files\Content.Outlook\12D82WYX\l83039.doc Project for the purpose of making any audit, examination, copies, excerpts and transcripts. Page 18—Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\green\Local SettingsUemporary Internet Files\Content.Outlook\I2D82WYX\I83039.doc ARTICLE IV SYSTEM OWNERSHIP; ALLOCATION OF CAPACITY 4.1 System Ownership Upon execution of this Agreement, Tigard shall pay Two Million twenty five Thousand, Three Hundred Sixty-One Dollars ($2,025,361.00) or such amount based on the valuation analysis set forth in Exhibits 1 and 6 to Lake Oswego, which Lake Oswego agrees to dedicate as working capital to the Project. Upon payment, Tigard shall be granted by this Agreement an equitable interest in the Supply Facilities as if it were a vendee under a land sale contract. Title shall transfer upon completion of the Initial Expansion of the existing Supply Facilities. The Parties shall each then own undivided interests in the Supply Facilities and Property. Such ownership shall be a percentage ownership in the Supply Facilities component as set forth in the exhibits in this Agreement. At the time of execution of this Agreement, the existing assets shall be valued as shown on Exhibit 1 and the contributing partner shall receive a credit for the asset value. If the current appraisals of the assets are not available at the time of execution of this Agreement, the Councils shall approve amendments to the exhibits to reflect updated valuation information when received and Tigard shall pay the difference to Lake Oswego as provided above. If the Initial Expansion is not constructed, Lake Oswego shall refitted the amount of Tigard's payment to Lake Oswego plus interest at the LGIP rate within 30 days of the decision to abandon the Project and Tigard shall have no further ownership or equitable interest in the Lake Oswego Supply Facilities and Property. Tigard will execute any document required by Page 19—Lake Oswego-Tigard Water Supply Agreement CADocumcnts and Settings\carotk\Local Settings\Temporary Internet Filcs\Content.0uttook\SWL4MGVY\LO-COT iGA final draft Ulackiine.doc Lake Oswego to convey any interest Tigard may have in Lake Oswego Supply Facilities and Property. Tigard's purchase of its percentage share of the Supply Facility assets shall be by capital contribution, mutually approved in kind contributions or payment of design, permitting and construction costs for the system expansion so that upon completion of the Initial Expansion, Tigard's contribution shall equal its percentage ownership as shown in Exhibit 7. Lake Oswego's percentage as shown in Exhibit 7 is based on its contributed assets, financial contribution to the Initial Expansion, mutually approved in kind contributions and other mutually agreed factors. 4.2 Anticipated Ownership At the completion of the Initial Expansion, the Parties' percentage ownership shall be allocated as set forth on Exhibit7, attached hereto and incorporated by reference. 4.3 Allocation of Capacity At the completion of the Initial Expansion, Tigard's allocation of Capacity shall be 14 million gallons of water per day, and Lake Oswego's allocation of Capacity shall be 18 million gallons per day. Page 20—Lake Oswego-Tigard Water Supply Agreement C1Documenis and Settingslcarolk\Local Sell ings''iTemporary Internet rileslContent.Outlook\BWL4MGVY\LO-COT IGA final draft blackline_doc ARTICLE V PROPERTY; CREATION OF TENANCY IN COMMON 5.1 Creation of Common Ownership Title to or easement rights to all properties over; under or upon which Supply Facilities are or shall be located (Property) shall remain in the name of Lake Oswego until the completion of the Initial Expansion. Tigard shall have an equitable interest as if it were a vendee under a land sale contract. Within 90 days following completion of the Initial Expansion, Lake Oswego will, by Warranty Deed, convey to Tigard,an undivided proportionate interest as tenant in common in the Property as set forth on Exhibit 7, attached hereto and incorporated by reference. The Parties agree the Property owned by Lake Oswego as of the date of this Agreement shall be valued in 2008 dollars. Property acquired after the date of this Agreement shall be acquired proportional to the Parties' respective allocations of Capacity; according to the purchase price paid. Closing costs for the Lake Oswego transfer to Tigard shall be shared equally. 5.2 Ownership Interest/Use 5.2.1 Title to the Property held in the name of Lake Oswego until transfer shall be held in part for the use and benefit of Tigard to the extent of Tigard's interest as set forth in this Agreement. Lake Oswego water rights shall not be transferred under any of the real property transfers. Upon transfer, title to the Property shall be held in the name of each of the Patties in their respective undivided interest. The Parties agree that except as provided herein, the Property is dedicated for water supply purposes. The Parties intend that their relationship, with respect to the Property, be a tenancy in -Page 21 —Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local SettingsUemporary Internet Files\Content.Outlook\I 2D82WYX\I 83039.doc common: A Tenancy in Common Agreement shall be executed and recorded at the time of transfer. 5.2.2 The Parties' responsibility for all maintenance, insurance and other land costs, shall be: 5.2.2.1 Until completion of the Initial Expansion and transfer of an undivided interest to Tigard, the existing Supply Facilities shall be used by Lake Oswego at its sole risk and cost to accommodate water supply uses. 5.2.2:2 Following transfer, Lake Oswego and Tigard shall be responsible for all costs related to the Property in proportion to their respective interests as set forth on Exhibit 7. Such costs shall be included in the monthly invoices under Section 7.1.4. 5.3 Covenant The Parties declare that the Property is and shall be held, conveyed, hypothecated, encumbered, leased, rented, occupied and improved subject to the limitations, restrictions, covenants and conditions set forth in this Agreement, all of which are declared to be in furtherance of a plan established for the purpose of constructing and operating the Supply Facilities. All such limitations, restrictions, covenants and conditions are intended to run with the Property, and to inure to the benefit of sand be binding upon all parties having or acquiring any right, title, interest or estate therein. Other incidental uses shall be limited or restricted to the extent they conflict with water supply purposes. 54 Partition Following transfer and so long as this Agreement is in effect, no Party shall seek Page 22—Lake Oswego-Tigard Water.Supply Agreement CADocuments and Settings\greer\Local Settings\Temporary Internet Files\Content.Outlook\12D82WYX\183039.doc or obtain through any legal proceedings a judicial partition'of the Property or sale of"the Property in lieu of partition, without the prior written consent of the other Party. Page 23 —Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local Settings\Temporary Internet Files\Content.Out]ook\12D82WYX\183039.doc ARTICLE VI DESIGN AND CONSTRUCTION OF SUPPLY FACILITIES 6:1` Preliminary Planning; and Desi Tigard and Lake Oswego, by this Agreement,.commit to design and construct the Initial Expansion, which shall include initially Water. Treatment Plait, Clackamas River Intake Pump Station and Transmission Facilities with a design capacity of 32 mgd as generally described in the plan prepared by Carollo Engineers ("Carollo") dated July, 2007, and to achieve completion by July 1, 2016, immediately commence: 6.1:1 Participation in necessary joint planning sessions for the Supply Facilities; 6.1.2 Contribution of their proportionate share of costs of preliminary design, preliminary engineering, permitting, and other fees as necessary and as set forth on Exhibit 7, attached hereto and incorporated by reference. The Supply Facilities shall accommodate subsequent expansion up to 38 mgd (Long Term Expansion). The general configuration map of the Property attached to the Agreement as Exhibit 3 shall allow the Parties to expand the treatment plant in the future. Lake Oswego shall retain a project team for permitting, design, and construction management of the Initial Expansion of the Supply Facilities. 61" Permit Applications Lake Oswego, as the Managing Agency, shall be the lead agency in negotiating required permits for construction of the Supply Facilities. 6:2:_11 Lake Oswego shall be responsible to obtain all other permits such as: _Page 24—Lake Oswego-Tigard Water Supply Agreement C`.\Documents and:Settttings\greer\Local'Settings\Temporary Internet FilesTontent.Outlook\I 2D82VPMI 8 303 9.doc 6.2.1.1 Section 404 Permits under the Clean Water Act through the Division of State Lands and the Corps of Engineers; 6.2.1.2-Any permit necessary from the Oregon Division of State Lands for use of submerged or submersible lands for intake and transmission, if that is in addition to the 404 Permit; 6.2.1.3 Any permit with the Water Resources Department regarding permit extension, amendment of a Water Management and Conservation Plan, or application of water to beneficial use in the Service Areas identified in the Carollo Report; 6.2.1.4 Any permit necessary from the Oregon Department of Fish & Wildlife, the United States Department of Fish & Wildlife or the National Marine Fisheries Service through consultation; and 6.2.1.5 Any other permit required for the project. 6.2.2 Lake Oswego shall be responsible for obtaining necessary land development permits. The Parties agree that improvements imposed by the land use permitting body shall be a Project cost. Additional amenities not required by the land use permitting body shallbe paidfor at the sole expense of the party requesting them. Lake Oswego, in its proprietary capacity, further agrees to, in good faith, assist and support Tigard in its efforts to secure.the issuance of all permits for pumping and transmission facilities from locations within the Lake Oswego City limits and to enable. Tigard to provide water from the Supply Facilities to Tigard users. The Parties acknowledge, however, that this Agreement cannot bind Lake Page 25 —Lake Oswego-Tigard Water Supply Agreement C:\Documents,and Settings\greer\Local Settings\Temporary Internet Files\Content.Out]ook\12D82VNX\183039.doc Oswego; with relation to acts or decisions occurring in its regulatory authority, including, without limitation, .the exercise of its regulatory authority to issue permits. 6.3Construction 6.3.1 Project Management. During construction, Lake Oswego will, as Managing Agency, convene the Technical Committee at least bi-weekly to review project schedules and performance, progress payment requests, change orders and punch list items. Tigard may attend all contractor and consultant meetings. 6.3.2 Progress Payinents. Progress payments, during design and construction, shall be billed monthly by Lake Oswego according to the proportionate allocation of system improvement costs for individual components of the Supply Facilities as set forth on Exhibit 7. For a construction contract or contract that materially includes construction within its scope that is included in the Supply Facilities Capital Improvement Program and approved budget, the Managing Agency may award such agreements after giving prior notice to each Council of the Project Engineer's estimate. Contracts not within the foregoing description or where the bid or proposed price exceeds the Engineer's estimate by 10% may not proceed unless each Council has approved. Within 30 days of invoice from Lake Oswego, Tigard shall remit the amount due, unless disputed. Any disputed amount shall be resolved in accordance with the Dispute Resolution Procedures of Article 14 betow.. However, notwithstanding the. .Page 26—Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local SettingsUemporary Internet Files\Content.Out]ook\12D82wYX\183039.doc foregoing, during construction no dispute between the Parties shall cause cessation or delay of work by the contractor. If the contractor threatens to' suspend' or terminate work because of a dispute over nonpayment, the Parties hereto agree to make such payments to Lake Oswego to resolve contractor issues and shall expressly reserve all rights regarding the ultimate allocation of costs or obligations paid to the contractor which shall be resolved by dispute resolution. 6.3.3 Post Construction. Following construction, the Technical Committee shall meet as needed to review and recommend to the governing bodies on matters related to warranty or other contract performance issues. Page'27—Lake Oswego-Tigard Water Supply Agreement CADocutnents.and Settings\greer\Local Settings\Temporary Internet Files\Content.Outlook\12D82WYX\183039.doc ARTICLE VII OPERATION AND MANAGEMENT 7.1 Supply Facilities 7.1.1 Management. Lake Oswego shall have responsibility as Managing Agency to manage, operate, repair and replace the Supply Facilities until such time as the Parties agree otherwise. The Managing Agency may perform work with its own forces and charge the other Party therefore or by contract with another party. Additional work or charges outside the approved budget shall require unanimous consent of the Parties. 7.1.2 Operation and Maintenance Costs. The costs of operation and maintenance shall be allocated between the Parties according to water delivered from the water treatment plant to each Party's connection point to their distribution systems measured.in hundred cubic feet (ccf) imposed on the Supply Facilities multiplied by the operations and maintenance expense rate in $/ccf. The method for calculating the rate and water use determination of payment shall be agreed to by the Councils based on the budget and' anticipated water use considering the previous 12 months' water use. For the first year when Tigard draws water, the Parties will not have prior usage data from Tigard's use of the Supply Facilities. Therefore, the Parties agree that an estimated cost per cef shall be determined based upon the budget and applied to all Tigard volumes with invoice on a monthly basis. At the end of the first year, actual unit costs will be calculated and reconciled as set forth in 7.1.4. Page 28—Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local SettingsUemporary Internet Mles\Content.Outlook\12 D82"rM I 83039.doc 7.1.3 Renewal, Repair and Replacement Costs. The Parties shall budget for renewal, repair and replacement costs as provided in Section 3.4. The Parties shall make those payments as required for renewals, repair and replacement proportional to that Party's ownership interest in the Supply Facility component. 7.1.4 Billing and Payment. Each Party shall receive an invoice monthly from the Managing.Agency representing one-twelfth of the allocated operations and maintenance budget amount for that Patty. The invoice.may also include required payments for renewal, repair, and replacement under Section 7.1.3 or the Managing Agency may send a separate invoice. Payment is due to the Managing Agency within 30 days of receipt of the invoice. On March 1St of each year, the Managing Agency will send an invoice calculating actual water usage as compared to estimated annualized expenditures in the budget and reconcile them. The respective Parties will pay (or receive credit 'for overpayment toward the next invoice) based upon this reconciliation. As soon as reasonably possible after June 30th of each year, the Managing Agency will conduct a similar reconciliation and the Parties will pay or receive credit for overpayment as appropriate on the next invoice in the new fiscal year. 7.2 Property Management. The 'Parties agree that the property over, under, or upon which the Supply Facilities are constructed shall be operated and managed as follows: Page 29—Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greerTocal Settings\Temporary Internet Files\Content.Outlook\12D82tdIPX\183039.doc 7.2.1 Duties, of the Managing Agency. The Managing. Agency shall have the responsibility and authority to.perform the following functions and may make decisions with respect to such matters as to the Property unless otherwise provided in this Agreement, 7:2..1.1 Operation, Maintenance, Repair, and Replacement. To contract for maintenance; repair and cleaning of the Property pursuant to an approved budget, contract, or other approval of the Parties as may be required by the terms of the Agreement. 7.2.1.2 Insurance. To obtain or renew a policy of property insurance insuring the Property against loss or damage by fire and other hazards covered by a standard policy of fire insurance with extended coverage endorsements written for the full replacement value of the Property. The Parties shall also obtain or renew a policy or policies of public liability and property damage insurance with a single limit of not less than $2,000,000. The policies shall name the Parties as co-insureds. 7.2.1.3 Assessments. 'To collect and deposit the assessments and other charges due from the Parties into an account established for the Property; to mail written notice to any Party who is more than 30 days delinquent in payment of any assessments or charges; and to mail written notice to the Parties for additional assessments whenever it appears that the funds on hand shall be insufficient to cover future expenses. 7.2.1.4 Payment of Expenses. To pay when due the expenses of the Property, and all other expenses or payments duly authorized by the Parties. Page 30—Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local Settings\Temporary Internet Files\Content.Outlook\l2D82wYX\l83039.doc 7.2.1..5 Records. To maintain complete and accurate records of all receipts and expenditures for the Parties. 7.2.1.6 Reimbursement of Expenses. Unless approved in writing by the Oversight Committee, no Party shall be compensated for services related to nonbudgeted matters where contingency or other funds in the approved budget are available. Otherwise, approval by each Council is required. However, a Party shall be reimbursed for out-of-pocket expenses. 7.2.1.7 Payment of Costs. Amounts owed by each Party for expenses related to the Property shall be invoiced as provided in Section 7.1.4. Page 31 —Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local Settings\Temporary Internet Files\Content.Outlook\12D82VdYX\183039.doc ARTICLE VIII SUPPLY FACILITIES 8.1 Use-of Supply Facilities The Parties shall each use the Supply Facilities in a mariner consistent with prudent water utility practices and to minimize interference with each other's use of its respective share of Capacity to meet its demands. Prudent practices shall include a mutual commitment to conservation and use of water without waste implemented in each Party's Water Management and Conservation Plan. When the Initial Expansion is completed and the Parties are using the Supply Facilities, the Parties anticipate that instances of overuse of Capacity by a Party will be rare and the Parties shall resolve such instances on a case-by-case basis. If a new member is added or if a third party is supplied by the Supply Facilities so that additional demands or capacity are placed thereon, then, unless caused by system operation conditions not caused by the overusing party, any use of 10% or greater by either Party (or third party user) than its share of Capacity for two consecutive years or three out of five years shall be overuse. The overusing Party (or third party user) shall .compensate the other party at a lease rate as may be fairly and equitably agreed upon by the parties. In lieu of the above lease rate or in 'combination with it, the Parties may agree to construct the Long Term Expansion of the Project or reduce demand so that overuse shall cease to occur. 8.2 Mutual.Forecast Submittal In order to make timely, reasonable and prudent judgments concerning meeting respective demands for capacity, the need to lease capacity, the ability to lease capacity, and the terrns and conditions of any-such Lease, the Parties shall each Page 32—Lake,.Oswego-Tigard Water Supply Agreement. C:\Documents aiid.'Settings\greet\Local Settings\Temporary Intemet Files\Content.Out]ooh 12D82wYX\183039.doc submit to the other commencing February 1, 2016 and February 1 of each fifth year thereafter, a 10-year planning forecast. The planning forecast shall set forth the respective projected water demands, capacity to serve that demand, and identify any deficiencies in capacity by year for the 10-year period. Demand shall include any sale of water from capacity agreed to or reasonably anticipated within the ten-year time frame. The capacity requirement for the Supply Facilities shall consist of the average of five consecutive days containing the highest average peak day demands (mgd) imposed by the Parties, for the summer period of May 15 to October 31. The Parties shall agree on an appropriate course of action as they deem reasonably available and prudent, under the forecasted circumstances, including, but not limited to, leasing capacity from one to the other, both within and without the timeframe of such planning forecasts. 8.3 Surface Water Rights Surface Water Rights shall remain in the name of Lake Oswego. By execution of this Agreement, Lake Oswego agrees to hold these permits or certificates for the benefit of Tigard and Lake Oswego to the extent of the rights of each under this Agreement. Development and beneficial use by the Parties of water authorized in the Surface Water Rights of Lake Oswego, but undeveloped as of the date of this Agreement, shall accrue to the benefit of all Parties, to the extent of their rights under this Agreement, without regard to ownership. 8.4 Water Treatment Plant Facilities Except during a curtailment event for any reason, each Party shall have or obtain Capacity in the Water Treatment Plant Facilities, to serve the Demand of the Party Page 33 —Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local Settings\Temporary Internet Files\Content.Outlooh)2D82VNX\l83039.doc during the Summer Period and the Winter Period up to the respective allocations. The.Capacity requirement for Water Treatment Plant Facilities shall consist of the -average of the five (5) consecutive days containing the peak day demand (mgd) imposed on the Supply Facilities by the Party for each Summer Period and Winter Period. Capacity in the Water Treatment, Plant Facilities may be obtained by purchase of excess existing Capacity, capacity expansion of the Water Treatment Plant Facilities and/or leasing of Capacity from another Party. 8.5 Transmission System The Parties agree to maximize the use of the existing Transmission System for the benefit of the Parties before construction of new transmission facilities. The Parties have agreed on connection points for delivery of water from the Transmission System as set forth in Exhibit 3, which exhibit may be updated and revised by resolution of each Party's Council. To the extent that a Party needs additional Capacity.in the Transmission System, the Parties agree to sell or lease available Capacity in the Transmission System prior to construction of new transmission facilities. When expansion of the Transmission System is required, the Parties shall follow the procedures as set forth in Article 9. 8.6 Finished Water Storaize The Parties agree to construct shared storage facilities where efficient and economic for both Parties. Notwithstanding this provision, each Party shall construct and operate separate adequate finished water storage within its distribution system to meet their respective operating and emergency conditions as set forth in the Operations Manual as required under Article 1.2. To the extent Page 34—Lake Oswego-Tigard Water.Supply Agreement CADocuments and Settings\greer\Local Settings\Temporary Internet Files\Content.Outlook\12D82VOM183039.doc that a Party cannot, do so, it may make a request to the other Party ,for supplemental storage. If the Party providing supplemental storage agrees to provide such storage, then the Party receiving such supplemental storage shall `compensate the other Party as mutually agreed. Page 35 —Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local Settings\Temporary Internet Files\Content.Outlook\I2D82V✓Y X\I 83039.doe ARTICLE IX EXPANSION RIGHTS AND REQUIREMENTS 9.1 Expansion Requirements The Parties agree that use of the Supply Facilities by the Parties should be accomplished first by utilizing the Capacity in the Supply Facilities to serve the needs of the Parties. The Supply Facilities should be expanded only after the Parties are projected to be using all Capacity, within a reasonable planning horizon or at such other times as the Parties deem appropriate. In determining the appropriate time to begin expansion of the Supply Facilities, the Parties shall consider the time required to provide for environmental reviews, design, permits and construction. Therefore, the Parties agree to lease Capacity to another Party as provided for in Article 10 to reasonably and prudently defer capital Improvements and costs thereof. 9.2 New'Surface Water Rights and Expansion The Parties agree that finding opportunities to acquire new water rights (surface or ground) may be of great significance to their long range needs. This may include the purchase of existing Surface or Ground Water Rights or application for permits for surface, ground or stored water rights. The Parties agree that new sources shall be acquired jointly in proportion to the Party's ownership interest in the Supply Facilities. If a Party elects not to participate in the acquisition of additional water, the other Party may proceed individually. 9.3 Expansion Rights in the Supply Facilities The Parties shall use reasonable and prudent utility standards in determining as to when and to what size the Supply Facilities should be expanded. Such Page 36-Lake.Oswego-Tigard Water Supply Agreement C\Documents and Settings\greer\Local Settings\Temporary Internet Files\Content.Outlook\12D82WYX\183039.doc determination shall take into consideration the Demand requested by the Parties, the Capacity of Water Supply Facilities, prudent utility planning standards and the available Surface Water Rights, and Transmission System owned or capable of being ]eased or expanded by the Parties. Based on the Planning Forecast of Section 8.2, a Party shall provide written notice to the other Party of its desire to expand the Supply Facilities. The Parties shall place the proposed project on the Capital Improvement.Program. The intent of the.Parties is to place the proposed project on the CIP for a period of five years. In the third year of the CIP, the Parties shall each decide whether to accept 'or reject participation in the expansion. Notice by a Party to participate in an expansion shall be in writing and specify the percent participation in the expansion. Each Party shall have the right to participate in the expansion in at least the same percentage level as the Party's percent ownership in the Supply Facilities at the time of the proposed expansion. A party may proceed individually if the other elects not to participate so long as the non-participating,Party is held harmless from financial obligation. 9.3.1 Long Term Expansion of Water Treatment Plant. Notwithstanding Section 9.3 on expansion of the Supply Facilities, the Parties recognize that Lake Oswego has or will contribute to design and construction of Supply Facility components to achieve capacity of up to 38 mgd. If either Party proposes such Long Term Expansion of the Treatment Plant, Lake Oswego will deterinine if it wishes to participate and the amount of Capacity it desires, which may be the entire expansion amount. Lake Oswego will notify Tigard of its decision, which shall be conclusive. Depending upon. Lake Oswego's Page 37—Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local Settings\Temporary Internet Files\Content.Outlook\12D82wYX\183039.doc decision, the Parties will then negotiate a 'Proj'ect Agreement for the Long Term Expansion, which shall specify, among other things, a. whether all or any portion of the expanded capacity is sold to Tigard; or b. whether Lake Oswego builds the expanded capacity with its funds and leases the capacity to Tigard upon such terms and conditions as the Parties agree;-or C. whether Tigard builds the expanded capacity with its funds subject to Lake Oswego's option to buy back all or part of the expanded capacity upon three years' written notice at the depreciated replacement cost of the expansion plus interest at the Municipal Bond Index fiom the date of substantial completion; and d. Such other mutually agreeable terms including adjustment of ownership interests in other Supply Facility components to match treatment plant capacity allocations of the Parties. 9.4 Other Assets There may arise other improvements which do not directly in and of themselves, provide for expansion of the Supply Facilities. In such circumstances, the Parties shall mutually determine the appropriate financial participation by each of the -Parties. They shall.consider the purpose for the construction of the asset and the benefits to be received by each of the Parties from the asset in determining the financial participation requirement of each. A party may proceed individually if the other elects not to participate so long as the non-participating Party is held Page 38—Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greerTocal Settings\Temporary Internet Files\Content.Outlook\12D82WYx\183039.doc harmless from financial.obligation. 9,,5 Bonita Road Pump Station Tigard's Bonita Road Pump Station is or will be capable of providing water from r Tigard to Lake Oswego if necessary. The Parties acknowledge this is beneficial to Lake Oswego .in those circumstances, but the frequency is difficult to predict. If this Pump Station is used for the benefit of Lake Oswego as the Parties agree, Lake Oswego shall pay Tigard's costs to supply water, including Tigard's costs to purchase water from other entities, as if it were a short-term lease. Tigard will invoice Lake Oswego on a monthly basis in such circumstances. Page 39—Lake Oswego-Tigard Water Supply Agreement C\Documents and'Settings\greer\Local Settings\Temporary Intemet Files\Content.Outlook\12D82WYM183039.doc ARTICLE X LEASING 10.1 Leasing As provided for in Article 8, the Parties shall lease to the other Capacity in the Surface Water Rights and Supply Facilities to the extent available according to the planning forecast. 1.Q.2 Purpose The purpose of this Article is to acknowledge the rights of the Parties to lease from each other the unused portion of their respective 14 mgd and 18 mgd allocations of the total 32 mgd Capacity of Initial Expansion to be constructed, to establish the conditions under which such leasing may occur and to acknowledge the right to lease future capacity from each other based on future expansion of the Supply Facilities depending upon conditions and circumstances then and there existing and when future shares of capacities are known. This section is not intended to limit the Parties from otherwise agreeing on leasing of supply capacity to each other. If the Supply Facilities are expanded to 38 mgd, these lease provisions shall apply to"the second increment of capital improvement. 1.0.3 Right to Lease Lake Oswego shall have the right to lease to Tigard and Tigard to lease from Lake Oswego such unused capacity of its 18 mgd as may be determined by Lake Oswego to be reasonably available and prudent to be leased to Tigard pursuant to . section 8.2 or as they may otherwise agree. Tigard shall have the right to lease to Lake Oswego and Lake Oswego to lease from Tigard the unused capacity portion of its 14 mgd capacity as may be determined by Tigard to be reasonably available Page 40—Lake Oswego-Tigard Water Supply Agreement C\Docuinents and Settings\greer\Local Settings\Temporary Internet Files\Content:Outlook\12D82V✓YX\183039.doc and,prudent to be leased to Lake Oswego pursuant to section 8.2 or as they may otherwise-agree. 10.4 Term The term of any lease for Supply Facilities shall be for a minimum of one (1) year and a maximum of ten (10) years and upon such conditions for renewal as the Parties determine. A.lease shall be a short-term measure that allows the Parties to defer expansion or 'new construction of Supply Facility components and to provide Parties with a near-term stable planning. horizon. The Parties do not intend to have perpetual renewal terms. 10.5 Lease Payments The lease payment for Supply Facilities shall be determined by utilizing the Depreciated Replacement Cost Value of the asset amortized over the remaining Book Depreciation Life of the asset at an interest Tate equal to the Municipal Bond Index rate plus 200 Basis Points at the year of the lease payment or a comparable index. The lease payment shall be fixed for lease terms of five (5) years or less. For lease terms of greater than five (5) years, the lease payment shall be recalculated every five (5) years in accordance with this Section 10.4. 10.6 Effective Date of Leases The effective date for leases set forth in this Article 10 shall be on April 1, following the adoption of this Agreement and every April 1, thereafter. 10.7 Curtailment of Leasing Capacity The'Parties agree that a condition of any lease shall be that the lessee Party shall be provided Capacity to the same extent that Capacity is available to serve the Page 41 —Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local Settings\Temporary Intemet Files\Content.Outlook\12D82VNX\183039.doe lessor -Party's Demand. Curtailment of Capacity resulting from reduced availability of water for all new water supplies developed after the effective date of thi's Agreement shall be shared equally among the parties. Page 42—Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\green\Local SettingsUemporary Internet Files\Content.Outlook\12D82WYX\183039.doc ARTICLE XI SALES TO OTHERS Except for the Existing Wholesale Customers, existing mutual aid agreement, or extension of service to .service areas identified in the Carollo Report, neither Party may contract for the sale or use of the Supply Facilities to any other entity or person who is not a Retail Customer of any Party without the approval of the other Party and compliance with the terms of this Agreement. Any revenues derived from the sale of water to another entity shall be paid to the Managing Agency. Net proceeds from such sales shall be credited back to the Parties based on a method as mutually agreed. Net proceeds ,shall be those proceeds remaining after expenses, renewals and replacements { and contingencies are paid. Page.43 —Lake Oswego-Tigard Water Supply Agreement CADocuinents and Settings\greer\Local SettingsUemporary Internet Files\Content.Outlook\12D82wYX\183039.doc ARTICLE XII OPERATIONS MANUAL 12.1 Operations Manual Not ,later that! 180 days from the date of Substantial Completion of the Initial Expansion, the Parties shall adopt an Operations Manual for the Supply Facilities, which shall include, but not be limited to, agreed protocols and methodology to provide for water quality, treatment standards and protocols, and for the equitable, effective and efficient operation of the Supply Facilities in accordance with generally accepted utility practices regarding the operation, management, capital improvements, and expansion of all aspects of. the Supply Facilities. The Operations Manual may be updated as required. The Operations Manual shall also provide for an Operations Committee ("Operations Committee"), which shall consist,of one designee of each of the Parties, as set forth in Section 12.2 below. Not more than 30 days after substantial completion of the Initial Expansion each Party shall appoint one person to develop the Operations Manual. 12.2 Operations Committee Each Party shall appoint at least one person technically knowledgeable in utility system operations or engineering to the Operations Committee. A Party may allow other attendees, but in no event shall a Party have more than one vote in making a recommendation to the Oversight Committee created under Section 3.3. The Operations Committee shall report to the Oversight Committee not less often than, quarterly. The Parties may choose to designate the Technical Committee as the.Operations Committee. 1.2.3 Curtailment Page.44—Lake Oswego-Tigard Water Supply Agreement C:\Documents and Settings\greer\Local Settings\Temporary Intemet Files\Content.Outlook\12D82wYX\183039.doc The Operations Manual shall reference each Party's Water. Management and Conservation Plan: The Parties agree that if an emergency or water shortage requires restriction on the deliverable supply of new Capacity developed after the effective date of this Agreement , the reduction in available water shall be shared equally among the Parties. Page 45 —Lake Oswego-Tigard Water Supply Agreement C:\Documents and Settings\greer\Local Settings\Temporary Internet Files\Content.Outlook\I2D82WYX\183039.doc ARTICLE XIII 'WITH°DRAWAL, TERMINATION OF MEMBERSHIP, SALE OF ASSETS AND DISSOLUTION 13.7 Complete or Partial Termination of Interest Any Party may elect to terminate all or part of its participation in this Agreement and withdraw from the Supply Facilities as designated (full or partial) by giving written notice of its desire to terminate to the remaining Party(ies), and stating a date for termination which shall be not less than two (2) years from the date of notice. The remaining Party receiving notice of termination shall have the first option to purchase the terminating interest. If Tigard terminates in whole or in part, the purchase price shall not include any value for water as those water rights remain with Lake Oswego. If Tigard completely terminates from this Agreement, it shall not receive water unless Lake Oswego agrees in writing. If Tigard partially terminates, its 14 mgd capacity shall be adjusted,to reflect its retained, proportionate interest. The Parties shall meet for the purpose of establishing the price for the terminated interest. The meeting shall be held within 90 days following receipt of notice of termination. Notice to the selling Party of the other Party's intent to buy all or a portion of the terminating interest shall be given no later than three (3) months after receipt of the written notice of the Party's desire to terminate. If the remaining Party purchases less than the full portion of the terminating interest, the Parties also agree that any unpurchased interest may be sold to another local government party so long as that other local government party becomes subject to all terms and conditions of this Agreement. The terminating Party shall use best efforts to find Page 46—Lake Oswego-Tigard Water Supply Agreement CADocunients-and Settings\greer\Local Settings\Temporary Internet Files\Content.Outlook\I2D82WYX\I83039.doc another local government partner to buy the remaining unpurchased interest or to assign or.lease capacity so as not to unduly burden the remaining party. Consent by the remaining Party for another local government party to purchase, take assignment or lease the Supply Facilities to this Agreement shall not be unreasonably withheld. Any assignment or lease of an unpurchased interest to another local government shall not relieve the Party from its obligations under this Agreement. Negotiations of the terms of sale, assignment or lease to another local government Party shall include the non-terminating Party as to those terms which directly impact its operational and financial interest. 13.2 Sale of Assets A Party may offer to sell to the other Party its ownership interest in an identified portion of the Supply Facilities (e.g., a percent of the Transmission System). Notice of the proposed sale shall be given to the other Party by the Party wishing to sell. Such notice shall specify the material terms.and conditions of the sale. The terms and conditions of Section 13.1 shall apply. The Party may also assign or lease the unpurchased interest to another local government Party. Consent to . such assignment or lease shall not be unreasonably withheld or relieve the Party from its obligations under this Agreement. 13.3 Valuation of Interest The Parties shall meet to agree upon a price within 90 days of the receipt of notice. under Sections 13.1 or 13.2. The price shall be fixed by determining the terminating/selling Party's interest in the subject assets using the Depreciated Replacement Cost Value. Nothing herein shall prevent the Parties from agreeing Page 47—Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local Settingffemporary Internet Files\Content.Outlook\12D82wYX\183039.doe upon a price through negotiation and unanimous consent. Sales, assignments or Teases to third.parties are not subject to the valuation formula of this Section. 155 Payment The payment price for the subject interest shall be paid in full on the date of termination set forth'in the notice of intent to terminate/sell or award of arbitration or court. Interest shall commence to accrue from the date of agreement arbitration or judgment at the Local Government Investment Pool rate. If a Party fails to pay the purchase price in full at the date of termination, then the terminating/selling Party shall have the right to sell or transfer or assign the subject interest to any other government entity as provided in Section 13.1 or 13.2. 13.5 Default and For Cause Termination The failure of a Party to perform any duty imposed upon it by this Agreement shall constitute a default. The non-defaulting Party shall have the right to give the defaulting Party a written notice of default, which shall describe the default in reasonable detail and state the date by which the default must be cured, which date shall be at least 60 days after receipt of the notice of default, except in the casel of a failure to advance funds, in which case the date shall be 30 days after receipt of the notice of default. 13.5.1 Opportunity to Cure. if within the applicable period described in Section 13.5 the defaulting Party cures the default, or if the failure is one (other than the failure to make payments) that cannot in good faith be corrected within such .period and the defaulting Party begins to correct the default within the applicableperiod and continues corrective efforts with reasonable diligence Page 48—Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local Settings\Temporary Internet Files\Content.Outlook\12D82WYX\183039.doc until a cure is effected, the notice of default shall be inoperative, and the defaulting Party shall lose no rights under this Agreement. If, within the specified period, the defaulting Party does not cure the default or begin to cure the default as provided above, the non-defaulting Parties at the expiration of the applicable period shall have the rights specified in Section 1.3.5.2. 13.5:2 Rights Upon Default. If the defaulting Party has not cured the default as provided in Section 13.5.1, it shall have no voting rights under this Agreement until the default has been cured. In addition, the non- defaulting Party may pursue any other remedy available at law or in equity against the defaulting Party, including but not limited to, an action for damages;costs of obtaining substitute water or other performance. F16 Dissolution of the Agreement This Agreement may be dissolved by mutual agreement. Upon dissolution, the .Parties shall agree on a Dissolution Plan and schedule to wind down and dissolve the business affairs. Unless modified by the Dissolution Plan, the dissolution 'shall be effective only after all debts and obligations are paid or provision for payment is made. Each Party shall assume a share of the debts and obligations in proportion to their ownership in the Supply Facilities unless the instrument or transaction that created the debt or obligation specified otherwise. The Parties shall execute those documents necessary to vest proportionate ownership of the Supply Facilities and Property in each Party and execute a post dissolution water supply agreement and a management agreement for the Supply Facilities and Property. Nothing herein shall prevent a Party from accepting cash or other Page 49—Lake Oswego-Tigard Water Supply Agreement dADocuments and Settings\greer\Local SettingsUernporary Internet Files\Content.Outlook\I2D82VPMI83039.doc consideration in_lieu of continued proportionate ownership in the Supply Facilities and Property. The cost of dissolution shall be treated as an operation and 1 maintenance expense. 13':7 Post Initial Expansion Water for Tigard. After substantial completion of the Initial Expansion, if Lake Oswego elects to terminate this Agreement, or if the Parties mutually agree to dissolve this Agreement, Lake Oswego agrees to provide Tigard with treated water sufficient to' supply 14 million gallons per day so that Tigard is always assured of having sufficient source to supply its capacity share and usage of the Supply Facilities. If Tigard is allocated additional capacity in the*Supply Facilities by the Long Term Expansion, the provisions of this section shall apply to that increment of water. Negotiation of a mutually agreeable water supply agreement shall be a condition precedent to any termination of this Agreement by Lake Oswego or Dissolution Plan. 13.8 Unreasonable Withholdiniz of Consent. Unreasonable withholding of consent shall be those reasons other than financial considerations, availability of alternate water sources, water usage characteristics, water service territory, water demand forecasts, technical or operational expertise, history as a recognizedlocal government water service provider, ownership, conttol or operation by or for a private entity or person,,and other relevant matters considered in reasonable and prudent utility management. Page 50—Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local'Settings\Temporary Internet Files\Content.Outlook\12D82WYX\183039.doc ARTICLE XIV DISPUTE RESOLUTION 14..1 Dispute Resolution The Parties hereby.agree that resolution of any disputes shall follow the steps as set forth in Section 14.2. However, nothing shall prevent the disputing parties ;(Disputing Parties) from waiving any of the steps by mutual consent. 14:2' Dispute Resolution Steps Step One: (Negotiation) The City Manager or other persons designated by each of the Disputing Parties shall negotiate on behalf of the Party they represent and attempt to resolve the issue. If the dispute is resolved at this step, there shall be a written determination of such resolution, signed by each City Manager or other designated persons and ratified by the governing bodies, which shall be binding upon the Disputing Parties. Step Two: (Mediation) If the dispute cannot be resolved within thirty (30) days at Step One, the Disputing Parties shall submit the matter to non-binding mediation. The Disputing Parties shall attempt to agree on a mediator. If they cannot agree, the Disputing Parties shall request a list of five (5) mediators from an entity or firm providing mediation services. . The Disputing Parties shall mutually agree on a mediator from the list provided. Any common costs of mediation shall be borne equally by the Disputing Parties. If the issue is resolved at this step, a written determination of such resolution shall be signed by each City Manager or other -Page 51 -Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local Settings\Temporary Internet Files\Content.Outlook\12D82WYX\183039.doc designated persons, and ratified by the governing bodies, which shall be binding on the'Disputing Parties. Step Three.(Arbitration) After exhaustion of the preceding processes, all disputes or claims arising out of 'this Agreement shall be submitted to binding arbitration under the rules and processes of U. S. Arbitration and Mediation of Portland, Oregon or similar mutually agreed process. Each Disputing Party shall select an arbitrator and the two shall appoint a third arbitrator. All costs of arbitration shall be borne equally. The Oregon Rules of Civil Procedure relating to discovery and the Oregon Evidence code shall apply. The decision of the panel shall be binding. Nothing herein shall prevent the Disputing Parties from selecting a single arbitrator by agreement. 14.3 Legal Fees Each'Disputing Party shall bear its own legal and expert witness fees at all stages of proceedings, including any appeals. :Page 52—Lake Oswego-Tigard Water Supply Agreement CADoc'uments and Settings\greer\Local SettingsUemporary Internet Files\Content.Outlook\I2D82WY X\I83039.doe ARTICLE XV COMPLETION OF INITIAL EXPANSION OF THE SUPPLY FACILITIES 15.1 Modification to Agreement Within three years after completion of the Initial Expansion, the Oversight Committee shall undertake a review of all agreements and operations and to consider the need for any modification to the terms and conditions of this Agreement. At the recommendation of the Oversight Committee, the Councils for the Parties may consider: 15.1.1 Modification to the existing Agreement(s); 15.1.2 Replacement of existing Agreement(s) with a new Agreement; l 5.1.3 Creation of a Supply Agency under ORS Chapter 190. Page 53 —Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local Settings\Temporary Internet Files\Content.Outlook\I2D82WYX\183039.doc ARTICLE XVI NOTICES .Any notice herein. re=quired or permitted to be given shall be given in writing and effective When'actually received by hand delivery or by the United States mail, first class postage.prepaid, addressed to the Parties as set forth below. The Parties shall notify the Managing Agency of any change of address or title for receipt of notices under this Agreement. LAKE OSWEGO: The City of Lake Oswego Attention: City Manager 380 A Avenue P.O. Box 369 Lake Oswego, OR 97034 TIGARD City of Tigard Attention: City Manager 13125 SW Hall Blvd. Tigard, OR 97223 Page 54—Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local Settings\Temporary Internet Files\Content.Outlook\12D82wYX\I83039.doe i ARTICLE XVII GENERAL PROVISIONS I1;1 Instruments of Further Assurance From,time to time, at the request of a Party, each Party shall, without further ,consideration, execute and deliver such further instruments, and shall take such further action as may be reasonably required to fully effectuate the purposes of this Agreement. 17.2 Entire Agreement This Agreement embodies the entire agreement and understanding between the Parties hereto with respect to_the Supply Facilities and supersedes all previous agreements and understandings relating to the Supply Facilities except as provided herein. The Parties agree that the existing Agreement for Water Service effective July 1, 1983, shall terminate as of :the date Initial Expansion is substantially complete. 17:3 Assignment, Sale or Transfer No Party shall have the right to sell, transfer or assign its interest in this Agreement (or any portion thereof) or asset(s), without the prior written consent of the other in accordance with requirements of this Agreement. No Party may sell, transfer, assign its interest or sell water to an existing wholesale customer in the: other Party's service area as set forth on.Exhibit 2 without the prior written consent of the other Party in accordance with the requirements of this Agreement. :1.7.4 Severability In case any one or more of the provisions contained in this Agreement. shall be invalid, illegal, or unenforceable in any respect, the validity, legality and 'Page 55 —Lake Oswego-Tigard Water Supply Agreement CAD,ocuments and Settings\greer\Local Settings\Temporary Internet Files\Content.Outlook\I2D82\VYX\183039.doc enforceability of the remaining provisions contained herein shall not in any way be affected pr'impaired thereby. 17:5 Counterparts This Agreement may be executed in any number of counterparts and by the Parties or separate counterparts, any one of which shall constitute an Agreement between and among the Parties. Headings -The,Article, section and subsection headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. 17.7 Force Majeure No Party shall be considered in default in the performance of its obligations under this Agreement to the extent that the performance of any such obligation is prevented or delayed by any cause, existing or in the future, which is beyond the reasonable control .of the affected Party, including,, but not limited to, Acts of God, earthquake, 'labor disputes, civil commotion, war events beyond the reasonable control of the Parties, such as regulatory restrictions or requirements, permit issuance, and the like. In the event a Party claims that performance of its obligations was prevented of delayed by any such cause, that Party shall promptly notify the other.Parties of that fact and of the circumstance preventing or delaying performance. Such Party so claiming a cause of delayed performance shall endeavor to the extent reasonable to remove the obstacles which preclude performance. Page 56—Lake Oswego-Tigard Water Supply Agreement C.\Documents and Settings\grcer\Local Settings\Temporary Internet Files\Content.Outlook\12D821AFMI83039.doc 1.7.8 Consolidation, Mercer, Annexation 17:8.1 Change of organization is defined as the consolidation or merger of a Party with another city under ORS 222.610 et seq. 17:8.2 Any new entity created by change of organization involving a Party to this Agreement shall require prior consent of the other Party as to the successor or surviving entity's entitlement to be an owner of the Supply Facilities, based on the entity's legal, financial and technical ability to assume the original Party's obligations under this Agreement. Such consent shall not be unreasonably withheld. If the surviving or successor entity is approved, the original Party/Parties' obligations and rights hereunder shall be binding upon and inure to the benefit of the surviving or successor entity, and that entity shall be subject to all obligations of this Agreement. 17.8.3 Annexation of or provision of service to an area beyond that area identified for each party in the Carollo Report, and any transfer of a Party's territory to a Water Authority formed by one or more cities, water districts, or both, shall require the prior consent of the other Party, which shall not be unreasonably withheld considering capacity and demands and other system factors. Annexations or service to identified areas shall not require consent. 17.9 Survival of Covenants Any provision of this Agreement which., by its terms has or may have application after the expiration or earlier termination of this Agreement, including all Page 57—Lake Oswego-Tigard Water Supply Agreement C:\Docurnents and Settings\greer\Local Settings\Temporary Internet Files\Content.Out]ook\12D82wYX\183039.doc covenants, agreements, and warranties, shall be deemed to the extent of such application to survive the expiration or termination of this agreement. 17.10 Indemnity To the extent permitted by the Constitution and laws of Oregon, each Party agrees to defend, indemnify and hold harmless the other from and against any and all actual or alleged claims, damages, expenses, costs, fees, including but not limited to attorney, account, paralegal, expert and escrow fees, fines, environmental costs and/or penalty (collectively "costs"), which may be imposed upon, claimed against, or incurred or suffered by the Party, unless and to the extent it was resulting from an individual Party's negligence or willful misconduct. 17.11 No Third Party Beneficiaries The Parties hereto are the only Parties to this Agreement and the only persons or entities entitled to enforce its terms. IN WITNESS WHEREOF the Parties have dated and signed this Agreement. CITY OF LAKE OSWEGO CITY OF TIGARD r 4May'0/r Mayor ku usl U .2ZIM Aiaust Dated i Dated aw'�L Attest Cq#lpw r"U 14 Citf Recorder City Recorder U 9- 08 Dated Dated t City Attorney City ttorney Page 58—Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local Settings\Temporary Internet Fi1es\Content.0ut1ook\12D82WM183039.doc Page 59—Lake Oswego-Tigard Water Supply Agreement CADocuments and Settings\greer\Local Settings\Temporary Intemet Files\Content.Outlook\12D82WYX\183039.doc 1 laterim supply to:eke 9awgo Ino,al—ca-ed) 2 paw�+ater Intake [not allceatad) 3 paw;xeter 4ranssisaioa 4 N.acer Trencnent Plant:fend 5 Hater rreaceeat Plant:S"wtsrn t E> ipser-t (not e11—tedl 6 Finished Trensaisaimt Nein (roc allocac ed) 7 aalupa pecervoir: :And(lesersair property) 8 ealuaa R:rvoir: StruCtaree i Ppuipeerd loot allocated) 9 Bonita Pep S:at3en Ino,.Mooted) 10 con,uce,systwIsottware i1 General Plant Exhibit 1 Existirg Real Property,Supply Facility Components and Valuation Currant Yaar 200e Aswmed Escalation 5,6 Ma 2008 ENR CCI 8140 Prc'clad Jul 2008 ENR CGI 8,206 Acquisition Acquisition Original Juty Today Acquisillon Useful Us Oepradation Allocation Asaet0esc tion Data Amount ENRCCI 200BCCI Amount In ars Amount Value Today Water Treatment Plant L and 1,155 8,208 4 Fknl S!a lix3N195p $ 81.797 S 595,491 -arid 5 - S 595.491 Sub Total £ 83,797 5 595,491 5 - 5 595,491 Ra1v Water Transmission 1,269 6.2DB 7 Raw•vlear Tra:smasrr, &30!1960 $ 590.137 5 3,816,979 100 S 1,488,622 5 2328.357 3 Pirk'me Fasame,ts 600/1969 S 22.000 S 142,295 100 S 55,495 5 86.83 Sub Total 5 611137 S 3,959.274 S 1,644,117 S 2,415,167 Distribulirm Steens 2 Rasarvcir Propenv 6.2911980 S 8,416 3,237 6208 5 21.340 Land S - 21.340 W..ga Resevov 30011983 $ 1281,427 4086 6208 S 2,586.753 100 5 64E.688 S 1,9.70.065 Sub Total $ 1,259,843 S 2,608,093 S 646,688 $ 1,961,405 CIL Svs1em550Nware 10 SCAOA Sysem U grsde 6MI991 S 180,722 4,835 E.208 3 30f,.791 20 5 260.773 5 4E.019 10 Scads Iolh—Upgrade 6131Y1999 S 33.530 6,059 E.206 S 45.381 20 S 20.421 S 24,959 Sub Total $ 214,222 S 352.172 5 281,194 5 70,978 General Pi-I 11 Other &B/19B2 5 17,030 3,825 E,208 S 36.479 20 5 36.471) S 11 Vah,Ues &811956 S 24,030 4295 8,208 S 45,864 20 S 45,964 5 - 11 veRtks 6.7947999 S 20,530 6,059 8,208 $ 27,770 20 5 12,497 S 15,274 Sub Tote1 5 81.500 5 110,114 S 94,940 S 154274 Land Addlbol5 2006 RMV nand Onlyj 7 LValup Res.: 1976 S 719,841 Land s - $ 328,841 7 =800 Carmen Cr 1992 5 237,345 Land S - S 237.346 - Vacenl Parcel 1992 S 253,486 Lard $ - S 253,485 4260 K-&mipe 1'!ay 196E S 880,014 Land S - 5 6801014 4 WTP Property 1979 S 132,652 Land S - S '32652 4 4245 MapeY V 1989 $ 258,916 Land 5 - 5 258,916 4 43D5 Mapimo Cr 1995 S 258.P16 Land S - 5 258.916 443'5 Maplelcr Cr 1989 S 258,916 Land 5 - S 258,916 d So"r d P1a1I S4e 1989 5 47,430 Lard 5 - S 47,433 Clarkamas River Intake 8 Pump Stali0n Stkart EW1969 5 121.960 1.269 8.209 5 :88.9131 63 S 512,825 5 276,136 Rimm d e7u4m,"A 6W1S69 5 50.825 1.289 8.209 S 326.734 4D S 320.515 $ 8,216 Ppra and`:eMes 6137x1969 S 20,330 1.269 8,208 S 131.494 60 S 55.47• $ 46.023 Elacinca!,I&C.HVAC8130x1969 5 78155 1,269 8,208 S 66.747 40 S 64,103 5 1,644 Senamlc lJporades 1980 S 131,000 6.538 8.208 S 164,455 60 5 76.747 5 07,71• Pump; 1980 5 40,000 3.237 8.208 S 101.425 40 S 70.998 1 30,428 Pumps No.e 2002 S 153633 6.538 8.204 1 193,123 40 S 26.969 S 164,154 Inak2 Fis'1-1-1 2002 S 1,352.600 6.538 8,208 1 1,6ill 20 1 539,418 1 1.188,642 P"aad"'.k— 1980 S 10.000 3.237 B.20B S 25,356 60 1 11,833 1 13.523 Elect i and HVAC 1980 S 21.GC0 3.237 8,208 S 53,249 40 1 37,274 £ 15,974 make L-J Waley Tragi Jnenl Pia,; Site Wcrk 63041969 5 155.915 1.23 8206 S 1,38,45/ 69 5 655.493 S 352,958 Concrete and BJI6ngs 6/00/1969 5 479.739 1269 8.208 S 3.102,930 60 S 2.016,904 S 1,086,025 Pump,. 613011969 S 4.197 1169 5.208 S 27,146 40 S 2BA67 S 679 MCCwuc I rg.pmarn 6`5D"9695 125.931 1.269 8,208 S 814,516 40 S 794.153 S 2D,363 Piping and V.1— U, 969 S 191,995 1.259 8,208 5 1,241.168 60 S 606.759 S 434,409 Elactr:cal,160.HVAC EI30/1969 S 791695 1.294 8208 S 1,241,168 ;0 S 1210,139 5 31,029 F�ter Media.and Uroerdrans 60/119697269 4208 S - 40 S - S - Q1any,alAddnbn 600/1969 7289 8208 S - 40 S - S - C7earWeB 6:'"1959 1.23 8.208 S 60 S 5 - Salicit O le-kg Fadfi.es FJ30.^.9691.269 5,208 S - EO S - S Mesceipneous 66/30/1969 5 11,993 1,269 8208 S 77,570 20 5 77,670 S - ErgneeMp 600!1989 1,289 8208 $ - EO S - S - Expansimn !994 S 80.221 3,237 8,208 S 203,411 EO 5 94.925 S 109.486 Site won, 199E S 510.000 5.920 8,206 S 707,094 ED 5 117.849 5 E89245 Eapanslan 1980 S 333224 3,237 9,208 S 6",933 ED S 594.3D2 5 450.631 Seismic/AOAJUG 2000 S 499.416 6.221 IL206 S 657,706 60 5 97,694 S 57DR12 E,Panlion '98C $ 86,39 1 3,237 &208 S 219,056 60 S 102.226 S 116.830 Pumps and EWipmani 1999 $ 507.925 6,859 8,208 S 688,061 40 5 154,814 5 533.246 Fspaseicn 1980 5 67,879 3,237 &208 S 172,116 60 S 60.321 5 91.796 L4charicsl 2001 S 641,126 6,343 8,208 5 829,616 40 S 145,183 S 684,433 Exp—sion 1960 S 357.93 3,237 8,206 S 907,517 60 S 423,608 5 484,009 Erpeulor Ige: S 178,954 3.237 8,208 5 453,76160 S 211,766 S 242.00E SJ EJriral 1999 S 66,247 6,39 8,206 S 69,142 40 S 20.192 5 69,560 Electrical&Inst oration 2001 S 668.564 6,343 8.208 5 735,721 40 S 128,751 S eC8,970 5tpeldor 1980 S 03,923 3.237 8,208 5 212,796 60 5 99.306 S 113,492 2.,.&St,ucl.at Won 2001 S 416,888 6.343 8.208 5 539,450 40 5 94.404 S 44564E Sodium Hyp-113me System 19W $ 262,793 5.920 8,208 5 392.081 40 5 98.020 S 294,061 Lime Sc-9e•Feed Systam 199E S1.03,168 5,920 8,208 5 1,385,677 40 5 246,669 S 1.040,00E CO2 Shrage/Fee l System 1998 S 238,357 5,920 8,208 5 330.472 40 5 BZ618 S 247,564 .4,,m Solr'eiFaed System1Si m 5 522.63 5.920 8208 5 724.840 40 5 181210 S 543.BX Clear!Vet Bar'le 1991. S 107.293 5.622 8.208 5 156,642 40 S 46,993 5 IC9,BSC Snitds Devralen.3 Lagoons 1999 S 1,084,518 6,059 8,208 5 1,469.144 40 5 330,557 S 1,130.587 ".•7ansion 1980 5 45,664 3,237 8,208 S 115.787 60 5 54,34 5 61.7E Engineering 1998 S 311,460 5,920 8,208 5 431,626 6D 5 71,971 5 359,85E Engineering 1999 S 1'40,30 6.059 6,208 5 162,556 60 S 24,384 S 136,174 Engineering 230 S 128.653 6,221 8.2[18 S 167,103 60 5 22760 S 1144,6T4 Engk—n,g 231 S 732,30 6.343 8,208 5 429,3E 60 S 513,121 S 379,487 Fin[shed Weber Transmission 24-ind6 FlniShed Water Man 8/3071969 S 473,456 1,269 8,208 S 3,062,282 100 S 1,194,294 5 1,867.988 WTPTracs—s,on Msln 87.6011969 $ 42.618 1.269 6,208 5 275,651 100 5 107.604 S 168.147 Noah Stnre-t—Win,o.fines &3D:197C S 534,:42 1,381 8,208 S 3,174,619 100• 5 1206,35E 5 1,968264 tipper Or.-1•on Min.24 Inch Pipeene &Wll985 S 575,398 4,195 8,208 5 1,125,810 100 S 258,93E S 866.873 Ca(ho rr-Pr3leclicn System 41200C 5 4E6.097 6,221 8208 5 641,344 40 S 128265 S 513.07E S 2,111,711 S 5,304,36e Sub Total S 18,665,160 5 34,825,504 $ 13,E65,082 S 26,647,780 Calculated Total Cu—m Acnukmon Value 290B Value Oap..Wlon Value TOTAL ASSETS 5 18.127,659 5 4;453,645 5 16,231.922 5 31,806,085 Exhibit 2 o`PG i / � —tiTEPHENSDN Y lF SFR t o 217 PARK MrLrOSE 0 00 c m. yc Cr"J"'I cLu❑ i COURTNEY—z N �J ruse n � `OAK GROVE-� o 'c \ z _ .F�11C t. —DURHAM a{ GANGDSO r4� Q W JEAN 2 MTRLDM1 1 OD RnYCE _ m - O Lu \ 4 /I S` I 2 F RDSF�D •�rJP m�F Q —CHIL05 Legend - — n Streets J Freeway 5 Water Service Area m QLake Oswego �\ Stafford Triangle(Build-out) RDRLANO -- River/Lake Izos Nr. 49 Z U bz.r IV, 21-1 Urban Rarorm rO 4F Fromay rT Water�lefvjceAren Ti,,pul Urtyar,Rt Uibm Recorva No.4? Figure 1.2 TIGARD WATER SERVICE AREA L 17� 0 F.. JOINT WATER SUPPLY SYSTEM ANALYSIS Lo50711.2-7525.al CITY OF LAKE OSWEGO AND TIGARD WATER SERVICE AREA EXHIBIT 3 - Map of Supply Facilities Waluga Reservoir Bonita Pump Station • Lake Oswego '� �x:r+-� WaterTreatment Plant :t. lyf - •S � � - J� r 1 �'� $ C•,+��••' - Ili l► -,1'� #' ' - ,° Via' 'j"�'si - - ``.. ` r^"�«•y w:..ni rr 3 '... •a 1 YI e y1y t or. — ;'s R Clackamas River Intake Legend Existing and Proposed Parallel Pipeline _ Z.- 0 1 2 Miles _ Exhibit 4 City of Lake Oswego Water Rights Summary Permitee Application/Permit# Authorized Authorized Amount Amount Priority Source amount place of developed/certificate# undeveloped Date water (efs/m d) use (efs/m d) efs/m d) City of S43365/S32410 50/32.32 City of Lake 25/16.16/C78332 25/16.16 3/14/1967 Clackamas Lake Oswego and River Oswego City of Tigard' City of S50819/S37839 9/5.81 City of 0 9/5.81 7/5/1973 Clackamas Lake Tualatin and River Oswego Tigard Water District Notes: 1.The City of Lake Oswego is currently seeking extensions of time to fully use all water authorized under permit Nos. S32410, S37839 and S43246. Proposed Final Orders(PFO)approving the City's request are pending at Water Resources Department (WRD) in Salem. It is expected protests will be filed on the PFO's once they are issued for public comment. 2.The City has submitted its water management and conservation plan to WRD and no public comments on the plan were filed during the 30-day public comment period. An approved WMCP is required before the City can access any portion of undeveloped water noted above. ' Permit Amendment T-8358 amended Permits S32410 and S37839 to include the City of Tigard as authorized places of use. 2 Permit 537839 was granted to the City of Lake Oswego for the benefit of the Cities of Tualatin and the Tigard Water District. Exhibit S Supply Facilities Capital Improvement Program (To be added following adoption by each Council) EXHIBIT DETERMINATION OF TIGARD BUY-IN Net Tigard Original Cost Reproduction Allocation Tigard Share Asset Tax Map Tax Lot Clackamas Co.Deed Cost a/. Clackamas River Intake& Pump Station S 1,911,733 S 1,832,454 0.00% S - Clackamas River Intake Land* 2 2E 20CA 15001 Bk 173,Pg 900-902 S S 14/38 S Computer System/Software S 214,222 S 70,978 14/38 S 26,150 Finished Water Transmission S 2,1 l 1,71 1 S 5,384,358 0.00% S - General Plant S 61,500 S 15,274 14/38 S 5,627 Raw Nater Transmission S 612,137 S 2,415,157 14138 S 889,795 Waluga Reservoir S 1,281,427 S 1,940,065 0.00% 5 - Waluga Reservoir:Land Reservoir Property 2 IE 07 AD 03100 Doc 72-06414 S 8,416 S 21,340 14/38 S 7,862 Waluga Res#1* 2 lE 07AD 00700 Doc 76-36977 n/a S 329,841 14/38 S 121,520 4800 Carmen Dr* 2 I E 07AD 00900 Doc 92-063461 n/a S 237,346 14/38 S 87,443 Vacant Parcel* 2 1 E 07AD 01000 Doc 92-063461* n/a S 253,485 14/38 S 93,389 Water Treatment Plant S 9,731,005 S 11,489,095 0.00% S - Water Treatment Plant Land 4260 Kenthorpe Way-parcel 1* 2 1 E 24BD 00300 Bk 688,Pg 581 S 83,797 S 595,491 14/38 S 219,391 4260 Kenthorpe Way-parcel 2* 2 1 E 24BD 00401 Doc 79-35248 n/a S 601,670 14/38 S 221,668 xxxx Mapleton Dr* 2 IE 24BD 01200 Doc 89-10200 n/a S 132,652 14/38 S 48,872 4245 Mapleton Dr* 2 1 E 24BD 01400 Doc 89-13210 n/a S 258,916 14/38 S 95,390 4305 Mapleton Dr* 2 1 E 24BD 01300 Doc 95-33429 n/a S 306,346 14138 S 112,964 4315 Mapleton Dr* 1 2 IE 24BD 01500 Doc 89-13210 n/a S 258,916 14/38 S 95,390 Totals i *less 2006-108190 i S 16,015,948 S 26,143,384 5 2,025,361 •Nct reproduction cost for these properues are based an an asscssofs 2006 reel mat Let value IRIAVI Thac costs art•not included in the total original cast_ Tipnl and LO will need m comptcte an uldmed appraisal of land values.and resolve which parcels ars ntatetial to this agreement before determining the final buy-in cost. All—tion!l.bsed nn la med.m ntgd capacity allaated to Tigard, Nn Reproduction Cost includes mcalalion by ENR[as depreciation EXHIBIT ALLOCATION OF SYSTEM IMPROVEMENT COSTS TO THE PARTIES Cost of Lake Oswego Tigard Improvement Allocation Allocation (in 2006 $}* (%) Share($) (%) Share($) Water Treatment Plant -Existing Plant n/a 100.00% n/a 0.00% $ - -32 mgd Expansion $ 39,430,000 2/16 $ 4,928,750 14/16 $ 34,501,250 -38 mgd Expansion n/a 100% ** n/a 0.00% $ - Raw Water Intake and Pump Station $ 4,440,000 24/38 $ 2,804,210 14/38 $ 1,635,789 Raw Water $ 23,920,000 24/38 $ 15,107,368 14/38 $ 8,812,633 Transmission Main Finished Water Transmission Main -Reaches 7-10 $ 38,220,000 24/38 $ 24,138,947 14/38 $ 14,081,053 -Reaches 11-12 $ 17,020,000 8/22 $ 6,189,091 14/22 $ 10,830,909 Storage(MG) $ 4,010,000 1.0/2.5 $ 1,604,000 1.5/2.5 $ 2;406,000 Bonita Road Pumping Station $ 1,700,000 0.00% $ - 100.00% $ 1,700,000 Total Costs $ 128,740,000 1 42.54% $ 54,772,366 57.46% $ 73,967,634 Project costs are presented in 2006 dollars.Actual cost will depend an project start and completion dates. '"-Second(6 mgd)expansion is currently assigned to Lake Oswego. Contract provides For potential reallocation by agreement. i CITY OF SING CITY, OREGON CITY COUNCIL RESOLUTION NO. R-08-12— RESOLUTION RECOMMENDING THE CITY OF TIGARD APPROVE THE WATER PARTNERSHIP INTERGOVERNMENTAL AGREEMENT REGARDING WATER SUPPLY FACILITIES,DESIGN,CONTSTRUCTION,AND OPERATION,BETWEEN THE CITY OF TIGARD AND THE CITY OF LAKE OSWEGO WHEREAS, the City of King City("City")and the City of Tigard("Tigard")are voting members of the Intergovernmental Water Board created by way of an intergovernmental agreement dated December, 1993;and WHEREAS,Tigard and the City of Lake Oswego desire to enter into an intergovernmental agreement("Proposed IGA')regarding water supply for the purpose ofjointly obtaining a permanent non-contract source of raw water;and WHEREAS,the City and Tigard have agreed that it is in the public's best interest for the City to review the Proposed IGA;and WHEREAS,the Proposed IGA is supported by sound engineering analysis,is in the best interest of water customers within the original water district and is consistent with the goal of working together to provide all of the residents and'property with a clean,economical water supply;and WHEREAS,in July 2007 an engineering study known as the Lake Oswego and Tigard Joint Water Supply System Analysis was performed by Carollo Engineers and was funded by the ratepayers of the Tigard Water Service Area and the City of Lake Oswego. NOW,THEREFORE,BE IT RESOLVED by the City Council of the City of King City that: SECTION 1: The City of King City hereby recommends to Tigard that the Intergovernmental Agreement Regarding Waxer Supply Facilities,Design and Construction and Operation Between the City of Lake Oswego and the City of Tigard be approved by the City of Tigard;and SECTION 2: This resolution is effective immediately upon passage. PASSED: This 16th day of July,2008. 7Mayor,City of King City A � City Recorder, City o :.King City Page 1 - RESOLUTION NOR-08-12 CITY OF DURHAM, OREGON RESOLUTION NO. 503-08 RESOLUTION RECOMMENDING THE CITY OF TIGARD APPROVE THE WATER PARTNERSHIP INTERGOVERNMENTAL AGREEMENT REGARDING WATER SUPPLY FACILITIES,DESIGN, CONSTRUCTION,AND OPERATION,BETWEEN THE CITY OF TIGARD AND THE CITY OF LAKE OSWEGO WHEREAS, the Tigard Water District("District")/City of King City("City")/City of Durham("Durham") and the City of Tigard("Tigard")are voting members of the Intergovernmental Water Board created by way of an intergovernmental agreement dated December, 1993;and WHEREAS, Tigard and the City of Lake Oswego desire to enter into an intergovernmental agreement ("Proposed IGA')regarding water supply for the purpose of jointly obtaining a permanent non-contract source of raw water;and WHEREAS,the District/City/Durham and Tigard have agreed that it is in the public's best interest for Durham to review the Proposed IGA;and WHEREAS,the Proposed IGA is supported by sound engineering analysis, is in the best interest of water customers within the original water district and is consistent with the goal of working together to provide all of the residents and property with a clean,economical water supply;and WHEREAS, in July 2007 an engineering study known as the Lake Oswego and Tigard Joint Water Supply System Analysis was performed by Carollo Engineers and was funded by the ratepayers of the Tigard Water Service Area and the City of Lake Oswego. NOW,THEREFORE,BE IT RESOLVED by the City Council of the City of Durham that: SECTION i: The City of Durham hereby recommends to Tigard that the Intergovernmental Agreement Regarding Water Supply Facilities,Design and Construction and Operation Between the City of Lake Oswego and the City of Tigard be approved by the City of Tigard;and SECTION 2: This resolution is effective immediately upon passage. PASSED: This 26 day of July, 2008. f ry Schiriddo,Mayor ATTEST: Roland Signett, City Rei der Tigard Water District Serving the Unincorporated Area RESOLUTION NO. 08-03 RESOLUTION RECOMMENDING THE CITY OF TIGARD APPROVE THE WATER PARTNERSHIP INTERGOVERNMENTAL. AGREEMENT REGARDING WATER SUPPLY FACILITIES,DESIGN,CONTSTRUCTION,AND OPERATION,BETWEEN THE CITY OF TIGARD AND THE CITY OF LAKE OSWEGO WHEREAS, the Tigard Water District("District")and the City of Tigard("Tigard")are voting members of the Intergovernmental Water Board created by way of an intergovernmental agreement dated December, 1993;and WHEREAS, Tigard and the City of Lake Oswego desire to enter into an intergovernmental agreement ("Proposed IGA")regarding water supply for the purpose of jointly obtaining a permanent non-contract source of raw water;and WHEREAS,the District and Tigard have agreed that it is in the public's best interest for the District to review the Proposed IGA;and WHEREAS,the Proposed IGA is supported by sound engineering analysis,is in the best interest of water customers within the original water district and is consistent with the goal of working together to provide all of the residents and property with a clean,economical water supply;and WHEREAS,in July 2007 an engineering study known as the Lake Oswego and Tigard Joint Water Supply System Analysis was performed by Carollo Engineers and was funded by the ratepayers of the Tigard Water Service Area and the City of Lake Oswego. NOW,THEREFORE,BE IT RESOLVED by the Tigard Water District Board of Commissioners that: SECTION 1: The Tigard Water District hereby recommends to the City of Tigard that the Intergovernmental Agreement Regarding Water Supply Facilities,Design and Construction and Operation Between the City of Lake Oswego and the City of Tigard be approved by the City of Tigard;and SECTION 2: This resolution is effective immediately upon passage. PASSED: This 28th day of July,2008. j Chair, Tigard Water District ATTEST: Tigard Water Di 1ct Acting Recorder EXHIBIT `A' Water Supply Plan Joint Funding Agreement Amendment No. 1 WHEREAS, on March 6, 2006 the City of Lake Oswego, a municipal corporation of the State of Oregon and the City of Tigard, a municipal corporation of the State of Oregon, hereinafter collectively referred to as"the parties"by and through their respective charters entered into an intergovernmental agreement(the Agreement)to jointly fund a water supply system plan, and WHEREAS, pursuant to a competitive selection process,Lake Oswego retained Carollo Engineers, P C (the Consultant)to perform an engineering study for anoint water supply system plan according to a Scope of Work mutually agreed to by the parties, and WHEREAS, the parties mutually agreed to share equally the costs of the Consultant for the approved Scope of Work, and WHEREAS,the Agreement provides that modifications to the approved Scope of Work may be made at any time with the mutual consent of the parties, and WHEREAS,pursuant to Section 2,paragraph 2 of the Agreement Lake Oswego and Tigard mutually agree to modify the Consultants Scope of Work to include additional services, and WHEREAS,pursuant to Section 2,paragraph 3 of the Agreement Lake Oswego and Tigard mutually agree to share the costs for these additional services NOW,THEREFORE, the City of Lake Oswego and the City of Tigard agree that the Intergovernmental Agreement for Joint Funding of a Water Supply System Plan for the City of Lake Oswego and the City of Tigard, approved by Tigard on February 28, 2006, and approved by lake Oswego on March 6,2006, is hereby amended as follows 1 The"Amendment 1 Scope of Work"in the form attached as Exhibit 1 is added to the Scope of Work 2 The parties shall share the costs of the"Amendment 1 Scope of Work"in the following proportions Lake Oswego$63,531 and Tigard$62,619 3 Except as specifically amended herein,the provisions of the original Intergovernmental Agreement for Joint Funding of a Water Supply System Plan for-the City of Lake Oswego and the City of Tigard shall remain in full force and effect For City of Lake Oswego For City of Tigard C C 4adi€-IammerstadyMayor Craig 'rksen;Mayor Ellie McPeak, Council President Craig Dirksen Lake Oswego has acted in this matter pursuant to Resolution No. 07-/0 adopted by the City Council on the day of FtbruAl , 2007 Tigard has acted in this matter pursuant to a Motion adopted by its City Council on the day of 21A- 1-, 2007 ATTEST ATTEST By: By: (' Robyn firistie, City Recorder Cathy Wheatley, City Recorder APPROVED AS TO FORM APPROVED AS TO FORM David Powell,City Attorney Tim Ramis,C y Attorney City of Lake Oswego and the City of Tigard E X H I B I T Joint Water Supply System Analysis Amendment 1 Scope of Work 1 January 3, 2007 --------- Page 1 fir BACKGROUND The Cities of Lake Oswego and Tigard (the Cities) have initiated a comprehensive study to develop and evaluate options for the possible formation of a joint water supply system to serve both cities. In May 2006, Lake Oswego entered into a consulting services agreement with Carollo Engineers, P.C. (Carollo) to complete this project. Since that time, many of the initial project goals have been accomplished including identifying projected water supply demands, development of conceptual alternatives for water supply improvements, identification of regulatory constraints, development of a strategic communications plan, and evaluation of governance options. Based on the work completed to date, the Cities have identified additional services and modifications to the original scope of work to better respond to the issues, concerns and opportunities that have been identified. Details of the proposed amended scope of each task are presented in the following section. The budget and schedule for these activities are attached. TASK 1 — EVALUATE WATER SUPPLY SYSTEMS The following additional work has been requested as part of this task: A1.1.1. Modifications to Lake Oswego Population and Demand Forecasts Lake Oswego has requested additional modifications to the population and demand forecasts developed by Carollo to achieve improved consistency between the Joint Water Supply System Analysis and Lake Oswego's draft Water Management and Conservation Plan (WMCP). This task includes additional revisions to initial population and demand forecasts, development of a summary of proposed forecasting methodologies, coordination with the draft WMCP, meeting with the City and the City's WMCP consultant, and revisions to Technical Memorandum 1 based on additional revisions to the updated methodology. H:\JOEL—K\TIGARD\PSC amendment 1\LO Amendment 1 -Scope-Final.doc City of Lake Oswego and the City of Tigard Joint Water Supply System Analysis Amendment 1 Scope of Work January 3, 2007 Page 2 A1.1.2. Significance of Conservation on Supply Improvements The City's elected officials have expressed interest in making water conservation a key element of future supply planning and to build upon the conservation programs each city has developed This task includes preparing a technical memorandum (TM) describing the relative significance of the three potential conservation strategies on the capacity, cost and implementation schedule of supply requirements, supply scenarios, and the associated capital improvements for the proposed water supply scenarios A draft TM will be prepared for review by the Cities and will be finalized based on the Cities' review comments Findings of the final TM will be incorporated into the project report It is assumed the Cities will Identify potential conservation measures and assumed conservation targets for each conservation strategy TASK 2 — EVALUATE WATER SUPPLY FACILITY ALTERNATIVES The following additional work has been requested as part of this task A1.2.1. Evaluation of Alternative Intake via South Fork Water Board Prepare a brief(one-page) memorandum describing the feasibility and costs of upgrading the existing South Fork Water Board (SFWB) intake and constructing a new transmission line to convey the water to the existing Lake Oswego intake These Improvements would be sized to supplement the capacity of the existing Lake Oswego intake, to provide a total combined intake capacity equal to Lake Oswego's existing senior and junior water rights on the Clackamas River It Is assumed that based on this limited analysis, this alternative will not be considered further in the remaining supply planning work A1.2.2. Evaluation of Interim Supplies to Lake Oswego This task consists of evaluating two alternatives for interim supply to Lake Oswego to allow deferring of near-term supply Improvements that would otherwise be necessary to serve the Lake Oswego The first alternative consists of supply from Tigard using a connection to the existing Washington County Supply Line (WCSL)from Portland The H\JOEI-_K\TIGARD\PSC amendment 1\1_0 Amendment 1 -Scope-Final doe City of Lake Oswego and the City of Tigard Joint Water Supply System Analysis Amendment 1 Scope of Work January 3, 2007 Page 3 second alternative consists of supply from the South Fork Water Board (SFWB)via an intertie with the City of West Linn The evaluation of these two alternatives will include analysis of this alternative supply concept, identification of capital cost and capacity for two options (Option 1 use of existing pipeline capacity, and Option 2 development of a new transmission capacity) Capital and O&M costs for associated upgrades will be identified, and Implications for timing of future supply improvements to implement the 24, 32 and 38 mgd water supply scenarios will be evaluated A matrix will be prepared presenting a comparison of the alternatives based on various evaluation criteria (such as capacity, reliability, resource impacts, governance requirements, capital cost, operating cost, and consistency with long-term supply requirements), The evaluation will be summarized in a draft and final technical memorandum, with resulting finding Incorporated Into the project report It is assumed the City of Tigard will provide a recently-completed capacity analysis of the WCSL It is further assumed that the City of West Linn and SFWB will assist in identifying the capacity of the existing intertie between West Linn and Lake Oswego, system Improvements that may be required to increase intertie capacity, and aid In identifying costs for water purchases TASK 3— EVALUATE REGULATORY, PERMITTING, AND WATER RIGHTS The following additional work has been requested as part of this task A1.3.1. Water Rights Overview and Recap Prepare additional information summarizing existing water rights on the Clackamas River This will include 1) a summary of existing Oregon water law, Including a synopsis of the processes and criteria for establishing and enforcing water right priorities, 2) a summary of the location, quantity and priority of existing water rights on the Clackamas River, 3)the existing and projected future water demands of water right holders on the Clackamas River, 4) maps identifying the location, capacity, current and future demands, and priorities of existing water rights on the Clackamas River, and 5) a review and summary of the conclusions of the existing Portland State University (PSU) hydraulic H\JOEL K\TIGARD\PSC amendment 110 Amendment 1 -Scope-Final doc City of Lake Oswego and the City of Tigard Joint Water Supply System Analysis Amendment 1 Scope of Work January 3, 2007 Page 4 model of the Clackamas River This information will be provided as a presentation to be made as part of Joint City Council Workshop 2, which is scheduled to be conducted as part of the original scope of Task 5 Graphics associated with this task will be Included in a revised draft of Tech Memo 3, and will be Incorporated into the project report TASK 4—CONDUCT STRATEGIC OUTREACH & COMMUNICATIONS The following additional work has been requested as part of this task A1.4.1 - Implementation of Public Outreach Plan This supplemental scope of services supports implementation of the Strategic Outreach and Communications Pian for the Joint Water Supply System Analysis. Initiation of this work requires separate authorization to proceed, which is anticipated to be Issued following completion of the individual City Council meetings outlined in Task Al 5 1 This work Includes the following sub-tasks Al 4 1 1 - Information Materials & Tools Materials and tools will be created that enable the Cities to identify and reach Interested citizens, answer their questions, and invite their involvement These tools may include • Fact sheet/ updates (assumes one fact sheet/ one update) • Synopsis of technical issues/analysis • Targeted communications for interested parties (assumes one mailing) • Develop/ maintain project mailing list • Design portable displays ® Website Al 4 1 2 - Public Meetings Public meetings /open houses will be organized and facilitated Assist in developing feedback forms and other materials that may be needed to capture public input • Organize /facilitate two public meetings /open houses In Lake Oswego and Tigard • Develop meeting materials /feedback forms H\JOEL_K\TIGARD\PSC amendment 1\1_0 Amendment 1 -Scope-Final doc City of Lake Oswego and the City of Tigard Joint Water Supply System Analysis Amendment 1 Scope of Work January 3, 2007 Page 5 0 Summarize meeting results/ public Input for the project team and policymakers Al 4 1 3 - Media Relations Support Lake Oswego and Tigard Public Works department heads that have primary media outreach responsibility for the project The support tasks are as follows • Support project spokesperson(s) • Draft media releases 0 Support media briefings (to be conducted by City staff) 0 Monitor news coverage Al 4 1 4 -Website(s) Develop and post timely Information on the Cities' websites • Provide website content, Including such things as project overview, schedule, general project Information, opportunities for public Involvement, announcing meetings and events Provide downloadable copies of technical studies, means for feedback, and offer ways for stakeholders to contact project team members Al 4 1 5 - Strategic Communications Provide advice to the Cities of Lake Oswego and Tigard on strategic communications, Including the following 0 Messaging 0 Review project communiques 0 Advice to project team Al 4 1 6 - Documentation The results of strategic outreach and communications will be documented, and highlights shared with the project team and Lake Oswego and Tigard policymakers This subtask Includes one additional meeting with staff of the Cities and a presentation to a Joint City Council Meeting to provide a summary of public Input obtained as part of this work H\JOEL_K\TIGARD\PSC amendment 1\1-0 Amendment 1 -Scope-Final doc City of Lake Oswego and the City of Tigard Joint Water Supply System Analysis Amendment 1 Scope of Work January 3, 2007 Page 6 It is assumed that up to two maps or similar graphics will be produced by the as part of this effort for use in presentations and public communications It is further assumed that printing, distribution and web hosting will be providing by the Cities TASK 5— CONDUCT STAFF AND JOINT CITY COUNCIL WORKSHOPS The following additional work has been requested as part of this task A1.5.1. Support for Additional Individual Council Meetings Provide support in the preparation and facilitation of individual meetings with the City Councils of the City of Tigard, the City of Lake Oswego, and the Intergovernmental Water Board Develop presentations, meeting handouts, and meeting summaries for each council meeting, as needed The results Of the financial rate impact forecasts will be presented at one council meeting each for Lake Oswego, Tigard and the Intergovernmental Water Board In addition, one project briefing will be held with the West Linn City Council A1.5.2. Support for Additional City Staff Workshop Provide support for one additional meeting of the Cities' staffs Objectives of this additional meeting will include review and comment on water rights and conservation draft deliverables, review and comment on the additional supply alternatives, and preparation for the additional point City Council meeting Develop presentations, meeting handouts, and meeting summary , as required A1.5.3. Support for Additional Joint City Council Meeting Provide support In the preparation and facilitation of a third point meeting of the City Councils of the City of Tigard and the City of Lake Oswego and the Intergovernmental Water Board Develop presentations, meeting handouts, and meeting summaries for the meeting, as required TASK 6— EVALUATE ORGANIZATIONAL &GOVERNANCE OPTIONS The following additional work has been requested as part of this task H\JOEL_K\TIGARD\PSC amendment 1\1-0 Amendment 1 -Scope-Final doc City of Lake Oswego and the City of Tigard Joint Water Supply System Analysis Amendment 1 Scope of Work January 3, 2007 Page 7 A1.6.1. Development of Matrix of Governance Issues and Alternatives To further refine and clarify the governance issues and alternatives for the Cities, a matrix of the options will be developed This matrix will identify topics and associated options for governance, asset ownership, system management, voting rights, system expansion, buy-out and terms of withdrawal, dispute resolution, capital buy-in, and addition of future partners For each option, relative advantages and limitations will be identified This task also includes one additional meeting with the City Attorneys from Lake Oswego and Tigard to review the matrix and identify the preferred alternatives TASK 7— CONDUCT FINANCIAL EVALUATION The following additional work has been requested as part of this task A1.7.1. Update and Integration of Tigard Water Supply Options The original project scope of work related to a financial and economic analysis'focused on a cost comparison of various water supply options To further support evaluation and decision-making, the City of Tigard wishes to compare these findings to the results of a separate analysis addressing other regional supply options This scope of work provides task elements to update that separate analysis by applying a consistent set of assumptions, and to incorporate and document those findings in project documentation The work conducted for a regional consortium of water service providers benchmarked several supply scenarios for Tigard This study has now revised demand forecasts and created additional alternate scenarios requiring multiple sources to meet Tigard's projected needs This task will update analyses of regional supply costs as alternatives to, and supplements to, the Lake Oswego supply Included in this effort are the following tasks • Update existing supply cost analyses based on a revised Tigard water demand forecast Coordinate with the City of Tigard to validate revisions to assumptions • Develop additional supply cost analyses addressing demands in excess of supply available from Lake Oswego H\JOEL_K\TIGARD\PSC amendment 1\1_0 Amendment 1 -Scope-Final doc City of Lake Oswego and the City of Tigard Joint Water Supply System Analysis Amendment 1 Scope of Work January 3, 2007 Page 8 o Develop additional summary materials to address this broader perspective on supply costs for Tigard o Participate in one project review session specifically related to Tigard's broader supply cost issues A1.7.2. Develop Rate Impact Forecasts The Cities of Lake Oswego and Tigard wish to evaluate potential rate impacts related to the proposed water supply scenarios This scope of work provides task elements to develop updated rate forecasts by incorporating supply costs into a water utility rate forecast model In each case, FCS Group has previously developed such a forecast model, which will be updated and used as a platform for the rate analysis In order to reasonably forecast rates, related water System Development Charges (SDCs) also need to be considered Since this supply evaluation does not consider all system water investments and improvements, an "incremental" analysis is proposed Under this scope of work, supply system capital costs for each scenario will be used to develop unit costs per gallon of demand It will be assumed that SDC revenues will be consistent with that unit cost and annual demand growth These revenues will be considered an offset against capital costs, including related debt service The net remaining costs will be considered to be supported by rates, thus leading to a rate impact determination It should be noted that this analysis will not result in a proposed revision to either City's water SDC, a work product that is more extensive in its content and one that would require further and more detailed analytical and process elements than proposed here This supplemental scope includes the following subtasks Al 7 2 1 — Develop Lake Oswego Rate Impact Forecast This task will develop a current version of the City of Lake Oswego's water revenue requirements model based on current levels of revenues and expenses The incremental capital and operating costs of each supply scenario will be incorporated into H\JOEL_K\TIGARD\PSC amendment 1\1-0 Amendment 1 -Scope-Final doc City of Lake Oswego and the City of Tigard Joint Water Supply System Analysis Amendment 1 'Scope of Work January 3, 2007 Page 9 the forecast to determine rate impacts Four supply scenarios will be developed in this fashion The scenarios include alternatives scenario 2 (stand alone), 3 (senior right), 4 (senior and junior right), and new scenario 5 (senior and junior right with interim Tigard supply of Portland water to Lake Oswego) The City of Lake Oswego will provide necessary budget data, non-supply capital improvement plans, and operations and maintenance (O&M) cost,breakdowns as requested to support the development of this analysis, based on a data request C Update the City's water rate forecast(revenue requirement) model with current budget and system planning information, including the Capital Improvement Plan (CIP) The operating and maintenance budget will be structured to segregate supply and treatment costs from other expenses, in order to introduce differential costs for each supply scenario. • Develop a unit capital cost to project an estimated SDC revenue stream attributable to each of four supply scenarios c Develop a water rate forecast for each of the four supply scenarios (2-5) The forecast will portray total annual revenue requirements, projected annual percentage rate increases and total revenue requirements Based on preliminary findings, rate smoothing features will be considered and incorporated as appropriate to mitigate mayor rate impacts C Document the rate forecast findings in the form of a technical memorandum, and develop appropriate summary materials to present comparative findings Al 7 2 2 — Develop Tigard Rate Impact Forecast This task will apply a current version of the City of Tigard's water revenue requirements model based on current levels of revenues and expenses The incremental capital and operating costs of each supply scenario will be incorporated Into the forecast to determine rate impacts Four supply scenarios will be developed in this fashion The scenarios include alternatives scenario 2 (stand alone), 3 (senior right), 4 (senior and junior right), and new scenario 5 (senior and junior right with interim Tigard supply of Portland water to Lake Oswego) H\JOEL_K\TIGARD\PSC amendment 1\1_0 Amendment 1 -Scope-Final doc City of Lake Oswego and the City of Tigard Joint Water Supply System Analysis Amendment 1 Scope of Work January 3, 2007 Page 10 The City of Tigard will provide necessary budget data, non-supply capital improvement plans, and O&M cost breakdowns as requested to support the development of this analysis ® Update the City's water rate forecast(revenue requirement) model as needed with current budget and system planning information, including the CIP As needed, the operating and maintenance budget will be refined to fully segregate supply and treatment costs from other expenses, in order to introduce differential costs for each supply scenario • Develop a unit capital cost to project an estimated SDC revenue stream attributable to each of four supply scenarios o Develop a water rate forecast for each of the four supply scenarios (2-5) The forecast will portray total annual revenue requirements, projected annual percentage rate increases and total revenue requirements Based on preliminary findings, rate smoothing features will be considered and incorporated as appropriate to mitigate major rate impacts o Document the rate forecast findings in the form of a technical memorandum and develop appropriate summary materials to present comparative findings TASK 8— Prepare Final Report The following additional work has been requested as part of this task Al 8.1. Expand Scope of Final Report The amended scope tasks, described above, will require a significant modification to the development of the Final Report The additional white papers, technical memorandums, and meeting summaries describing the regulations, water rights, strategic outreach, financial evaluations, and additional Council meetings will be summarized and included in the Final Report of this Joint Water Supply System Analysis A decision matrix will be generated to reflect a subjective evaluation of supply options against the values and principles and public input identified as part of Task 4 i-i\JOEL_K\TIGARD\PSC amendment 1\1-0 Amendment 1 -Scope-Final doc City of Lake Oswego and the City of Tigard Joint Water Supply System Analysis Amendment 1 Scope of Work January 3, 2007 Page 11 A1.8.2. Project Management and Administration of Amended Services The original completion date for the Joint Water Supply System Analysis was scheduled for December 2006 However, the scope amendments described above result in a delay of approximately four months, with a new final completion date scheduled for April 2007 This task includes associated project management and administration to meet the extended project deadline H\JOEL_K\TIGARD\PSC amendment 1\1-0 Amendment 1 -Scope-Final doc Attachment 2 car®LL® City of Lake Oswego and Tigard Water Service Area e n 6 $ n e e r Is Joint Water Supply System Analysis Professional Services Fee&Rate Schedule Updated Project Hours and Costs As Amended 1/3/2007(revised 3/9/07) ORIGINAL BUDGET AMENDMENT 1 TOTAL BUDGET AS AMENDED Original Amended Amendment 1 Amendment i TOTAL Amended Total Amended Total Task Original Carollo Subtotal Original Task Relmbursables and Lake Oswego Tigard Cost Relmbursables Amended total las Task Description Carollo Labor SubconzuHant Amendment 1 Carollo Labor Subconsuhant Number Labor Budget Subconsunant Budget Budget Budget Other Direct Charges Task Budget Cost Share Share Budget Budget and Other Direct Budget Budget Charges 1 Evaluate Water Supply Systems(Facilities 240 84 324 Demands Scenarios) $ 29 760 $ 4 000 $ 33 760 $ 10 400 $ $ 50 $ 10 450 $ 8 273 $ 2 177 $ 40 160 $ 4 000 $ 50 $144210 2 Evaluate Facility Alternatives(Intake 400 75 475 Treatment Transmission Wheeling) $ 50 960 $ $ 50 960 $ 9 842 $ $ $ 9 842 $ 5 244 $ 4 598 $ 60 602 $ $ 3 Evaluate Regulatory Permitting and Water 8 52 60 Rights $ 1 456 $ 17 800 $ 19 256 $ 5 848 $ $ 100 $ 5 948 $ 2 974 $ 2 974 $ 7 304 $ 17 800 $ 100 4 Conduct Strategic Outreach and 72 36 108 Communiciations $ 9 776 $ 18 000 $ 27 776 $ 4 128 $ 15 400 $ 1 590 $ 21 118 $ 10 559 $ 10 559 $ 13 904 $ 33 400 $ 1 590 $ 48 894 5 Conduct City Council and City StaffWorkshops 140 88 228 $ 18 320 $ 7 480 $ 25 800 $ 12 584 $ 10 000 $ 1 150 $ 23 734 $ 11 867 $ 11 867 $ 30 904 $ 17 480 $ 1 150 $ 49 534 6 Evaluate Organizational Structures and 68 12 80 Governance Options $ 11 056 $ 4 440 $ 15 496 $ 1 784 $ 3 500 $ 350 $ 5 634 $ 2 817 $ 2 817 $ 12 840 $ 7 940 $ 350 $ 21 130 7 Conduct Financial Evaluation 8 24 32 $ 1 456 $ 26 400 $ 27 856 $ 3 312 $ 32 120 $ 3 212 $ 38 644 $ 16 407 $ 22 237 $ 4 768 $ 58 520 $ 3 212 $ 66 500 8 Prepare Final Report 136 56 192 $ 15 152 8,340 23,492 $ 7 880 2 500 400 10,780 5,390 5,390 $ 23 032 10,840 400 1 1 34,27 Total 1072 421 1 499 $ 137 936 $ 86 460 $ 224 396 S 55-7-7 8 $ 63 520 $ 6 852 $ 126 150 $ 63 531 $ 62 619 $ 193 714 $ 149 980 $ 6 852 $ 3505461 TOTAL Consultant Budget $ 350,546 CITY OF TIGARD, OREGON TIGARD CITY COUNCIL RESOLUTION NO. 07 I A RESOLUTION AUTHORIZING AMENDMENT NO. 1 TO THE INTERGOVERNMENTAL AGREEMENT BETWEEN T1-1E CITY OF TIGARD AND THE CITY OF LAKE OSWEGO FOR JOINT FUNDING OF A WATER SUPPLY SYSTEM PLAN WHEREAS, to explore the feasibility of a possible water partnership, the Cities of Tigard and Lake Oswego entered into an intergovernmental agreement to jointly fund a Water Supply System Plan in March,2006; and W[-IFEREAS,Carollo Engineers,P.C.was retained as the consultant to provide engineering services for the Joint Water Supply System Plan;and WHEREAS, the Cities of Tigard and Lake Oswego have determined the need for additional services and, pursuant to that need, an amended Scope of Work (Exhibit 1, to the Water Supply Plan Joint Funding Agreement Amendment No. 1)has been developed;and WHEREAS,the Cities of Tigard and Lake Oswego mutually agree with the amended Scope of Work and fees as proposed by the consultant for this additional worm;and WHEREAS,the Cities of Tigard and Lake Oswego have agreed to share the cost of any additional services. NOW,THEREFORE,BE IT RESOLVED by the Tigard City Council that: SECTION 1: Amendment No. 1 to the Water Supply Plan Joint Funding Agreement(Exhibit A)is approved. SECTION 2: The City of Tigard's proportionate share of the additional services contained in Amendment No. 1 is$62,619. SECTION 3: This resolution is effective immediately upon passage. PASSED: This J day of. 2007. Mayor City of Tigard ATTEST: t City Recorder-City of Tigard dCertifed to be a tare copy f the original on file at city of Tigar C all. y City Kecor er, City of Tigard Date RESOLUTION N0.07- -;� L) Page 1 RESOLUTION 07-10 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE OSWEGO AUTHORIZING THE MAYOR TO SIGN A FIRST AMENDMENT TO THE INTERGOVERNMENTAL AGREEMENT FOR JOINT FUNDING OF A WATER SUPPLY SYSTEM PLAN FOR THE CITY OF LAKE OSWEGO AND THE CITY OF TIGARD WHEREAS,the City of Lake Oswego (hereinafter,Lake Oswego) and the City of Tigard(hereinafter, Tigard)hereinafter collectively referred to as"the parties" entered into an intergovernmental agreement to jointly fund a study of the benefits and costs of forming a Joint water supply partnership, and WHEREAS,the parties pursuant to a competitive selection process mutually agreed to retain Carollo Engineers,P C (hereinafter,"consultant")to provide engineering services for the j omt water supply study and equally share the costs of this study, and WHEREAS,Lake Oswego pursuant to the intergovernmental agreement is to act as the paying agent and make all payments to consultant as such consultant costs are invoiced monthly for services performed, and WHEREAS,pursuant to the intergovernmental agreement Tigard is invoiced monthly by Lake Oswego for its share of monthly consultant invoices paid by Lake Oswego, and WHEREAS,the parties have determined the need for the consultant to provide additional engineering services not previously authorized and pursuant to that need have requested and received a proposal from consultant to provide such additional services, and WHEREAS,the parties mutually agree with the scope and fees as proposed by the consultant for this additional work and to share the costs in the following proportion Lake Oswego $63,531 and Tigard $62,619 NOW,THEREFORE,BE IT RESOLVED that the City Council of the City of Lake Oswego authorizes the Mayor to sign a first amendment to the intergovernmental agreement for Joint funding of a water supply system plan for the City of Lake Oswego and the City of Tigard,attached as Exhibit `A' Considered and enacted by the City Council of the City of Lake Oswego at a special meeting held on the 20'h day of February,2006 AYES McPeak, Turchi, Grozni.k, Hennagin, Johnson NOES None ABSTAIN None EXCUSED Mayor Hammerstad, Jordan AbAie/livh"a4'AW Ma Ellie McPeak, Council President ATTEST &�10 Robyn Chn tie, City Recorder APPROVED AS TO FORM David Powell, City Attorney Attachment Exhibit 'A'—Water Supply Joint Funding Agreement Amendment No 1 <4 coroLLo City of Lake Oswego and Tigard Water Service Area • n • I n • • r s Joint Water Supply System Analysis Professional Services Fee&Rate Schedule Updated Project Hours and Costs As Amended 1/3107 ORIGINAL BUDGET AMENDMENT 1 - TOTAL BUDGET AS AMENDED Original Amendment 1 Amendment 1 TOTAL Amended Total Amended Total Amended Task Original Carollo Subtotal Original Task Reimbursables and Lake Oswego Tigard Cost Reimbu rsables Amended Total Tas Number Task Description Labor Budget Subconsuttant Budget Carollo Labor Subconsuttant Amendment 1 Carollo Labor Subconsuttant Budget Budget Other Direct Charges Task Budget Cost Share Share Budget Budget and Other Direct Budget Budget Charges Evaluate Water Supply Systems(Facilities, 240 84 324 1 Demands,Scenarios 29 760 $ 4,000 $ 33.760 S 10,400 § $ 50 $ 10,450 $ 8.273 $ 2,177 $ 40,160 S 4,000 $ 50 $ 44.160 $ , Evaluate Facility Alternatives(Intake, 400 75 475 2 Treatment,Transmission,Wheeling) $ 50,960 $ $ 50,960 $ 9.842 $ - $ $ 9.842 $ 5,244 S 4,598 s 60.802 $ $ $ 60.802 Evaluate Regulatory,Permitting,and Water 8 52 60 3 Rights $ 1,456 S 17.800 $ 19.256 $ 5,848 $ S 100 s 54948 $ 2,974 $ 2.974 S 71304 S 17,800 S 100 $ 25,104 4 Conduct Strategic Outreach and 72 36 108 Communiciations $ 9,776 $ 18,000 $ 27.776 $ 4,125 $ 15,400 $ 1,590 $ 21,118 $ 10,559 1 s 10,559 $ 13.904 $ 334D0 $ 1.590 E 47,304 5 Conduct City Council and City Staff Workshops 140 BB 228 $ 18320 $ 7,480 $ 25,8D0 $ 12584 $ 10,000 $ 1,150 $ 23,734 $ 11.867 $ 11,867 $ 30,904 $ 17,480 3 1,150 $ 48384 6 Evaluate Organizational Structures and 68 12 6D Governance Options $ 11,056 S 4,440 s 15,496 $ 1,784 $ 3,500 $ 350 $ 5634 $ 2,817 $ 2.817 $ 12.840 S 74940 $ 350 $ 20,780 6 24 32 7 Conduct Financial Evaluation $ 11456 3 26,400 $ 27856 $ 7,312 $ 32,120 $ 3,212 $ 36.644 $ 16.407 $ 22,237 $ 41768 $ 58,520 $ 3.212 $ 67,288 136 56 192 8 Prepare Final Report $ 15,152 8,340 $ 23.492 $ 7,880 2 500 400 $ 10 780 $ 5.390 3 5,390 $ 23,032 $ 10 860 $ 400 S 33.872 Total 1072 427 1.499 $ 137,936 $ 86,460 S 224,396 $ 55,778 $ 63,520 $ 6.852 $ 126,150 $ 63.531 $ 62.619 $ 193,714 $ 149,980 $ 6,852 $ 347.694 TOTAL Consultant Budget S 343,694 C ' This a ement is executed in triplicate. INTERGOVERNMENTAL AGREEMENT FOR JOINT FUNDING OFA WATER SUPPLY SYSTEM PLAN FOR THE CITY OF LAKE OSWEGO AND THE CITY OF TIGARD This ORS 190 Intergovernmental Agreement is entered into by the following parties: the City of Lake Oswego, an Oregon Municipal Corporation, (hereinafter"Lake Oswego"), and the City of Tigard, an Oregon Municipal corporation, (hereinafter"Tigard"),hereinafter referred to collectively as the"parties". The parties have agreed to enter into this Intergovernmental Agreement pursuant to ORS 190.003 — 190.110, which authorizes units of local government to enter into such agreements. RECITALS WHEREAS,pursuant to the terms of a water sales agreement executed in 1983, the City of Lake Oswego has supplied surplus water to the City of Tigard, and WHEREAS, since 1983 the parties have mutually benefited from this water supply relationship, and WHEREAS, in the past the parties have jointly and individually funded and completed engineering studies and water master plans that have identified the mutual benefits of continuing the existing water supply relationship and jointly developing a long term water,supply partnership, and WHERAS, Tigard desires to partner in the development of a long term source of new water supply for its customers and desires to secure an equity position in such a new water supply, and Lake Oswego is willing to consider a partnership in the development of any new water rights or facilities,which partnership may include shared ownership, and WHEREAS, Oregon Administrative Rules Chapter 690,Division 315 "Water Rights Permit Extensions"adopted on November 22,2005,require municipal water supply agencies with undeveloped water rights to demonstrate to the satisfaction of the State water resources department, their ability to beneficially use undeveloped water or risk losing such rights, and WHEREAS,the City of Tigard commissioned a study entitled"Water Supply Feasibility Project", which was completed and dated September 2005, and WHEREAS,that study concluded that it was feasible for Lake;Oswego to supply water to Tigard on a.long term basis and that partnering with the City of Tigard to develop Lake Oswego's undeveloped water rights could achieve many benefits.including more efficient use of the water resource, improved economy of water supply,protection of existing permitted water rights, improved water supply reliability, and more effective joint response to regulatory challenges, and 1 WHEREAS, the parties have identified the need to conduct a more comprehensive study of the costs and timing of jointly developing Lake Oswego's currently undeveloped water rights and 'that time is of the essence in completing this study: NOW THEREFORE, the parties agree as follows: SECTION 1 —Obligations of the Parties 1. The parties agree to jointly fund'an engineering study that will be comprehensive in scope and that will complete the various tasks as outlined in the Scope of Work attached herein as Exhibit"A". 2. Lake Oswego will prepare the necessary documents to solicit and procure the services of an engineering consulting firm for the study 3. The parties will jointly participate in the review/evaluation and selection process for the engineering consultant 4. Once an engineering consultant has been selected, Lake Oswego will contract with and undertake the day to day management of the work of the selected consultant 5. The parties will jointly participate in the provision of all documentation requested by consultant and necessary for the completion of the Scope of Work 6. The parties will, as required by the Scope of Work,jointly review and comment on all memoranda,draft reports and other documentation developed by the consultant in the conduct of the work 7. The staff of each city will be responsible to communicate all relevant information to their councils as to the progress, status and recommendations of the study. Each party agrees to facilitate the work of the other in this regard as may be requested by each of the other during the conduct of the work Section 2—Allocation of Study Costs and Payment 1. The City of Lake Oswego will be the paying agent for the parties. 2. Amendments to the approved Scope of Work may be made by mutual agreement of the parties. 3. The costs of any such amendments approved by the parties will be allocated to each party equally unless mutually agreed otherwise 4. The City of Lake Oswego will make all payments due the consultant pursuant to the terms of the contract executed between Lake Oswego and consultant. Tigard will reimburse Lake Oswego for one half of the expenditures. Lake Oswego will invoice Tigard monthly coinciding with the work=in-progress invoicing submitted by the consultant. Payments shall be made to the City of Lake Oswego Finance Department, P.O. 369 Lake Oswego, Oregon 97034. Any amount unpaid after thirty(30) days shall accrue interest at the rate of nine percent(9%)per annum until paid. 2 SECTION 3 —Ownership of Work Products 1. Work products generated by consultant pursuant to the Scope of Work will be jointly owned by the parties 2. At the completion of the study, Lake Oswego will provide Tigard with five copies of the final report'in hard copy and electronic format SECTION 4—Dispute Resolution If a dispute arises between the parties regarding this Agreement, the parties shall take the following steps: Step One (Negotiation) Upon written notice provided by one party to the other of a dispute regarding this Agreement, the parties shall first attempt to resolve the dispute through negotiation. The City Manager or another person designated by each of the disputing parties will negotiate on behalf of each entity. If the dispute is resolved at this step, the resolution shall be reduced to writing and signed by each party. Step Two (Mediation) If the dispute cannot be resolved at Step One within thirty(30) days of the date of mailing of the written notice of the dispute, the parties shall attempt to resolve the dispute through mediation. If the parties cannot agree on a mediator,they shall request a list of five(5)mediators from the Presiding Judge of Clackamas County Circuit Court. The parties will attempt to mutually agree on a mediator from the list provided, but if they cannot agree, the mediator will be selected by the Presiding Judge of Clackamas County Circuit Court. The cost of mediator shall be borne equally between the parties, but each party shall otherwise be responsible for its own costs and fees therefore. If the issue is resolved at this step, the resolution shall be reduced to writing and.signed by each party. Step Three(Arbitration) If the parties are unsuccessful at Steps One and Two,the dispute shall be resolved by binding arbitration proceedings pursuant to ORS 36.600 et seq. The parties shall follow the same process as in Step.Two for the selection of the arbitrator. The prevailing party in Step Three shall be entitled to reasonable attorney fees and posts which have been incurred during the Step Three process, as determined and awarded by the arbitrator. In addition, in the event of a petition to the court to for judicial relief related to the arbitration, such as a petition to seek confirmation, vacation, modification or correction of an arbitration award, or in the event of judicial action to enforce an arbitration award, the prevailing party shall.be entitled to recover from-the other party, in addition to costs and disbursements provided by statute; any sum which a.court, including any appellate court, may adjudge reasonable as attorney's fees. In the event the prevailing party in the 3 ATTEST: By: Robyn liristie; City Recorder City of Tigard, by and through its city officials By: Cr 'g Dirksen,Mayor APPROVED AS TO FORM jirfR�amis,-'G�tyAtt'o�mey ATT By 6thyWAeAey, City Recorder 5 arbitration or related judicial action is represented by"in-house"counsel, the prevailing party shall,nevertheless be entitled to recover reasonable attorney fees based upon the reasonable time incurred and the attorney fee rates and charges reasonably and generally accepted in the metropolitan Portland, Oregon,area.for the type of legal services performed. SECTION 5 -Amendments 1. The terms of this agreement may be amended by mutual agreement of the parties. Any amendments shall be in writing, shall refer specifically to this agreement, and shall be executed by both parties. SECTION 6—Notice 1. Written Notice Addresses. All written notices required under this agreement shall be sent by first:class mail to: City of Lake Oswego: City Manager City of Lake Oswego P.O. Box 369 Lake Oswego,Oregon 97034 City of Tigard: City Manager City of Tigard 13125 SW Hall Blvd., Tigard, Oregon 97223 IN WITNESS WHEREOF, the Parties have set their hands and affixed their seals as of the date and year hereinabove written. Lake Oswego has acted in this matter pursuant to Resolution No. 0(0-0/ adopted by the City Council on the day of MOC6 12006. -4 /-.nD7-ron! Tigard has acted in this matter pursuant to Reselatiort N& adopted by its City Council on the 'Z�day of 2006. City of Lake Oswego, by and through its city officials By. jL Judie Hammerstad, Mayor APPROVED AS TO FORM David Powell, City Attorney 4 Exhibit A ��O4 LAKE ps�f OREGON REQUEST FOR PROPOSALS TO PROVIDE PROFESSIONAL ENGINEERING SERVICES FOR AN ANALYSIS OF A JOINT WATER SUPPLY SYSTEM FOR THE CITIES OF LAKE OSWEGO AND TIGARD The City of Lake Oswego, Oregon has selected your firm to submit a proposal for provision of professional engineering services related to an analysis of a joint water supply system for the Cities of Lake Oswego and Tigard. In general, this analysis will require a comprehensive and'in- depth review, analysis and update of previous planning and engineering studies as regards: o Current and forecasted water demands of both City's through"build-out"; o Options available to meet the combined build-out water demands of each City assuming the preferred source of supply is the Clackamas River; o Condition assessment and valuations of existing water utility infrastructure used and. useful in supply water for the two cities; o Water rights and water availability; o Requirements for augmenting, improving and replacing existing utility infrastructure to provide desired levels of service for build-out water system demands as well as current and future drinking water regulations o Environmental and land use permitting requirements necessary for the construction of new water infrastructure to supply, treat and convey build-out water demands o Financing strategies and water rate analyses EXISTING SYSTEM DESCRIPTION Surface water from the Clackamas River is withdrawn near the town of Gladstone, Oregon and pumped via the City's raw water intake and pumping facility through a 27-inch diameter pipeline crossing underneath the Willamette River to the City's treatment plant located just north of Mary S. Young State Parkin the City of West Linn. The City has'permits to appropriate up to 38 MGD from this source in addition to a permit to appropriate up to 3.87 MGD from the Willamette River. 32.3 MGD of the City's Clackamas source is authorized pursuant to a permit Request for Proposal - 1 with a priority date of March 14, 1967. This date is important as it precedes the priority date of the States in-stream water right. 16.1 MGD of this "senior"permit has been certificated. The remaining 22 MGD of Clackamas water permitted for municipal use will need to be developed in order to meet the majority of future water demands for both cities. The City's water treatment plant (WTP) was constructed in 1967 with an original treatment capacity of 10 MGD. An expansion to the plant in 1980 provided an additional 6 MGD of capacity for a current total of 16 MGD. Water treatment operations and processes include prechlorination, coagulant addition and in-line mixing, sedimentation, dual-media filtration,post- chlorination and pH adjustment.. Disinfection is accomplished using liquid sodium hypochlorite, lime and carbon dioxide are used for alkalinity and pH adjustment, PAC is added for seasonal taste and odor control and polymers are used as coagulant and filter aids. Filter backwash that is not recycled is wasted to a series of four(4) concrete lagoons where supernatant is decanted to promote solar drying of alum sludge. The dried sludge is trucked off-site to a landfill. The existing treatment plant is sited within an existing residential neighborhood and currently occupies property totaling 6.05 acres. In the early 1990's,the City acquired property contiguous to the south property line of the plant adding an additional 3.30 acres of land area. Of the 9.35 acres currently under City ownership,plat restrictions-effectively preclude use of the recently acquired 3.30 acres until such time as 75% of the property owners in the plat agree to amend the plat covenants to allow other than single family residential dwellings. Treated water is pumped from the plant through about 37,000 feet of 24-inch diameter steel and ductile iron transmission mains to the City's 4 MG Waluga reservoir. This reservoir serves as the starting point for parallel 16 and 24-inch transmission mains that provide water to the City of Tigard via its Bonita Road pump and metering station. SCOPE OF SERVICES REQUESTED The City desires that the bulk of the effort described in the tasks below be completed by August 31, 2006. The order of the tasks shown below is not meant to imply a serial approach to the conduct of the work nor do they reflect all possible tasks or analyses that may need to be conducted to achieve a thorough understanding of the permitting, design, financing, governance and construction related issues and costs a project of this scope might produce. The Cities desire that the level of analysis be sufficiently rigorous to provide the technical staffs and City Councils information and cost projections that could allow each agency to initiate discussion of a cooperative agreement to implement the recommendations of this study effort, should they so choose. To that end, Consultants are encouraged to include within their proposals any scope items or tasks they deem to have been omitted in this RFP, and that they believe are necessary to successfully complete this work. At a minimum, engineering and planning tasks will include: A. Evaluate existing water supply system - This evaluation will include the following sub- tasks: 1. Site visits to existing facilities e.g., intake facility,,water treatment plant, Waluga Reservoir and Bonita Road pump station Request for Proposal -2 2. Interviews with Lake Oswego plant personnel 3. Review of existing reports, studies and master plans. These include: o "Water System Study for the City of Lake Oswego",November 1974,C112M HILL o "Tigard,Water System Study",January 1992, James M. Montgomery o "Final Report for Evaluation of Water Service With and Without Tigard",July 1994, CH2M HILL o "Water Supply Plan Update"for City of Tigard, August 1994,Murray, Smith&Assoc., Inc. o "Water Treatment Plant Facilities.Plan for the City of Lake Oswego",March 1997, Carollo Engineers,PC o "Pilot Study for Treatment of Water from the Clackamas River",Final Report March 1997, . Black&Veatch/CH2M Hill. o "Clackamas Basin Water Treatment and Supply Options Study", January 1998,Black& Veatch; C112M HILL; McKeever/Morris, Inc. o "Concept Overview and Decision Guidance Document for Water Supply Options",February 2000,Murray, Smith&Assoc.,Inc. o "Regional Transmission and Storage Strategy", July 2000,Montgomery Watson, Inc. o . "Water Supply Master Plan Update for City of Lake Oswego",January 2001, Montgomery Watson Harza,Inc. o "Biological Assessment for the City of Lake Oswego Clackamas River Water Intake Modifications",February 2002,MWH,Inc. o "Cathodic Protection of Raw and Finished Water Transmission Mains",February 2003, Cascade Corrosion Consulting Services,Inc. o "Clackamas River Intake, Structural Evaluation and Finite Element Analysis", September 2005,MWH,Inc. o "Water Supply Feasibility Project for the City of Tigard", September 2005, CH2M HILL, Inc. o "City of Lake Oswego Finished Water,Pumping Surge Control System Review",February 2005,Murray, Smith&Associates,.Inc. 4. Compilation and review of existing raw water quality data, treatment plant performance data from plant database files and other sources. 5. Review of City of West Linn Development Codes, City of Lake Oswego Development Code, City of Gladstone Development Code,Uniform Building Code, Uniform Fire Code and other pertinent regulatory documents. 6. Review of existing record'drawings for construction of the City's intake, treatment plant, transmission mains, etc. 7. Conduct an engineering appraisal:of the existing system including all facilities currently in use to supply surplus water to the City of Tigard. Deliverable: Prepare and deliver six (6) copies of a technical memorandum summarizing the salient information gleaned during the conduct of the above tasks and that relate to and facilitate the conduct of the remaining tasks requested in this scope of work including those additional tasks as may be proposed by the consultant and included in the requested scope of services. Request for,Proposal - 3 B.Review, evaluate and update existing water demand forecasts-Collect and compile population and water demand data from available local and regional sources to understand current water demand behaviors and forecast future demands for each City. Where appropriate and as may be authorized by each City use new demand data for subsequent planning and engineering tasks. C. Evaluate water treatment alternatives—Based upon the conduct of the above tasks, identify and evaluate the range of water treatment technologies and processes that could be implemented to expand present treatment capacity and meet current and,pending regulatory water quality requirements under two capacity scenarios, i.e., 32 MGD and 38 MGD. Identify and evaluate the full range of planning, permitting, design, constructability and operations and maintenance issues associated with each feasible treatment alternative. The effort expended for this task should be sufficiently rigorous to allow the development of budget level estimates of capital and O&M costs and an understanding of operations staffing and skill level needs. D. Evaluate river intake alternatives—Use the information gained in the above tasks to evaluate. alternatives for the City's river intake facility. Conduct the following sub-tasks. ✓ Hydraulically model and analyze the existing intake facility to determine maximum sustained pumping capacity with current wet-well geometry. Use historical stream.flow records or other sources of information to establish minimum river levels for worst case analysis purposes ✓ Identify deficiencies in the existing intake facility relative to plans to expand pumping capacity up to 32 MGD. Determine budget level costs associated with upgrades to achieve 32 MGD pumping capacity ✓ Evaluate the full range of planning,permitting, design and construction issues associated with constructing a new intake facility capable of diverting and pumping between 32 and 38 MGD at or very near the current intake site. Develop budget level costs for anew intake facility E. Evaluate transmission system alternatives—Evaluate the costs to augment existing transmission capacity with parallel pipe lines against the costs for complete replacement of the existing transmission mains. Identify a preferred alternative for meeting potential capacity needs of up to 38 MGD for raw water piping and up to 46 MGD for finished water transmission piping. Conduct routing analyses and constructability reviews to determine preferred routes and to facilitate evaluation of land use and regulatory permitting in subsequent tasks. F. Land use and regulatory permitting—Evaluate the full range of land use and regulatory permitting requirements for tasks B., C., D and E. Sub-tasks will include: ✓ Meeting or interviewing staff from regulatory agencies at an appropriate stage in this study effort to facilitate their understanding of the genesis of the project, its intent and possible schedule. Agencies include but are not limited to ACOE, DEQ, DSL, NOAA Fisheries, ODFW, USFW, Oregon Health Department, Cities of Gladstone, West Linn and Lake Oswego, Clackamas County, Oregon State Marine Board, Oregon State Parks, ODOT region 2A and others as may be appropriate Request for Proposal-4 ✓ Identifying costs associated with securing the necessary land use and regulatory approvals as well as costs for conducting specific studies or assessments that can reasonably be assumed to be required as part of the permit acquisition process. Such additional studies or assessments might include Biological Assessments,Hydrologic,or hydraulic analysis; geotechnical reconnaissance and reporting, attendance at public meetings, preparing land use applications,water rights transfers, etc. Deliverable: Prepare and submit six (6) copies of a technical memorandum documenting the findings, conclusions and recommendations developed at the completion of tasks B, C, D, E and F. Provide a table of contents and tabs for the various sections of the memorandum. Format the memorandum for ease of use and understanding by non-technical stakeholders. G. Conduct financial analysis—Using the information developed through completing the above tasks, conduct a thorough financial analysis of the capital and operating costs for the preferred alternatives for source of supply,water treatment and transmission systems. Subtasks will include: ✓ Valuations of the depreciated replacement or"book value" of existing capital that would remain in use for a joint water supply system ✓ Compilation of budget level capital costs associated with preferred alternatives identified in the above tasks ✓ Development of operating and maintenance costs for preferred alternatives over a 207year . period using a range of discount rates ✓ Identifying alternate scenarios for allocating existing and new capital and O&M costs to Lake Oswego and Tigard based upon each agencies funding capacities, constraints and forecasted rate of water demand growth through build out ✓ Identifying the rate implications of each allocation scenario on each agency ✓ Identifying financing options available for funding capital costs H.Evaluate Organizational Structures—This task will require the consultant to research and identify Oregon statutory and administrative rules governing the creation of new governmental bodies and to identify and discuss the pros and cons of each possible forming mechanism. The general structure, authority and operating characteristics of each possible governmental body should be described and discussed. Potential administrative or operational challenges should be vetted for each option identified. I. Strategic outreach and communications plan—Prepare a proposed outline and schedule of activities critical to a successful outreach and communications plan in support of a possible joint water supply agency between Lake Oswego and Tigard. This plan should at a minimum include discussion of the following: Identifying stakeholders and developing templates for stakeholder specific messages ✓ Strategies for controlling the flow and content of information ✓ Means and methods to engender trust ✓ Developing the "message" Request for Proposal - 5 Deliverable: Prepare and submit six (6) copies of a final report combining all technical memoranda and task findings developed through the completion of all preceding tasks. The report shall be submitted in a three-ring binder, with tabbed sections and an executive summary. Printing shall be double-sided. Figures and tables shall use colored text or graphics where appropriate to improve readibilty and understanding. J. Tasks or Support Provided by City of Lake Oswego/Tigard Staff 1. Provide the consultant copies of all available, relevant utility"as-built" plans, topographical maps, reports, studies etc.,related to the existing and relevant components of water utility infrastructure. 2. Provide the consultant with a copy of the City's hydraulic model (MWSoft H2O Net) including input data files. 3. Provide the consultant with access to each agencies rate models for rate forecasting as needed. 4. Timely review and feedback on all technical memoranda,preliminary reports and findings developed by the consultant-in the conduct of this study., PROPOSAL REQUIREMENTS Consultants are encouraged to provide clear, concise proposals that contain only the information required to respond to this proposal and the Requested Scope of Services. Each proposal shall include the following information: 1. A detailed description of the consultant's approach to each major task element of the project. This description should include a discussion on how essential personnel assigned to any particulartask element will benefit the overall objectives of the project. The description should also include specific examples of recent relevant work which best demonstrates the consultant's qualifications to accomplish the objectives of each task element for the benefit of the project 2. Based upon the preceding Scope of Services,provide a detailed project schedule, which identifies critical paths and milestones for major task elements and the overall project. Show interrelationships between tasks and key points where progress is dependant upon client actions 3. Discuss in detail strategies your firm (team) would employ in an effort to secure permits from Federal/State/local regulatory agencies as required. Identify any unique talents, experience or insights that you feel increase the likelihood of-success in this regard 4. Discuss in detail your approach to developing a collaborative process that would include,stakeholders in the communities of Lake Oswego and Tigard 5. Explain why the cities of Lake Oswego and Tigard would benefit from your services on this project Request for Proposal - 6 r SUBMISSION OF PROPOSALS Submit six (6) copies of the written technical proposal in a sealed envelope to the City of Lake Oswego Engineering Division at City Hall.until 4:00 PM Pacific Standard Time on April 12, 2006. Proposals shall be addressed to: Joel B. Komarek,P.E., City Engineer "Proposal for an Analysis of a Joint Water Supply System—Lake Oswego and Tigard" City of Lake Oswego 380 A Avenue Lake Oswego, Oregon 97034 (503) 635-0270 EVALUATION OF PROPOSALS The proposal selection committee will review and evaluate all technical proposals received based upon the criteria discussed below. Proposals received after the close of the proposal period will be considered non-responsive and will be returned unopened. Each evaluation criterion has been assigned points based on its perceived value to the services requested. Technical Proposal (100 point maximum) A. Firm Qualifications: Past performance of the firm providing services based upon scopes of work similar to that requested herein. Current workload and capacity to commit qualified staff for the duration of this study effort. .(35 points). B. Project Manager and Key Staff Qualifications: Specific experience of the proposed Project Manager and key staff in successfully completing similar studies and investigations. Discuss unique expertise and skills of staff that will benefit the project. Discuss recent examples of how the proposed Project Manager and key staff used such unique expertise and skills to deliver a work product of exemplary quality under tight schedules. (30 points). C. Project Management Plan: Describe the management plan proposed for the conduct of the work requested herein. Key points may include the availability of key personnel immediately and throughout the project, ability to control project schedule and cost and internal quality control/quality assurance procedures. (30 points). D. Experience working with the City of Lake Oswego and Tigard. The City desires to complete the bulk of this study effort by August 31, 2006. The success of this study effort will depend in part on the consultant's experience and knowledge of current water rights issues on the Clackamas River, the utility systems of Lake Oswego and.Tigard,Federal,State and local land use codes and the local political climate. In recognition of this, points will be Request for Proposal - 7 1 ' awarded to proposing firms who have conducted engineering and planning studies for Lake Oswego and Tigard. (5 points). The selection committee will review all conforming technical proposals received in response to this RFP, and based upon the above scoring develop a short list of three (3) firms. These three firms may be invited to oral interviews, anticipated to be held April 20, 2006, if it is the consensus of the committee that interviews are needed to better ascertain qualifications or the consultant's understanding of the project requirements. However, the committee reserves the right to forego oral interviews and enter into contract negotiations with the top-ranked consultant firm,if in the committee's opinion there is a clear distinction in qualifications and project understanding between the top-ranked proposal and the remaining two. Contract Negotiations The City will enter into contract negotiations with the top-ranked firm to confirm project understandings, scope,project deliverables and fee. Should the City and the top ranked firm be unable to successfully negotiate a contract, negotiations with the second ranked firm will be initiated and so on until a contract is successfully negotiated between the City and one of the top three ranked firms. CONSULTANT SELECTION SCHEDULE Item Date Requests for Proposals March 17, 2006 Proposals due from Consultants April 12 2006 Consultant interviews (tentative) April 20, 2006 Select consultant April 24, 2006 Complete final scope and fee negotiations April,26, 2006 Award Consultant contract May 2, 2006 ADMINISTRATIVE INFORMATION Joel Komarek is the City's Project Manager for this project. Please contact'Joel at 503.697.6588 with any inquiries regarding this RFP. The selected firm will be expected to execute a professional services agreement with the City containing the City's standard contract language and requirements concerning General Liability and Professional Errors and Omissions insurance. Attachments: City of Lake Oswego Professional Services Agreement RIJOEL_KITIGARDIRFP_LO-Tigard supply plan study v71 15 2005.doc Request for Proposal - 8