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City Council Packet - 07/13/1982 r TIGARD CITY COUNCIL SPECIAL MEETING AGENDA JULY 13, 1982, AFTER STUDY SESSION TIGARD CITY HALL 12755 SW ASH AVENUE 1. RECONVENE - City Hall 2. ROLL CALL 3. CONTINUED FROM 7/12/82 REGULAR MEETING • Astro Sports s 72nd Avenue Bills o - Redwood Trees • Town & Country Days s Budget Committee 8-19 • Civic Center • Maksym's 72nd Avenue LID Questions, Discussion C 3. CONTINUED FROM 7-13-82 STUDY SESSION r s Discussion of Water Situation 4. COUNCIL COMMENTS 5. ADJOURNMENT P� July 13, 1982 C17YOFTIVARD WASHINGTON COUNTY,OREGON Board of Commissioners Tigard Water District 8841 SW Commercial Tigard, Oregon 97223 Dear Fellow Community Officials: The Tigard City Council requested the opportunity to meet with the Tigard Water District Board in a Study Session, and asked that interested mem- alsoth bers of the Metiger Divited or strict onnoticebfornwhat is certa nlyoanf impore opportunity to meet taut and potentially significant meeting. As you are aware, the City Council directed a study of the community's water situation. Tigard Water District Commissioner Jim Henderson has presented a response by the District to the City's study. Rest assured that the City's next action, depending on the outcome of these discus- sions, will be only after public hearings and strong consideration of a direct referendum to the voters. Regardless of the outcome, mo, he City public feels that the community will be better served by Pen exchange of this information and the varying points of view. I will first ask our Public Works Director, Mr. Frank Currie a i er and former manager of water systems for Registered Professional Engine Walla Walla, Washington and Mercer Island, Washington -- to respond to f next ask the issue' of operational and engineering cost savingsMI l r. WaltMintkeski the engineering consultants who prepared our study, and Mr. Duane Lee of Lee, Engineering, to respond to the questions raised as to operating costs and supply. Finally, I will ask our City Administrator, Mr. Bob Jean, to respond generally and to place the City's concerns into their larger context. That will conclude the City's response presentation and hopefully open discussions between Board and Council members. f t Yours truly, l --L� Wilbur A. Bishop Mayor WA,B:RWJ:Zw I 12755 S.4V. ASH P.O. BOX 23397 TIGARD,OREGON 97223 PH:639-4171 July 13, 1982 CIF TI WASHINGTON COUNTY,OREGON Board of Commissioners Tigard Water District, and Mayor and City Council City of Tigard, Oregon Honorable Persons: The Tigard City Council has been quite clear in its direction to . this Administration that we are to act in the community interest, not simply the City interest. Last October the City Council set as one of its goals "the study of the feasibility and desirability of the two water districts possibly becoming a City Department." Two months ago questions were raised in the community as to the adequacy of overall water supply. The City Council commissioned a professional study of the situation. The City's study showed that there are major unresolved questions as to water supply, both long-term and short-term, and, further, that significant operational cost savings to the community could be possible under either a City Water Department or a merger of Water District and City operations. These events, and our desire to "act in the community interest, brought about the City Council's request to meet with Water ` District Board Members. In the larger context, the City is concerned• with the overall economic health of our community. The Tigard community has been .fortunate in that the amount of industrial and commercial development has exceeded residential development. This kept our cost of urban service among the lowest in the State for communities of our size. Such may not longer be the case unless we act together as a community.- In March, 1982, the City of Tigard was represented as one of the 112 business and government leaders who met in Corvallis for "Operation Paycheck" to define a st--ztegy for improving our State's economy. One of "Operation Paycheck's" recommendations to the Governor was that "primary focus should be placed upon satisfying Goal #9 (Economy of the State)." University of Oregon, Professor of Economics, Ed Whitelaw, suggests that urban infrastructure and the need for structural change in the provision of public services are two of the three major changes needed in Oregon's economy. Most recently, Oregon's U.S. Senator, Mark Hartfield, stated at the Governor's conference on New Federalism that we "cannot solve our problems with short-term or band-aid solutions, but rather that major structural change is required to address tomorrow's needs with limited resources." Public facilities and the economy of our community are a part of the C City's State-mandated Comprehensive Planning responsibilities. Assuring the provision of needed public services and facilities at the lowest possible cost is a City goal. The adequate supply of water at an affordable cost is an important fact of any economic development strategy. 12755 S.W.ASH P.O. BOX 23397 TIGARD,OREGON 97223 PH:639-4171 Page 2 July 13, 1982 Water District Board & Mayor and Council Letter _ Given the City's historical growth pattern and irregular service area boundary, it was more efficient to the community to receive water service from the districts. Now, given growth and annexation, the situation has changed significantly. A structural change in the delivery of water service seems appropriate. It could be much more efficient and less costly to the community for the City of Tigard to be a part of the provision of those water services. The City of Tigard's immediate objective is to provide better service for the same cost, or the same service at a lower cost. The City's long-term goal is to assure the needed public facilities at the lowest possible cost as a part of our efforts to build and encourage a strong Tigard economy. The City of Tigard has not been critical of water district operations. To the contrary, the City has been highly complementary. The City is, however, concerned over water supply. The City is further concerned that the true cost of water in our community is among the highest of all water providers in the area, and that is without equity ownership or control of . a supply of water which is included in all the other's rates. The City Is concerned about water district tax levies, and feels that water utilities should operate on a cost-of-service approach without levying a property tax. The City finds, as to supply, that any of the options available to the District are available to the City. Only the City, however, can fully reconsider the Portland option. Any operational practices available to the District are available to the City. Yet, only City operations or merger of District with City operations can achieve the possible 10%-12% annual savings, totaling over $2 million within the next 10 years. Only with the City does the community have the greatest choice as to supply and the opportunity to significantly lower operating costs. It was the Tigard Water District Administrator who told the Tigard City Council, "The future of the Tigard Water District's long-range supply appears grim and expensive. I don't know what to do about it." The City agrees with Tigard Water District Commissioner Henderson's presentation that: "The responsibility is great when one must guarantee that potable water is provided the citizens at all times." The City further agrees with Commissioner Henderson that: "The City should have some control over the water system within the City." The Tigard Water District admits that it is uncertain about what to do as to supply and cost. The District has not guaranteed a supply. Now may be the time for the City to have "some control" as Commissioner Henderson suggests. The Water District may have served its purpose. If we really want less government and less government spending, then now may be the time to consider a structural change to better serve the community and its future. Page 3 July 13, 1982 Water District Board & Mayor and Council Letter f k�k Quoting again from Senator Hatfield's recent address, "A real major change in direction is occurring. The next few years will be particularly difficult, but also challenging and full of new opportunity, if we are creative and innovative." The City of Tigard wants to know if the water districts are willing to work with us in meeting the challenges ahead and in fulfilling the opportunities available to us. The future of our community, its liveability and economic health, may well depend upon your response. Ve truly ours, Vp Robert W. J an City Admi i trator RWJ:lw l IGATI�.-�i- RD WATER DISTRICT T 5 W COMMERCIAL ST. IGARD.OREGON 97223-6290 PHONE 15031 639-1554 July 9, 1982 To: Mayor and City Council City of Tigard Board of Commissioners Metzger Water District From: Board of commissioners Tigard Water District Subj: Water Report The opportunity for the water district to respond to the allegations and statements of the city administrator regarding water service to the citizens of Tigard is welcome. No Crisis. The first concept that we would like to discuss is that, somehow, the district is in a crisis situation and must make an immediate decision on a long-term source of water supply. The statement by the city administrator that the water district could be without adequate water supplies within 3 or 4 years is totally without truth or foundation. The facts and history do not support a conclusion that the district is in a crisis situation. As confirmed by the independent engineering report commissioned by the city of Tigard, the water system of the Tigard Water District (TWD) is one of the finest in the state of Oregon. This is borne out by the fact that, in the past 11 years, there have been no water restrictions or shortages of any kind in the district. -1- i For the past two years, 100% of the needs of the city of Tualatin have been provided by Tigard Water District. This represents 30% of all water used by the district. Tualatin will be off TWD's system in 1983, thereby releasing additional capacity for our regular customers. Another 1-MGD has been supplied to the city of Beaverton each summer at peak demand time. Compare this, if you will, to other governmental bodies who have had to resort to water restrictions each summer, in- cluding Wolf Creek Highway Water District, Beaverton, Tualatin (internal system) and, yes, even the city of Portland last summer. The internal system of the district is rated superb by any standard of measurement. The district has more than ample storage at 20-MG (including cludin the 2.5-MG tank presently being constructed) , all pipelines either cast or ductile iron, capa- ble of lasting up to 100 years and appropriately sized for increased capacity in the future, minimal water losses within the system, and excellent fire flows which were instrumental in obtaining a Class 3 rating for the fire district. (Water supply accounts for 39% of a fire insurance rating) . Long-Range Water Supply. The long-range plans for water supply to the district have been developed after many years of study and investigation. Indeed, it has been the TWD which has been the leader in attempt- ing to search out and develop new sources of water. It is the firm belief of the Board of Commissioners that a public supplier of water should own its source of water supply. TWD was one of the first, in 1969, to subscribe to 2,500 acre-feet of water from the proposed Scoggins Dam. We were leaders in attempting to develop a regional source of water on the Willamette River. So the study of long-range plans of the district has been a continuing, on-going affair. -2- This past year, about 80% of the district's water supply was imported from the city of Lake Oswego (Clackamas River) _ The capacity of Lake Oswego's treatment plant was recently expanded from 10 to 16 MGD. Also, a 4-MG reservoir was con- structed at Waluga Park which will prove beneficial to TWD as well. The city has encountered some difficulty in meeting the design capacity of the treatment plant, however, these are temporary problems that will be resolved in due time. These types of "start-up" problems are not unusual on most construc- tion projects. We feel that Clackamas River water via the city of Lake Oswego will be the district's primary source of supply for many years in the future. This will vary depending upon the capability of the city of Lake Oswego. We believe the Bull Run back-up will be available as an alternate. if not, the district is prepared to commit funds to improving the capability of Lake Oswego's system so that all (100%) of the district's needs can be provided from this source. Finally, as a future option, the district can develop a new water source utilizing Ranney wells on the Willamette River near Newberg. Land purchase options are now being negotiated. i The district is now at the midway point in a 10-year con- tract with the city of Portland to purchase Bull Run water at Bradley Corner (intersection of Hall, Greenburg, and Oleson Roads) . Without question, there is ample water (20-MGD) from this source to meet the needs of the patrons of the district ( until about year 2020 and, perhaps, beyond. True, this could be expensive water, but the fact remains, there is more than adequate water to meet the long-range needs of TWD. The chart on the next page reveals the requirements and availability of water for TWD. -3- Requirements MGD 1980 1985 1990 1995 2000 Average Daily Demand 2.7 3.1 3.5 3.9 4.2 Peak Day Demand 6.8 7.8 8.8 9.8 10.5 Available Emergency Connections Lake Oswego 8 MGD (Variable) Beaverton Deep Wells 1 MGD Capitol Highway (Portland) Portland 20 MGD Metzger Water District , Tualatin (1983) Future Option Ranney wells at Newberg We are firmly convinced that if the district cannot own a water supply system, then the next best is to have a multi source system and not be dependent upon one source of supply. (See attached letters from Paul W. Hughes, Engineering Geolo- gist, dated July 5, 1980; State Health Division, dated June 24, 1981; and STRAAM Engineers, dated June 21, 1982) . As far as is known, TWD is the only water district in the Portland ( metropolitan area with three (3) independent sources of water (Clackamas River, Bull Run, and ground water) . The city administrator has not made clear how he intends to resolve the long-range needs of the city. No where does he present a concise, well-defined plan. Allegations are made about long-term problems, but no solutions are specifically outlined. It has been inferred that the district may have -4- I I "missed an opportunity" by not participating in the cost of the 60-inch gravity main across the city of Portland. Our studies conclude, and the Lee Engineering Report confirms, that such a venture would be unwise for TWD and result in a "white elephant" for the district. Please observe the attached graph (page 31 of the Lee Engineering Report) . It clearly shows that in 1990, availability of water is questionable from this source and the price is unknown. Not mentioned by the city administrator is the fact that it would cost the water district $7 million to participate and connect to the 60-inch gravity main. To make such a huge expenditure and still not be assured of water would be unwise, indeed. tThe graph clearly shows that the future needs of the water district are best met by either pumped Bull Run water or by developing a new source of water at the Willamette River, either surface or well water. However, these solutions do not preclude the district from continuing to purchase most of its water from Lake Oswego and using Portland water as required. Thus, we believe that both the short-range and long-range plans are valid and sound. Nothing is mentioned by the city administrator about the wholesale cost of water. The obvious question is never asked by interested parties, namely: "why does Bull Run water cost so much?" Here a situation exists where billions and billions t of gallons of free water are available from a watershed donated to Portland by an Act of Congress, where no treatment is required, except chlorination (with ammonia) for disinfection, and the cost of water is twice that charged by Lake Oswego. Lake Oswego treats and filters the Clackamas River water via a modern, multi- million dollar facility and sells only a fraction of the volume + sold by Portland, but still makes a profit by selling water at one-half (1/2) the price of Portland water. We believe that -5- 1 it LEE ENGINEERING INC. -2.20 20c � Leo ® WILLAMETTE RIVER RANNEY COLLECTOR }— 1L ������ �l-�,_WILLAMETTE RIVER Q SURFACE. WATER BULL RUN PUMPED pp t.so u 0 Z 1.20 N C a O AVAILABILITY OUEMONABLE AND �— .80 i� PRICE UNKNOWN AFTER 1990. ---TRASK-TUALATIN QAI BULL RUN GRAVITY ! I� .60 CL SLAKE OSWEGO ,40 .20 i 1983 1985 1988 1990 1995 2000 TIME IN YEARS FIGURE 4.2 ANALYSIS OF TIGARD WATER DISTRICT PROJECTIONS OF COST AND AVAILABILITY OF WATER SOURCES 31 i !I I r' Portland charges an excessive amount for its water to outside users which, in fact, subsidizes the in-city user rates. Water Contracts. All contracts to sell water to other water purveyors are subject to the limitation (by state law) that the water supplier must provide water to its inhabitants prior to selling water to others (outside users) . Therefore, all water sold can only be surplus to the provider's needs. The city administrator's statement that the city can obtain an assured supply of water must be corrected to an "assured" supply of surplus water which may or may not be available at peak demand periods when needed most. Lake Oswego and TV7D have operated very satisfactorily for the past six (6) years without a contract to sell and purchase surplus Clackamas River water. This arrangement has proved successful because both entities benefit with Lake Oswego desiring a return on investment by supplying surplus water and TWD enjoying the high quality water provided by Lake Oswego at very reasonable rates. The two water systems are compatible and no significant problems have been encountered. The dis- trict has signed an agreement with the city of Lake Oswego which will be considered at an early date by the city council. (See attached letter from City Manager Peter Harvey, dated July 7, 1982) . This is a 10-year agreement with the option of extending it for an additional 10 years. The Lake Oswego City Council has been interested for some time in formalizing an agreement with TWD. As mentioned previously, the water district is at the mid- point with its 10-year contract with the city of Portland to purchase surplus Bull Run water. The district has been nego- tiating for the past three years with the city on renewing this -6- contract or a new 25-year contract. We believe the new 25-year contract is very unfair to those entities which desire to pur- chase only a portion of their water from Portland. It includes substantial penalties to be paid to Portland for purchasing either too much water (growth impact charge) or too little water (minimum purchase) . After the water is purchased, Portland still controls how the water will be used. No such penalties are im- posed upon Portland for inability to provide a "firm" supply of surplus water. It is noted that no such restrictions, minimum purchase, or penalties are imposed by Lake Oswego. After lengthy deliberations, the Board of Commissioners, on May 11, 1982, accepted the terms of the 25-year contract, with an effective date of July 1, 1987 which is essentially when the present 10-year agreement expires. It is unfortunate that at this point in the negotiations, the city administrator apparently has indicated to the city of Portland that the city of Tigard might take over the water dis- trict. The impact of this action appears to have negatively affected the district's position. There are no known provisions in either the 10-year con- tract or 25-year agreement to suggest or require that present agreements must be terminated or superceded prior to effecting renewal. The renegotiation period may have ended on June 25, 1982, but that is an independent issue as to the effective date of the new contract. Thus, it is believed that the district has complied fully with all renewal provisions in both contracts and this is concurred in by competent legal authority. This is a fundamental issue which resolves around the city's right to assess a penalty if a contract is not renewed in a timely manner. The stated purpose of this provision is to assure the city of a bonafide customer in the future so that -7- appropriate expansion facilities can be constructed. We have advised Portland, by signing the contract, that the district desires and agrees to continue purchasing Bull Run water, not only for the next 5 years, but for 25 years thereafter. If the 30-year period is a problem for the city, the board has expressed a willingness to sign for only 20 years on the new contract with a total commitment of 25 consecutive years. What are the specific provisions in the present 10-year contract that are preferable to the 25-year agreement? a. 150% Limitation. The 10-year contract states: "City agrees for the term covered by this agreement, water rates to outside purchasers will not exceed a maximum of 150 percent of rates charged to city users." This clause places a ceiling on water rates to TWD. Such a provision is not in- cluded in the 25-year agreement and water rates are dependent upon a complex Portland-drafted formula which could result in substantially higher wholesale water rates. b. Growth Impact Charge. The 10-year contract contains no provisions for such a charge and one can buy as much water as deemed necessary without penalty. C. Basis for determining minimum purchase. The 10-year contract specifies that the minimum purchase will be based upon the lowest percentage of Bull Run to the total used at the low- est rate of the last three (3) years. The 25-year contract utilizes the average amount of Bull Run over the last five (5) years. We prefer the former method of computation. If the city of Portland is correct about the renewal pro- visions, the worst that can happen is that the district will have to pay a penalty, but will not, necessarily, be denied this source of water supply. -8- 1111311 11 1,11 M!1111 Finally, the city administrator states that the long- range problem is not addressed by the district. He fails to address the problem himself and seems to believe that one swish of the pen will cure all long-range problems, even though such action, approving an unfair contract, could be detrimental and undermining the best interests of the citizens of Tigard. Why' does Portland desire TWD as a customer? Simply stated, they like money. If the Bull Run water is not sold to someone, it merely flows from the Sandy River to the Columbia River to the ocean and no revenue is gained. Carl Goebel's statement that there may not be enough water in the l Bull Run watershed for TWD if not subscribed to immediately is not supported by any known facts. The supply capabilities of the Bull Run watershed are almost unlimited for the projected usage in the distant future. Compared to the total volume of water used in the Portland metropolitan area, TWD's consumption is obviously insignificant. While the quantity of water may be insignificant when compared to the whole, TWD's contribution to Portland's coffers would be substantial if we used 100% Bull Run water, estimated at $1.5 million this next year (with Tualatin on our system) . This would make TWD the second highest producer of city income of the 32 outside entities that purchase surplus water from Portland, with only Wolf Creek Highway Water District contribut- ing a higher amount. TWD would be a very lucrative customer, indeed, for the city of Portland. Real evidence of Portland's desire to main- tain existing customers and obtain new accounts was clearly demonstrated when Beaverton opted for the, Jpper Tualatin River -9- 1i for its primary water supply_ Commissioner Ivancie made his personal plea at a Beaverton City Council meeting for continued purchases of Bull Run water. When it appeared that governmental bodies in east Washington County were serious about developing a new source of water on the Willamette River, Portland quickly agreed to renegotiate the existing adverse contracts for water purchases. Therefore, TWD is not negotiating from a position of weak- ness or desperation that we must sign a contract under any and all circumstances. If the concept .-is "water at any price", then it can be had, but we do not feel this is in the best f interests of the patrons. Percentage of Bull Run water to be purchased. The city administrator and Carl Goebel contend that a percentage of Bull Run to the total used must be designated by the purchaser. The contract makes no such requirement. We challenge anyone to predict accurately what percentage of Bull Run water will be used during the next 25 years. It cannot be I done. We have agreed to abide by the contract in which the percentage is based upon historical data, the average of the last five (5) years. What better method is there than historical F data? The point is rather unimportant, anyway, because Portland ! has the right to assess a penalty on either side of the percentage x r' figure. Water Costs. About $750,000 has been budgeted for the next fiscal year to purchase surplus water, primarily the lower priced Clackamas River water. If additional supplies of Bull Run water are re- quired (or the primary source of water changed to Bull Run) , substantial increases in retail water rates would be necessary. _ ill -10- Lake Oswego charges 304 per 100 cubic feet while Portland charges 634 per 100 cubic feet which will increase to 714 on April 1, 1983. Utilizing 100% Bull Run water would double the wholesale water costs to about $1.5 million. Since the entire budget for FY 1982-83 is only $2.5 million, such a significant increase in wholesale water costs would affect retail rates dramatically. In conclusion, the economies referred to by the city administrator by a transfer to the Bull Run system are non-existent. Water Rates. As Administrator Robert Santee advised the city council at a public meeting on May 24th, the water rates to patrons as shown on page 16 in the Lee Engineering Report appear to be distorted in order to show that TWD ranks in the upper third in the region. The report fails to make a comprehensive study of water rates in the area. (The author indicated that certain data were unavailable. It took 15 minutes to acquire the following information) : COMPARABLE MONTHLY USER RATES 1100 Cubic Feet (Average Monthly Consumption) Tigard Water District: $4 for 400 C.F. +754/100 =$ 9.25 Metzger Water District: $3.10 for 200 C.F. + 904/100 = 11.20 (+21%) Wolf Creek Hwy W. D. : $5.07 for 0 C.F. + 744/100 = 13.21 (+43%) Lake Grove Water Dis: $5.50 for 0 C.F. + 754/100 = 13.75 (+49%) West Slope Water Dis: $6.25 for 500 C.F. + $1.25/100 = 13.73 (+49%) *City of Beaverton: $8.00 for 100 C.F. + 684/100 next 700 C.F. + $1.18/100 thereafter = 16.30 (+76%) City of Tualatin: $6.88 for 0 C.F. + 904/100 = 16.78 (+81%) City of Durham: $7.75 for 0 C.F. + 904/100 = 17.65 (+91%) *Effective July 12, 1982 -11- Note: The rates of Wilsonville and Sherwood cannot be compared with the entities noted on the preceding page because they rely solely upon ground water for their primary supply with no sur- face sources of water. Nor can the rates of Portland or Lake Oswego be included in the comparison because they are sole owners of their source of water supply_ After reviewing these statistics, one will arrive at an entirely different conclusion than presented in the engineer- ing report. By far, TWD has the very lowest rates in the area of those Who must import water. The city administrator states that "on a true cost rate , basis, both Metzger (MWD) and Tigard water districts have among the highest water rates in the area. (He is referring to an inclusion of the tax rate) . Assuming one owns a single family dwelling assessed at $60,000 and combining the property taxes due plus the user rates noted on the previous page, TWD and MWD would have a total monthly user rate as follows: (The tax rate in TWD is 45C per $1,000 while in MWD the tax rate is $1.40 per $1,000) . User Rate Taxes Total TWD: $ 9.25 + $2.25 = $11.50 MWD: $11.20 + $7.00 = $18.20 The facts support the conclusion that TWD still has the lowest rates in _the area even when including taxes, contrary to the city administrator's statement. While MWD shows a substantial increase in water rates this year by including taxes, this is a one-time phenomenon. Last year, MWD's tax rate was only 24C per $1,000, but a recent bond issue for the purpose of connecting to the 60-inch gravity main -12- i from Portland made a substantial increase in taxes necessary for one year only. Next year the tax rate will decrease sig- nificantly. This recent increase in Metzger's tax rate proves that it costs money to make capital improvements and one cannot have it both ways. It is nonsense to infer that one can absorb these huge expenditures and, also, reduce water rates. It is an exercise in futility to attempt to predict water rates 10 years hence. There are too many variables. Water rates in TWD were increased 14% two years ago and no increases were included in next year's budget. , Perhaps TWD will have to increase rates in the future, like everything else in our economy. However, the district is starting from a very low base and it is important to note that as the user rates increase, the tax rate will decrease because annual payments on bonded debt will decrease. The district will have paid off all present debt in only 14 years. i Interest on this bonded indebtedness varies between 2-3/4% to 6-3/4%. The financial condition of the water district is excellent f i as recent audit reports will attest. The physical assets of J. the district have been constructed to account for growth and � expansion which will keep future capital improvement expendi- tures to a minimum. The water district owns land for future reservoir- sites and both the administrative and shop offices were expanded and modernized just a few years ago. No rental fees are paid on either facility. -13- Cost of Operations. Admittedly, some savings could be made by economies-of- scale by utilizing common equipment, etc. However, it is the water districts that possess the new, modern equipment and have the highly skilled, qualified employees aboard to operate their systems. The city would definitely benefit under this arrangement. The statement by the city administrator that "city opera- tion of water services could save the community 11-12% on annual operations, or over $2 million in the next ten years" is totally inaccurate and not supported by the facts. Candidly, the city { does not have a history or reputation for being efficiently operated. The cost scenarios for operations as prepared by Lee Engineering in a letter dated June 23, 1982, are basically faulty. In comparing the staffing levels and costs of TWD versus the city of Tigard to operate a water system, the con- sultant obviously lacks an accurate conception of the operation and management of a water district. The consultant's simplistic proposal is to reduce everyone's salary. However, this would not only create an employee morale problem, but the level of service to the citizens would materially deteriorate. The city's plan, obviously, is to provide a maintenance crew only, �_. with no capability to perform any construction or heavy-duty work. Apparently, the city intends to contract to private enterprise all work to be accomplished. These additional costs are not shown in the report, nor is the lost income shown. Both items would necessarily have an impact upon city of Tigard water rates. Operating a water system is entirely different than having employees paint crosswalks or install traffic signs. {This -14- s comment is not intended to be derogatory toward city employees because there are some qualified, dedicated persons at the city) . The responsibility is great when one must guarantee that potable water is provided the citizens at all times and fire flows are available to fight fires. The retaining of highly skilled employees is mandatory. TWD does all of its own pipe-laying and construction work. Employees are trained and knowledgeable in all facets of the waterworks industry, including piping, pumps, valves, reservoirs, hydraulics, water quality, telemetry, etc. Specific discrepancies in the cost analysis include no provisions for a registered, professional engineer to accom- plish all engineering work for the city. (By law, all public capital improvements must be designed and supervised by a certified engineer) . While the Director of Public Works is E t a qualified engineer, he would not be designing pipelines, pumps stations, and reservoirs which are now being accomplished in-house by TWD. All of these tasks would have to be delegated to a consulting engineer, at high cost, similar to road and e i sewer projects now being designed for the city. During FY 1980- [ 81, with in-house engineering, the district gained $35,000 for i engineering fees from developers. Another $15,000 was saved by designing all water district pipelines by the staff. Addi- tionally, about $50,000 was saved in engineering fees on the t 2.5-MG reservoir now under construction. (About $80,000 was l saved in 1976-77 on the 10-MG reservoir, located at S. W. 125th and Bull Mountain Road, with engineering accomplished by f the staff) . While the analysis shows a potential savings by eliminating the engineer and one-half the salary of the admin- istrator, it does not reveal that elsewhere in the total budget that additional expenses will be incurred .for lack of qualified personnel on hand. -15- By having highly skilled personnel on board, the district made, in FY 1980-81, over $49,000 by inspections of developer's projects. Also, by performing some developer's work, the dis- trict's employees gained another $9,600 in wage reimbursement. This will not show up in the budget category of staff salaries, but certainly will affect the total budget figures. One of the most glaring errors in the report is the omission of a clerk, or billing person to perform all the necessary tasks to operate the office. This is a full-time job and a bookkeeper has enough to do without being responsible to handle cash re- ceipts, open mail, bill, bank deposits, delinquent accounts, coordinate shut-offs and ons, etc. i Finally, any figure used in the report for TWD should be reduced by 30% because the city would be withdrawing only 70% i of the water district. I Utilizing the figures noted above, a more realistic, revised comparison of the costs to operate the water district is summarized below: F PERSONNEL COSTS ! Tigard Water District City of Tigard s $423,000 (from Lee Report) $257,800 (from Lee Report) -126,900 (less 30%) +15,000 (plus engr. fees - 35,000 (less engr. fees for city projects) ( from developers) +10,200 (billing clerk) - 49,000 (less insp. fees from developers) - 9,600 (less wage reimb. from developers) Total: $202,500 $283,000 All of a sudden, the savings referred to by the city administrator and consultant have turned into a deficit, in addition to a marked decrease in the quality of service pro- vided the citizens. -16- Cost of city to get into water business. Omitted in any report by the engineers or the city administrator is the potential cost to the city to get into the water business which would include withdrawing those portions of the city located within the water districts. The following important ORS is quoted: t 222.510 Procedure for division of installations on withdrawal of part of water district;nppeal;joint operations.(1) Wilt", a part of a water district, including a water control district or a domestic water supply corporation. is thus withdrawn. the district shall, by action of its governing body, turn over to the city,of which the withdrawn area becomes a part,-its water mains, service installations, structures, facilities, improve- ments and other property in the area with- drawn frrnn the district that are,not necessary for the operation of the remuindei-of the wa- ter control or water supply system of the dis- trict. All water mains, service installations, reservoirs, structures, facilities, improve- ments and other property which are necessary for the district to continue maintenance and Operation of its water control or water supply system shall remain the property of the dis- trict, regardless of whether they are located within or without the city. If the city is not satisfied with such property division made by the district governing hody, or if, within 90 days from the effective date of the withdraw- al, the district governing body has failed to make a division, the city's governing body may request the county court or board of county commissioners of the county in which the property is situated to decide upon such a division. —17— simply stated, in the division of the assets, the city would receive only those facilities not required by the two water districts to operate the remainder of each district. The unincorporated areas in Metzger and Bull Mountain and the city of King city will not be denied their rightful claim to all assets to continue operations. In the case of Metzger, the city would receive nothing except distribution mains as the remainder of the district would require all existing trans- mission mains and reservoirs to continue operations. A few reservoirs would be deeded to the city from TWD, but all trans- mission mains and the 10-MG reservoir would stay with the remaining district. r ( It would appear prudent for the city to have a comprehen- sive study made on the costs of assuming control of a water system in view of the limited assets which will be deeded to r the city. The city council would certainly be gambling with the city's future for an adequate water supply if these real issues were not addressed prior to making a decision. Both MWD and TWD have independent, integrated water 1 systems, not easily dissected. Further, for the most part, the two systems are not compatible for easy integration because of different hydraulic levels. TWD is incapable of serving north of Highway #217 without pumping. MWD has difficulty i serving south of Highway #217 because of the extremely high ( pressure. Pressure-reducing valves would have to be installed j which negates the possibility of dependable looped systems. I In conclusion, it is hoped that the city council will thoroughly explore and investigate all issues and ramifications on any course of action proposed for future water service to the common citizens of both water districts and the city. Finally, it is believed that any plan or major change in the administration, management or operation of the water districts should be referred to the citizens by referendum. -18- i Conclusion and recommendations. a. Both TwD and MWD would be strongly opposed to any division or dissection of either water system. It is believed impracticable and would result in a needless duplication of facilities at extremely high cost to the citizens of Tigard. Such action would require hundreds of thousands of dollars just to attain the same level of service to the patrons. b. It is believed that, at some date, the city should have some control over the water system within the city. This could be accomplished in an orderly manner with elected officials and citizens involvement toward a satisfactory solution. t In this regard, TWD would not be opposed to studying the formation of a WATER COMMISSION or BOARD, similar to that practiced at McMinnville, Eugene, and Tacoma, in which the water system is an integral part of the city(s) , yet indepen- dent. The annexation goals and planning objectives of the city(s) could be realized and coordinated via this commission. In this concept, the water district could be assured that funds derived from the water system are not syphoned off to support other city functions. For example: 7% of the gross receipts of the Bureau of Water Works is diverted to the General Fund to support other activities in Portland. We would envision that a 5-person governing body would consist of representatives appointed by the city of Tigard (2) , city of King City (1) , the unincorporated areas (1) and, perhaps, another city, such as Durham (1) . This apportionment would not give any one entity control of the entire board. c. As for Metzger Water District, it would be best that they be left alone. They have an outstanding water system, well-governed and managed. At some point in time the cities -19- i surrounding Metzger will arrive at the best solution for those citizens. But citizen involvement is the key and they are getting such action from the CPO's. Why should the citizens be unnecessarily upset? They are happy. The TWD stands ready to explore any and all suggestions toward a satisfactory solution which will truly benefit all citizens in the area. Respectfully submitted, BOARD OF COMMISSIONERS TIGARD WATER DISTRICT Presented by: Commissioner Jim L. Henderson -20- I P.W.HUGHES & ASSOCIATES - INCOw►OwnTCo 1590 WOODLAND TERRACE .LAKE OSWEGO.OREGON 97034 Telephone 503— 635-2523 July S. 1980 Mr. Robert E. Santee, Administrator Tigard Water District 8841 S.W. Commercial Street Tigard, Oregon 97223 Dear Mr. Santee: ' I recently had the opportunity to review your June 1980 Tigard Water Dis- trict Water Supply Study. There is one significant factor to be consid- ered, which was not mentioned in your study. The water transmission system from the Bull Run watershed passes through several areas of high geologic hazard potential. The system is vulner- able to landslides and potential volcanic and related seismic hazards. it simply is.not prudent to rely solely upon a single water source under these conditions. Sincerely, .a 4. Paul W. Hughes, Engineering Geologist PWH/ah GEOLOGY — HYDROLOGY i CRS GROUP ENGINEERS. INC STRAAM Division p....a.7 C.E;_. 9-._ June 21, 1982 Mr. Bob Santee Tigard Water District 8841 S.W. Commercial Street Tigard, Oregon 97223-6290 Subject: Lee Engineer's Study for the City Dear Bob: Thanks for the kind note and the copy of the subject study. It seems to state what we know and no new ideas emerge. I know of several competent economists who will argue that water supply does not have much impact on growth potential of an urban area, and that it certainly doesn't control growth. Their point is that it is the area's economy that brings people in, not water, sewer, parks, or the like. I think you have several options for a long-term supply that aren't foreclosed by your negotiation position with Portland. Although your job is to deliver water efficiently, the fact that water may cost a bit more in the TWO than elsewhere nearby isn't really going to impact growth rates, for water is such a cheap commodity in our personal budgets. The report acknowledges yours and the Commissions accomplishments, and we at STRAAM are pleased to have had our part in them. Very truly yours, CRS Group Engineers, Inc., STRAAM Division `Gilbert R. Meigs, P.E. Senior Vice President GRM:cag Department of Human Resources HEALTH DIVISION V=,ow^—E. 1400 S.W. 5th AVENUE, PORTLAND, OREGON 97201 PHONE P29-5954 Wd June 24, 1981 Bob Santee, PE Administrator Tigard Water District A941 SW Cnmmarr.ial St. Tigard, OR 97223 RE: W - Tigard Dear Bob: -12-81, and the magazine article Thank you for your letter of 6 on Robert Harris' efforts to preserve the quality of drinking water in the US. Like you, I was also surprised by the state- ment that no granulated activated carbon filtering systems had been constructed in the US. This seems strange since Lake Oswego, Oregon City, Corvallis, Eugene, Medford, and several other cities in Oregon presently utilize activated carbon for taste and odor control. Perhaps Mr. Harris was referring only to plants where activated carbon was installed exclusively for removal of trihalomethanes. I was pleased to hear your comments on the prospects for water in east Washington County. I agree that the availability of additional water from Lake Oswego, Hillsboro/Forest Grove, and Bull Run should improve the situation greatly. I also agree that properly designed Ranney Wells on the Willamette have good potential if the Tigard WD ever needs an independent source. Your proposal for living within your means and concentrating on internal improvements such as increasing the storage capacity up to 20 MG, makes a lot of sense. I appreciate your consideration in keeping us posted on what's going on in your area. Best personal regards, A.D. Smythe, PE Manager, Plan Review ADS:do AN EQUAL OPPORTUNITY EMPLOYER Mailing Address:P.O.Box 231.Portland.Oregon 97207 5-26 REV. 1-79 EMERGENCY PHONE(503)229-5599 CITY OF LAKE OSWEGO CITY MANAGER'S OFFICE July 7, 1982 Robert E. Santee, Administrator r Tigard Water District 8841 S.W. Commercial Street _ Tigard, Or 97223 Dear Mr. Santee: The agreement for water service between the Tigard Water District and the City of Lake Oswego was discussed by the City Council of Lake Oswego at their regular meeting of July 6, 1982. The City Council has been interested for some time in formalizing an agreement with the Tigard Water District. Over a year ago the Council designated a Council sub- committee to look at water and sewer rate structures as well as water and sewer agreements. The Committee has spent most of its time evaluating rate structures and the agreement with the City of Portland for sewage treatment. The Council Subcommittee, although desirous of formalizing an agreement with the Tigard Water District, felt the informal arrangement was working so well that other priorities took precedence. The City Council, at the July 6th Council meeting, indicated they were desirous of entering into an agreement with the Tigard Water District, and because the Council Subcommittee had previously been charged with the responsibility of working on such an agreement, referred the agreement to the Subcommittee for study and report back to the entire City Council. The Council Subcommittee will meet in the very near future. I will keep you advised of their deliberations. Very truly yours, Peter C. Harvey City Manager PCH:hb 348 NORTH STATE STREET/POST OFFICE BOX 369/LAKE OSWECO,OREGON 97034/(503)636-3601 July 13, 1982 To: Mayor and Council City of Tigard, Oregon and Board of Commissioners Tigard Water District and Board of Commissioners Metzger Water District From: Frank A. Currie, P.E. Director of Public Works,- c,, City of Tigard, Oregon i �j The City staff of the City of Tigard has no quarrel with the operation and maintenance of the Tigard Water District system. In fact, in my experience I would rate this system high indeed and certainly would concur that it is a system the Tigard Area community can point to with pride. However, there are substantial savings available through consolidation of the maintenance and operation of the system itself, fleet management for replacement and maintenance of vehicles and equipment, administrative and engineering services. PERSONNEL: To start off with, it has been our observation, supported by the City's study and by comments of Mr. Santee, that the major line replacement and capital improvements which can be accomplished by the district, have, for the most part, been accomplished. I agree with the Tigard Water District's philosophy that appropriate crew levels be maintained to allow the District to do some of its own construction work within the dictates of state statues. In fact, the City Council has seen fit in recent years to allow some expansion in the City's Public Works and Engineering crews to afford the same flexibility and diversity of operation which allows the Water District to be able to accomplish more than mere maintenance. Through consolidation, this same flexibility can be had with fewer people C - - a savings to the community! h EQUIPMENT: The City and the Water District both maintain a rather large inventory of equipment relative to the number of employees. Again, the philosophy is the same; with limited manpower, versitility in equipment is essential. The Water District operates under this premise as does the City Public Works Department. The City is, however, starting a fleet management program made possible by a most recent reorganization of the City labor force which created a badly needed middle management level. Fleet management, under consolidation, w,,ald eliminate the need for the Water District and the City to duplicate equipment purchases, some of which by necessity will sit idle for long periods of time. It is a misconception that only the Water District has new modern equipment and highly skilled employees to operate that equipment. In recent years, the City Council has made heavy investments in equipment. At any rate, fleet management would charge the cost of equipment to ( appropriate use areas and again result in substantial savings to the community which is served by both entities! ADMINISTRATION AND ENGINEERING SERVICES: Obvious savings in the area of administrative, finance and billing are available through joint water/sewer billing, combined utilities, other housing costs and coordinated computer and word processir_g operations. As previously mentioned, the City Council has seen fit in this last budget year to provide the Public Works Department with sufficient engineering staff to allow us to add surveying and design capabilities to our inspection, recordkeeping and general overseer operations in engineering. The City's Engineering Department is staffed with experienced technicians and a registered professional engineer with many years of practical water system management and operation experience. and is more than qualified to provide the needed engineering services -- again a savings to the community! FAC:lw