HomeMy WebLinkAbout5.724 Original ContractSPECIAL SERVICE AGREEMENT #1 BETWEEN
CITY OF PORT ANGELES
AND
DRY CREEK WATER ASSOCIATION. INC.
This special service agreement is made and entered into this 1st of December 2009, by and
between Dry Creek Water Association, Inc. (hereinafter called the Association) and City of Port
Angeles (hereinafter called the City).
, WHEREAS, on May 3, 2005, the Association and City signed an Interagency Water Facilities
Agreement, which may hereafter be called the IWFA; and
WHEREAS, the Association and City desire to enter into this Agreement to address provision of
potable water to current customers of the Association located within the City limits; and
WHEREAS, the Association and City desire to enter into this Agreement to address the sale to
the City of certain Association facilities located within the City limits; and,
NOW, THEREFORE IT IS AGREED between the parties hereto as follows:
1. Incorporation:
a. The IWFA is incorporated herein by this reference.
2. Special Service To Be Provided By The Association:
a. Pursuant to the IWFA, the City requested a special service agreement with the
Association for properties inside the city limits, south of Hwy 101, and west of
Eclipse Industrial Parkway, which may hereafter be referred to as "the special
service area."
b. This special service agreement specifies the conditions and charges for service
pursuant to Exhibit "C" of the IWFA.
c. The parties agree that the special service area qualifies for a special service
agreement under the conditions stated in the IWFA.
d. The water customers within the special service area shown in Exhibit "D -2" of the
IWFA are and shall be customers of the City's water utility. The Association
agrees to provide and be responsible for potable water service to and as required by
the City's water customers within the special service area shown in Exhibit "A."
As consideration for the special service to be provided by the Association pursuant
to this agreement, the City shall pay the Association compensation as provided in
Section 6 below.
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5.129
3. Sale of Facilities:
a. The City, as part of this agreement, is purchasing a portion of the Association's
water system (excluding the distribution main lines) currently serving properties
within the City limits located south of Hwy 101 and east of the special service area
depicted in Exhibit "D -2" of the IWFA. The facilities to be transferred, the
purchase price for the facilities, and the customers served by the facilities all are set
forth in Exhibit "B ", which is attached hereto and made a part of this agreement.
b. For purchase of the facilities, the City agrees to pay to the Association the sum of
$83,253.32, as detailed in Exhibit `B "- Calculation of Purchase Terms, plus interest
from and after December 1, 2005, at 7.45% per annum to the date it shall become
due in accordance with Section 3.c. below. The parties agree to pursue in good
faith closing of the transaction on or before December 31, 2009.
c. Payment shall become due on the date, the Association provides to the City and the
City accepts a bill of sale and other documents as appropriate to convey to the City
all right, title and ownership in and to the said water system.
d. The water customers identified in Exhibit "B" are and shall be customers of the
City's water utility. The City agrees to provide and be responsible for potable
water service to and as required by the City's water customers identified in Exhibit
«B„
e. The City and the Association acknowledge that water service to the customers
identified in Exhibit "B" must be disconnected from the Association's supply lines
and then reconnected to the City's supply lines. The parties agree that they shall
coordinate the work of disconnection and reconnection so that the customers
experience the shortest possible loss of water service.
4. Term:
a. This agreement shall become effective on this 1st day of December 2009. It
shall remain in effect until terminated as provided below.
5. Duration and Termination of Aereement:
a. This agreement shall continue in force and effect until terminated in accordance
with the following procedures:
The Association may terminate this agreement at any time upon receiving the
consent of the City. After December 1, 2014, the City may terminate this agreement
at any time by giving the Association at least sixty (60) days notice prior to
termination. Additionally, after December 1, 2014, the Association may terminate
this agreement upon one hundred eighty (180) days written notice to the City when,
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in the reasonable opinion of the Association, the preconditions set forth in Section
11 of the IWFA are no longer applicable to this agreement. In the event, at the
expiration of the notice period, the City shall proceed to implement service in the
manner and subject to the time frame as depicted in Section 6 of the IWFA.
6. Payment for Water to Special Service Area:
a. From and after the effective date of this agreement, the City shall pay to the
Association, a monthly amount to be calculated in accordance with the Exhibit "C ",
which is attached hereto and incorporated herein by reference. The parties agree
that the Association is entitled to payment from the City of the 20% surcharge as
depicted in Exhibit "C" for the period included in billings beginning with May 2005
through December 2009, together with interest on the surcharge due at the rate of
7.45% per annum from the date of each original billing to the date paid. The
Association shall recalculate past due 20% surcharges, plus applicable interest
thereon, and submit an invoice to the City therefore within ten (10) days of the
effective day of this agreement. The balance due shall be paid on of before
December 31, 2009. The time period May 2005 through December 2009 is included
in this agreement for reimbursement from the City to the Association as Exhibit "C-
1 ".
7. Chances to Aereement:
a. Changes in the terms and conditions of this special service agreement may be made
at any time upon the mutual consent of both parties. Either party desiring a change
shall give the other party written notice. The notice shall contain the desired
changes and a full explanation of the reasons for the changes. If, the parties hereto
cannot mutually agree to the proposed changes, the agreement shall remain
unchanged.
8. Hold Harmless:
a. The City agrees, upon completion of the transfer of the water facilities, to
indemnify, defend, and hold harmless the Association and its officials, employees,
and agents, from and against any and all claims for damages or any other relief due
to property damage, personal injury, or any other form of loss arising from acts or
failures to act occurring after the date of the transfer and from the ownership or
operation of the transferred facilities. The City agrees to accept facilities as is with
no warranty as to condition or suitability for use by the City except as otherwise
provided in the IWFA.
b. The Association agrees, upon completion of the transfer of the water facilities, to
indemnify, defend and hold harmless the City and its officials, employees, and
agents, from and against any and all claims for damages or any other relief due to
property damage, personal injury, or any other form of loss arising from acts or
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ATTEST:
failures to act occurring prior to the date of the transfer and from the ownership or
operation of the transferred facilities.
9. Arbitration:
a. The parties agree that any dispute with regard to the interpretation or enforcement
of this agreement shall be resolved by binding arbitration conducted pursuant to the
arbitration statutes of the State of Washington in effect at the time of the dispute.
10. Authority:
a. Each party warrants that the undersigned representative has full and complete
legal authority to sign for it and to commit it to the performance of the agreement
set forth herein.
11. Priority.
a. This agreement is intended to implement provisions of the IWFA, and the parties
have not intended to create any conflict between the terms of this agreement and
the IWFA. However, in the event of any conflict between the terms of this
agreement, the IWFA shall control.
WITNESS WHEREOF, the parties hereto have caused the SPECIAL SERVICE AGREEMENT
to be duly signed and executed in two counterparts as of the day and year first above written.
James Critchfield, President of the Board
Dry Creek Water Association, Inc.
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ATTEST:
Gary Braun, Mayor
City of Port Angeles
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ATTEST:
Janessa Hurd
City Clerk
City of Port Angeles
APPROVED AS TO FORM:
William Bloor, Attorney
City of Port Angeles
EXHIBIT "A"
PROPERTY OWNERS
Richard Owen
Richard Owen
Lynda Erdmann Eshom
Mrs. Charles Nyhus
Kurt Bruch
B &D Inc.
William Smith
Donna Jacobsen
1930 West Hwy 101
1938 West Hwy 101
2010 West Hwy 101
2156 West Hwy 101
2346 West Hwy 101
2358 West Hwy 101
2414 West Hwy 101
51 Cameron Road
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Residential Service (3/4 ")
Residential Service (3/4 ")
Commercial Service (3/4 ")
Residential Service (3/4 ")
Commercial Service (3/4 ")
Commercial Service (3/4 ")
Residential Service (3/4 ")
Residential Service (3/4 ")
EXHIBIT "B"
CALCULATION OF PURCHASE TERMS
Purchase Price for Transfer of Facilities:
The purchase price shall be compensation based on five (5) years of net revenue plus
plant value plus severance costs.
Any sums paid to Dry Creek Water Association by the City of Port Angeles pursuant to
Section 9 of the IWFA will not be included in acquisition costs.
A. PLANT VALUE:
Current replacement costs for all system facilities multiplied by the depreciation factor of
2% per year through year 45 and 90% per year thereafter. Trenching and labor costs for
underground services are not included. 4.45% annual yield rate plus 3% charge are
included.
Detail Service Expenditures
DOT Road Permit
3/4 water line
2" steel casing under Hwy
4" service saddle
Customer shut off valve
Corporation stop
3 /o "PRVUnit
Meter setter
3/4 " service meter
Meter boxes
827.00
(800.37 per lineal foot -LF)
(803.51 per lineal foot -LF)
830.84
$ 7.45
827.32
858 83
854.05
838.95
841.16
Customer #1 — (Patsy Triggs — 1248 West Hwy 101) - $1003.28 x 60% (1988) = $601.97
x 7.45% ($44.85) = $646.82 (121 LF plus detail service expenditures)
Customer #2 — (Ronald Richmond Estate - 1246 West Hwy 101) - $303.37 x 38% (1977)
= $115.28 x 7.45% ($8.59) = $123.87 (121 LF plus detail service expenditures minus
permit & casing)
Customer #3 — (Kenneth Spencer — 1330 West Hwy 101) - $1003.28 x 12% (1964) =
$120.39 x 7.45% ($8.97) = $129.36 (121 LF plus detail service expenditures)
Customer #4 — (Kenneth Patterson — 31 Benson Road) - $1003.28 x 12% (1964) =
$120.39 x 7.45% ($8.97) = $129.36 (121 LF plus detail service expenditures)
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Customer #5 — (Bruch & Bruch — 1706 West Hwy 101) - $855.64 x 30% (1973) _
$256.69 x 7.45% ($19.12) = $275.81 (83 LF plus detail service expenditures)
Customer #6 — (Jeffrey Young — 1708 West Hwy 101) - $289.31 x 68% (1992) = $196.73
x 7.45% ($14.66) = $211.39 (83 LF plus detail service expenditures minus permit &
casing)
Customer #7 — (Richard Kott — 1734 West Hwy 101) - $855.64 x 78% (1997) = $667.40
x 7.45% ($49.72) = $717.12 (83 LF plus detail service expenditures)
Customer #8 — (Lakeside Industries — Lot #2 — Eclipse Parkway) - $855.64 x 78% (1997)
= $667.40 x 7.45% ($49.72) = $717.12 (83 LF plus detail service expenditures)
Customer #9 — (NC Machinery — 73 Eclipse Parkway) - $289.31 x 78% (1997) _ $225.66
x 7.45% ($16.81) = $242.47 (83 LF plus detail service expenditures minus permit &
casing)
Customer #10 — (Richard Kott — 1734 West Hwy 101) - $855.64 x 50% (1983) = $427.82
x 7.45% ($31.87) = $459.69) (83 LF plus detail service expenditures)
One time $2,000.00 capital costs for fees agreed upon by Dry Creek Water Association
and the City of Port Angeles.
Subtotal. Part A= $5.653.01
B. SEVERANCE COSTS:
All costs mutually agreed upon by Dry Creek Water Association and the City of Port
Angeles associated with the transfer of customers including but not limited to removing
interconnecting pipes, facilities, and meters and administration costs.
Detailed Severance Expenditures
Totals
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Operator, Equipment, Laborer (2 hrs /open -close work main)
Maintenance Worker (2 hrs /open -close work main)
Administration (1 hr administration work)
Membership Reimbursement (Residential (primary) $5.000.00
Commercial (Secondary) 57.500.00
$258.00
$ 48.00
$ 31.00
$337.00
Customer #1 — (Patsy Triggs — 1248 West Hwy 101)
Residential Membership = $5,337.00
Customer #2 — (Ronald Richmond Estate — 1246 West Hwy 101)
Commercial Membership = $7,837.00
Customer #3 — (Kenneth Spencer — 1330 West Hwy 101)
Residential Membership = $5,337.00
Customer #4 — (Kenneth Patterson — 31 Benson Road)
Residential Membership = $5,337.00
Customer #5 — (Bruch & Bruch — 1706 West Hwy 101)
Commercial Membership = $7,837.00
Customer #6 — (Jeffrey Young — 1708 West Hwy 101)
Residential Membership = $5,337.00
Customer #7 — (Richard Kott — 1734 West Hwy 101)
Commercial Membership = $7,837.00
Customer #8 — (Lakeside Industries — Lot #2 — Eclipse Parkway)
Commercial Membership = $7,837.00
Customer #9 — (NC Machinery — 73 Eclipse Parkway)
Commercial Membership = $7,837.00
Customer #10 — (Richard Kott — 1734 West Hwy 101)
Commercial Membership = $7,837.00
Subtotal . Part B = $68370.00
C. NET REVENUE:
Five years worth of net revenue from transferred customers as determined by the
following formula:
Customer Monthly Billing Amount (W) x Annual Net Revenue Factor ®
(W) = Five years the sum of the most recent 12 customer monthly billing
amount for each transferring customer.
® = Annual operating revenue from the most recent annual financial
statement minus annual operating expenses for the same financial
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statement with the remainder divided by operating revenues. The annual
financial statement is included as Attachment "1" to Exhibit "B ".
Operating Revenue minus Operating Expenses $404,666. minus $239,093.
®_ _ =.59
Operating Revenue $404,666
Customer #1 - (Patsy Triggs - 1248 West Hwy 101)
(W) = 2008 billings (12 months) = $314.74 x 5 years = $1,573.70 x .59 = $645.22 x
7.45% ($48.07) = $693.29
Customer #2 - (Ronald Richmond Estate- 1246 West Hwy 101)
(W) = 2008 billings (12 months) _ $321.44 x 5 years = $1,607.20 x .59 = $658.95 x
7.45% ($49.09) = $708.04
Customer #3 - (Kenneth Spencer- 1330 West Hwy 101)
(W) = 2008 billings (12 months) = $375.06 x 5 years = $1,875.30 x .59 = $768.87 x
7.45% ($57.28) = $826.15
Customer #4 - (Kenneth Patterson - 31 Benson Road)
(W) = 2008 billings (12 months) = $384.81 x 5 years = $1,924.05 x .59 = $788.86 x
7.45% ($58.77) = $847.63
Customer #5 - (Bruch & Bruch -1706 West Hwy 101)
(W) = 2008 billings (12 months) = $339.87 x 5 years = $1,699.35 x .59 = $696.73 x
7.45% ($51.91) = $748.64
Customer #6 - (Jeffrey Young - 1708 West Hwy 101)
(W) = 2008 billings (12 months) = $370.29 x 5 years = $1,851.45 x .59 = $759.09 x
7.45% ($56.55) = $815.64
Customer #7 - (Richard Kott - 1734 West Hwy 101)
(W) = 2008 billings (12 months) = $1,065.53 x 5 years = $5,327.65 x .59 = $2,184.34 x
7.45% ($162.73) = $2,347.07
Customer #8 - (Lakeside Industries - Lot #2 - Eclipse Parkway)
(W) = 2008 billings (12 months) = $445.21 x 5 years = $2,226.05 x .59 = $912.68 x
7.45% ($67.99) = $980.58
Customer #9 - (NC Machinery - 73 Eclipse Parkway)
(W) = 2008 billings (12 months) = $295.12 x 5 years = $1,475.60 x .59 = $605.00 x
7.45% ($45.07) = $650.07
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Customer #10 — (Richard Kott — 1734 West Hwy 101)
(W) = 2008 billings (12 months) _ $278.38 x 5 years = $1,391.90 x .59 = $570.68 x
7.45% ($42.52) = $613.20
Subtotal. Part C = $9.230.31
Total Due for Purchase of Facilities under Exhibit B = $83,253.32
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Customers served under this special service agreement are the customers of the City of Port
Angeles, receiving water service by agreement from Dry Creek Water Association.
1. Definitions:
EXHIBIT "C"
SPECIAL SERVICE TERMS
"Special service water rate ". Dry Creek Water Association will charge the established
Association customer rate (residential or commercial, as the case may be) plus twenty
percent (20 %).
2. Facility Costs Associated with Special Service Aereements:
All costs of new or improved facilities in order to provide water pursuant to this special
service agreement shall be borne by the City. These costs shall include but not be limited
to the cost of providing meters and disconnect between the facilities of the two parties
when applicable. Payment of costs by the City shall be made within forty -five (45) days
of invoice by the Association upon completion of the project.
The Association as owner of the existing facilities shall be responsible for maintenance of
the existing facilities.
3. Special Service Charees:
The Association shall provide monthly statements to the City of the total metered
consumption of all customers included in this special service agreement. Special service
conditions and charges for this service will be as follows:
3 /4 Residential Service: $25.00 Monthly Base Rate
0 -499 cubic feet = $.005 per cubic feet
500 -999 cubic feet = $.010 per cubic feet
1000 -1499 cubic feet = $.015 per cubic feet
1500 -1999 cubic feet = $.020 per cubic feet
2000+ cubic feet = $.025 per cubic feet
Plus 20% = Total Billing
3 /4 Commercial Service: $28.50 Monthly Base Rate up to 1,000 cubic feet
0 -499 cubic feet = $.005 per cubic feet
500 -999 cubic feet = $.010 per cubic feet
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$38.00 Monthly Base Rate from 1001 to 1999 cubic feet
1000 -1499 cubic feet = $.015 per cubic feet
1500 -1999 cubic feet = $.020 per cubic feet
$48.00 Monthly Base Rate from 2000 cubic feet and over
2000 -over cubic feet = $.025 per cubic feet
Plus 20% = Total Billing
If a rate change happens by the membership of the Association before the termination of
this agreement, Dry Creek Water Association will submit a change agreement request to
this special service agreement.
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DRY CREEK WATER ASSOCIATION, INC.
STATEMENTS OF REVENUE, EXPENSES AND CHANGES IN ASSOCIATION'S EQUITY
FOR THE YEARS ENDED JUNE 30, 2008 AND 2007
2008
REVENUES
Water Assessments $ 261,886.87
Interest Income 47,887.29
Elwha Project 93,317.20
Other Income 1,574.52
Total Revenues 404,665.88
EXPENSES
Accounting Fees 1,409.68
Bank Charges 968.27
Dues and Subscriptions 775.50
Depreciation 34,868.00
Insurance 5,608.97
Leases 1,500.00
Meals and Entertainment 651.64
Office Supplies 2,795.35
Other Expenses 5,568.34
Salaries and Wages 91,396.00
Taxes - Payroll 6,754.67
Taxes - Other 13,572.28
Telephone 3,090.37
Travel and Lodging 2,741 43
Training and Seminars 50.00
Utilities 14, 593.73
Line Extension Fees
Elwha Mitigation Expenses 2,772.20
Water System Expenses 49,976.59
Total Expenses 239,093.02
Excess (Deficit) Revenue Over Expenses 165,572.86
Membership Fees 45,695.00
Association's Equity - Beginning of the Year 1,153,481.20
Association's Equity - End of the Year $ 1364,749.06
ATTACHMENT 1
Payment for Water to Special Service Area:
EXHIBIT "C -1"
SPECIAL SERVICE TERMS
From and after the effective date of this agreement, the City shall pay to the Association, a
monthly amount to be calculated in accordance with Exhibit "C ", which is attached hereto and
incorporated herein by reference. The calculations below include monthly billings from May
2005 through December 2009.
Customer #1 — (Patsy Triggs — 1248 West Hwy 101)
2005 -2009 billings = $1,451.61 x 20% surcharge = $290.32
Customer #2 — (Ronald Richmond Estate— 1246 West Hwy 101)
2005- 2009billings = $1,342.42 x 20% surcharge = $268.48
Customer #3 — (Kenneth Spencer — 1330 West Hwy 101)
2005 -2009 billings = $1,834.86 x 20% surcharge = $366.97
Customer #4 — (Kenneth Patterson — 31 Benson Road)
2005 -2009 billings = $1,460.15 x 20% surcharge = $292.03
Customer #5 — (Bruch & Bruch — 1706 West Hwy 101)
2005 -2009 billings = $2,929.66 x 20% surcharge = $585.93
Customer #6 — (Jeffrey Young — 1708 West Hwy 101)
2005 -2009 billings = $3,031.22 x 20% surcharge = $606.24
Customer #7 — (Richard Kott — 1734 West Hwy 101)
2005 -2009 billings = $3,862.39 x 20% surcharge = $772.48
Customer #8 — (Lakeside Industries — Lot #2 — Eclipse Parkway)
2005 -2009 billings = $1,597.84 x 20% surcharge = $319.57
Customer #9 — (NC Machinery — 73 Eclipse Parkway)
2005 -2009 billings = $1,378.91 x 20% surcharge = $275.78
Customer #10 — (Richard Kott — 1734 West Hwy 101)
2005 -2009 billings = $1,284.25 x 20% surcharge = $256.85
Customer #11 — (Richard Owen -1930 West Hwy 101)
2005 -2009 billings = $1,365.28 x 20% surcharge = $273.06
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Customer #12 — (Richard Owen -1938 West Hwy 101)
2005 -2009 billings = $1,321.75 x 20% surcharge = $264.35
Customer #13 — ( Lynda Erdmann Eshom -2010 West Hwy 101)
2005 -2009 billings = $2,145.99 x 20% surcharge = $429.20
Customer #14 — (Mrs. Charles Nyhus -2156 West Hwy 101)
2005 -2009 billings = $2,110.69 x 20% surcharge = $422.14
Customer #15 — (Kurt Bruch -2346 West Hwy 101)
2005 -2009 billings = $1,528.69 x 20% surcharge = $305.74
Customer #16 — (B &D Inc -2258 West Hwy 101)
2005 -2009 billings = $1,737.68 x 20% surcharge = $347.54
Customer #17 — (William Smith -2414 West Hwy 101)
2005 -2009 billings = $1,632.76 x 20% surcharge = $326.55
Customer #18 — (Donna Jacobsen -51 Cameron Road)
2005 -2009 billings = $1,984.40 x 20% surcharge = $396.88
Total Due: $6,800.11
Grand Total Due: $90,053.43
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2005 1156244 Clallam
County
DOCUMENT TITLE:
Interagency Water Facilities Agreement
Between Dry Creek Water Association, Inc. and
City of Port Angeles
PARTIES:
Dry Creek Water Association, Inc.
City of Port Angeles
DATE:
MAY 3, 2005
INTERAGENCY WATER FACILITIES AGREEMENT
BETWEEN DRY CREEK WATER ASSOCIATION. INC.
AND CITY OF PORT ANGELES
This agreement is made and entered into this 3rd day of May, 2005, by and between
Dry Creek Water Association, Inc. (hereinafter called the AssocIation) and City of Port
Angeles (hereinafter called the City).
WHEREAS, the Association and the City concur that the elimination and avoidance of
duplicate water system facilities would be in the best interests of their rate-paymg
customers; and
WHEREAS, the AssocIation and the City require definitive service areas in order that
they may properly plan for growth within their respective systems; and
WHEREAS, the law of the State of Washington authorizes agreements between utilities
regarding service territories and acquisition of facilities; and
WHEREAS, the Association and City representatives have met and reached an
agreement on water service areas;
NOW, THEREFORE, IT IS AGREED between the parties hereto as follows:
1. Definitions:
1.1 Facilities:
Facilities include but are not limited to: distribution lines, service lines, reservoirs,
pressure reducer stations, booster pum~ stations and hydrants.
1.2 Distribution Lines: I
Distribution hnes include water mains ranging in size from 2" to 14" including
but not limited to pressure reducing valve, C-900, ductile iron and asbestos
cement ("AC"). Distribution lines include gate valves and pressure relief stations.
1.3 Services Lines:
Service lines include individual customer lines ranging in size from Y2" up to 6"
including but not limited to pressure reducing valve, galvanized, and poly pipe.
Service lines include corporation stops, customer shut off value, customer
pressure reducer unit and water meter.
2. Service Area Boundary:
2.1 The water service area boundary between the Association and the City shall be
the City limits. All the territory within the city limits shall be the City service
area. The Association area is outside the City limits and is also depicted on
Exhibit "A" (Service Areas). Each utility shall have the exclusive right to provide
water service to facilities lying within their respective service territories except as
provided in this agreement.
2.2 The Elwha Heights Association is excluded from this agreement as they have an
existing water agreement with the City for potable water.
2.3 All areas that are annexed into the City during the term of this agreement shall
automatically adjust the service area boundary so that the annexed area is
included in the City's service area. Following any such annexation Exhibit "A"
shall be deemed to be revised accordingly.
3. Term of Agreement:
This agreement shall be effective from midnight, May 3, 2005 until May 2, 2030.
4. Termination of Agreement:
After the fifth year of this agreement and at five-year intervals thereafter, either
party to this agreement may terminate the agreement by giving the other party
written notice at least ninety (90) days before the end of the five-year interval.
5. Changes to the Agreement:
Changes in the terms and conditions of this agreement may be made at any time
upon the mutual written consent of both partIes, provided, however, that revisions
to Exhibit "A" as necessitated by annexations shall be made as provided in 2.3
above. Either party desinng a change shall give the other party ninety (90) days
written notice. The notice shall contain the desired changes and a full explanation
of the reasons for the changes. If, at the end of the ninety (90) day period, the
parties hereto cannot mutually agree to the proposed changes, the agreement shall
remain unchanged.
6. Sale of Facilities:
6.1 As areas are annexed into the City, the City will have twelve (12) months in
which to provide service to all customers in the annexed area subject to
agreements reached pursuant to Section 11 of this agreement; provided, however,
in the event the City makes diligent efforts but is unable to provide service within
twelve (12) months, the period in which to provide service shall be extended but
not more than an additional twelve (12) months, to allow the City to complete the
work necessary to provide service. The CIty shall provide service by purchasing
existing Association facilities within the annexed area subject to Section 10
hereof and, where appropriate, constructing facilities. Within sixty (60) days of
the effective date of annexation, the City will advise the Association how the City
intends to provide service to the customers in the annexed area (by constructing
facilities, purchasing facilities or both), and the date(s) the City proposes to
purchase any Association facilities in the annexed area. The purchase price will
be in accordance with Section 10 ofthis agreement.
6.2 The purchase price for facilities determined in accordance with Section 10 ofthis
agreement shall be payable in cash. Payment shall become due on the date, the
City begins to provide service and any sums not so paid shall thereafter bear
interest until paid at a rate equal to the most current 5-year U.S. Treasury note
annual yield rate plus three (3) percent. Until the City is able to provide service
the Association will continue (for a maximum of twenty- four (24) months from
annexation)to serve the affected customers on a temporary basis. On the date of
commencement of City service or twenty-four (24) months from the date of
annexation, whichever occurs first, the Association's customers in these areas
will be transferred to the City, and the Association will have no further service
obligation to such customers.
2
7. Retention of Certain FacilitIes:
This agreement shall not lImit or restrict the right of the Association and the City
to construct, maintain, and otherwise operate those facilitIes required to provide
water service to customers within their respective service area regardless of
whose service area the facilities lie within. Such facilities will be identIfied on
Exhibit "A". Each party agrees to make franchise rights and easements as the
case may be aVaIlable to the other without cost to facilitate construction and
maintenance of facilities reasonably necessary to allow the other party to serve its
customers. The parties shall also freely transfer franchise and easement rights
when necessary to implement the terms of this agreement. The Association agrees
to endeavor to obtain easements or franchises in the future, which are assignable
in whole or in part to a municipal utility.
8. New Development in City Service Area:
For the period of time that the Association maintains existing distribution lines in
the City's Service Area in order to continue water service to existing customers in
the area, the City may, at its option, request the Association to serve a new
customer or group of new customers until such time as the City purchases that
portion of the Association's distribution line used to provide service to the new
customer or installs its own facilities in the area. The Association may choose not
to provide service to new customers if the provisIOn of such service would require
substantial system capital cost or if capacity is not available as determined by the
Association. The City and the Association will meet to determine the preferred
manner to construct facilities to provide service to the new customer(s). The
Association will only install service lines and meters; all other facilities must be
installed by the City and will remain City property. The Association at City
expense will physically connect the City facilities to the Association facilities.
Maintenance responsibility will be established for each situation.
9. Exclusion:
All existing and future Association distribution lines, service lines and water
facilities as described and shown on Exhibit "A" attached hereto, and as further
amended, and made a part of this agreement may be repaired, replaced, expanded,
and up-graded to a larger size at any future date without regard to this agreement
whether within or outside a city service area; provided, that any replacement or
new construction within the Urban Growth Area shall be accomplished in
accordance with the City standards then applicable, unless otherwise agreed by
the parties in wnting. In such circumstances the City, on an annual basis, shall
pay the Association for any incremental increase in cost associated with the
applicatIon of CIty standards that result in increased system capacity, rather than
State Department of Health standards, for such replacement or new construction.
3
IO.Purchase Formulas:
The purchase price for transfers from the Association to the City shall be
established pursuant to Section 10.1 of this agreement. The meaning of the terms
used in Section 10.1 is set forth on Exhibit "B" (Definition of Purchase Terms)
attached hereto and made a part of this agreement.
1 0.1 Purchase Price for Transfer of Facilities:
The purchase price shall be compensatIOn based on five (5) years of net revenue
plus plant value plus severance costs.
I 0.2 Any sums paid to the AssocIatIOn by the City pursuant to Section 9 of this
agreement will not be included in acqUIsition costs.
II.Special Service Agreement:
The Association and the City acknowledge that there may be Isolated groups of
customers within either entity's service area located where extension of the lines
of the entity with responsibility to serve the customers would be uneconomical
and duplicative of the other party's facilities. Recognizing potential benefits to
rate-paying customers, the Association and City hereby agree to provide water
through their facilities for the other party in such circumstances upon request and
subject to an appropriate special service agreement(s). If the City annexes
property within the Association's service area and a special service agreement for
any portion of the area is requested, negotIation of a special service agreement
must be completed within ninety (90) days of annexation. Each special service
agreement will specify the conditions and charges for this service utilizing the
principles set forth in Exhibit "c" (Special Service Principles). The parties will
strive for a simple formula for special service charges that recognizes cost factors
and utility standards. Either party may deny a request for a special service
agreement, provided such denial is reasonable and not arbitrary and capricious.
Areas which will be subject to special service agreements at the effective date of
this agreement are depicted in Exhibit "D" (Special Service Agreement Areas -
D 1 and D2).
12. Hold Harmless:
The City agrees, upon completion of the transfer of the water facilities, to
indemnify, defend, and hold harmless the AssociatIOn and its officials, employees,
and agents, from and against any and all claims for damages or any other relief
due to property damage, personal injury, or any other form ofloss arising from
accidents or injuries occurring after the date ofthe transfer. The City agrees to
accept facilities as is with no warranty as to condition or suitability for use by the
City except as otherwise provided in this agreement.
The Association agrees, upon completion of the transfer of the water facilities, to
indemnify, defend and hold harmless the City and its officials, employees, and
agents, from and against any and all claims for damages or any other relIef due to
property damage, personal injury, or any other form ofloss arising from accidents
or injuries occurring prior to the date of the transfer.
4
13. Arbltration! Attorney Fees:
The parties agree that any dispute with regard to the interpretation or enforcement
of this agreement shall be resolved by binding arbitration conducted pursuant to
the arbitration statutes of the State of Washington in effect at the time of the
dispute. The arbitration award may be filed with the Clallam County Supenor
Court and enforced in that venue.
In the event of litigation regarding the enforcement or interpretation of this
agreement, the party who substantially prevails in such litigation shall be entitled,
in addition to any other relief, to an award of reasonable attorney fees incurred in
such proceedings.
l4.Authoritv:
Each party warrants that the undersigned representative has full and complete
legal authority to sign for it and to commit it to the performance of the agreements
set forth herein.
IN WITNESS WHEREOF, the parties hereto have caused the AGREEMENT to
be duly signed and executed in two counterparts as of the day and year first above
written.
ichard Headrick, Mayor
City of Port Angeles
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Becky Upto, ity lerk-'
City of Port Angeles
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May 2005
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EXHIBIT "B"
DEFINITION OF PURCHASE TERMS
PLANT VALUE:
Current replacement costs for all system facilities multiplied by the depreciation factor of
2% per year through year 45 and 90% per year thereafter. Trenching and labor costs for
underground services are not included.
SEVERANCE COSTS:
All costs mutually agreed upon by the Association and the CIty associated with the
transfer of customers including but not limited to removing interconnecting pipes,
facilities, and meters and administrative costs.
NET REVENUE:
Five years worth of net revenue from transferred customers as determined by the
following formula:
Customer Monthly Billing Amount (W) x Annual Net Revenue Factor (R)
(W) = Five times the sum of the most recent 12 customer monthly billing amount
for each transferring customer.
(R) = Annual operating revenue from the most recent annual financial statement
minus annual operating expenses for the same financial statement with the
remainder divided by operating revenues. The annual financial statement is
included as Attachment "1" to Exhibit "B".
ResidentIal Example
(W) = 2004 bIllings (12 months) = $439.11 x 5 years = $2,195.55.
Operatmg Revenue minus Operating Expenses
(R) = -----------------------------------------------------
Operatmg Revenue
$259,448. minus $164,149.
______n_n____n______nn____ = .37
$259,448.
$2,195.55 x .37 = $812.35
6
DRY CREEK WATER ASSOCIATION, INC.
STATEMENTS OF REVENUE, EXPENSES AND CHANGES IN ASSOCIATION'S EQUITY
FOR THE YEARS ENDED JUNE 30, 2004 AND 2003
2004
REVENUES
Water Assessments $ 256,279 71
Interest Income 856 79
Dividend Income 457.23
Other Income "" 1 ,854.32
Total Revenues 1: 259,448.05
EXPENSES
Accounting Fees 1 ,335.40
Bank Charges 215.55
Dues and Subscriptions 25.00
Depreciation 28,557 00
Insurance 4,760 00
Interest 196 87
Leases 1,500.00
Legal Fees 780.96
Licenses 1,611.50
Meals and Entertainment 530 00
Miscellaneous
Office Supplies 6,366 95
Salaries and Wages 42,874.17
Taxes - Payroll 18,872.44
Taxes - Other 12,308.78
Telephone 2,78821
Travel and Lodging 1,671 71
Training and Seminars 197.40
Utilities 12,95644
Elwha Mitigation Expenses 5,324 00
Water System Expenses 21,276.64
Total Expenses -t: 164,14902
Excess (DefiCit) Revenue Over Expenses 95,299 03
Membership Fees 55,000.00
Association's EqUity - Beginning of the Year 788,930 82
Association's EqUity - End of the Year $ 939,22985
ATTACHMENT 1
7
EXHIBIT "C"
SPECIAL SERVICE PRINCIPLES
It is the intention of the parties that special services will be granted to the requesting party
when: the preconditions set forth in Section 11 of this Agreement are met; sufficient
capacity exists for such service; and the party granting such services shall be fully
compensated for the special services provided. It is the intention of the parties that
customers served under special services agreement are the customers of Party 1,
receiving water service by agreement from Party 2. Customers will not be charged any
Party 1 new customer connection fees until the termmation of the special services
agreement.
1. Definitions:
"Party 1" - The utility requesting special services.
"Party 2" - The utility providing special services.
"Special service water rate": (a) When the Association is "Party 2", the established rate
charged the Association customers (residential or commercial, as the case may be) plus
twenty percent (20%); (b) when City is "Party 2", the established retail rate charged City
customers inside the City (residential or commercial, as the case may be) plus twenty
percent (20%).
2. Termination of Agreements:
"Party 1" may terminate a special service agreement at any time by giving "Party 2"
wntten notice at least sixty (60) days prior to termination. "Party 2" may terminate a
special service agreement: a) upon receiving the consent of "Party 1": b) upon 180 days
written notice to "Party I" when, in the reasonable opinion of "Party 2", the
preconditions set forth in Section 11 of this agreement for establishment of a special
service agreement are no longer applicable to the special service agreement in question;
c) upon the termination date negotiated as part of each special service agreement. At
expiration of the notice period, "Party 1" shall proceed to implement service in the
manner and subject to the time frame set in Section 6 of this agreement.
3. Changes to Agreements:
Changes in the terms and conditions of a special service agreement may be made at any
time upon the mutual written consent of both parties. Either party desiring a change shall
give the other party written notice. The notice shall contain the desired changes and with
a full explanation of the reasons for the changes. If, the parties hereto cannot mutually
agree to the proposed changes, the agreement shall remain unchanged.
8
, .
4. Special Service Areas:
The initial special servIce areas subject to this agreement are as depicted in ExhIbit "D".
Each special service agreement shall include an exhibit showing all areas to be provided
with special service. Information on the exhibit shall include the physical area to which
water service would be provided, list of customers located within the area, and any
facilities to be purchased by "Party 1" at the termination of the special service agreement
5. Requests for Special Service Agreement:
Written requests to establish a special service agreement may be made at any time by
either party. Such requests shall include a map or drawing of the area involved, a list of
all existing customers within the area and the basis for satisfaction of the preconditions
for a special service agreement as set forth in Section 11 of this agreement.
6. Acceptances or Reiection of Requests for Special ServIces:
Within sixty (60) days of receipt of a request to provide special services, "Party 2" shall
determine if sufficient excess capacity exists in its facilities or if capacity is not available
to carry the required additional capacity. If sufficient excess capacity exists, "Party 2"
shall prepare a plan as to how to interconnect the facilities of the two parties. After both
parties have reviewed, and if necessary, revised the plan, both parties shall decide
whether to enter into an agreement. If insufficient excess capacity exists, the request will
be denied.
7. Facility Costs Associated with Special Service Agreements:
7.1 All costs of new or improved facilities in order to provide water pursuant to a special
service agreement shall be borne by "Party 1". These costs shall include but not be
limited to the cost of providing meters and disconnect between the facilities of the two
parties when applicable. Payment of costs by "Party 1" shall be made within forty-five
(45) days of invoice by "Party 2" upon completion of the project.
7.2 "Party 2" as owner of the existing facilities shall be responsible for maintenance of
the existing facilities.
8. Special Service Charges:
"Party 1" shall provide monthly statements to "Party 2" of the total metered consumption
of all customers in areas where special services are provided. Special service water rates
shall be computed as defined in Exhibit "c" of this agreement Compensation as
calculated above shall be billed monthly and due and payable within thirty (30) days of
receipt of invoice.
9. Hold Harmless:
Each special service agreement shall have a hold harmless clause.
Revised 04/28/2005 (DCW A)
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C . CommerCIal
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Exhibit 0-2
May 2005
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Annexation area map
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Street centerline