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HomeMy WebLinkAbout5.791 Original Contract~. ~ q i~~~~u~uu~~~~~~~~~~~~ DOCUMENT TITLE: WHOLESALE WATER AGREEMENT August 16, 2006 F tLi. D F`'J~ ,: .4(F n f Taw' ~~. 5,~lc'r ~ ~ ~ } 2 :. A Cj {~~t} ~? t} Jtlil Si U i: ~ Ps?e ~ ~.r ° ~ rr LS ~3,~rp~C~-©r`. City of Port Angeles ~ ~~~ Public Utility District No. 1 5.'1'9l WHOLESALE WATER AGREEMENT This Agreement is made and entered into by and between the City of Port Angeles, Washington, a municipal corporation hereinafter called the "City," and the Public Utility District No. 7 of Clallam County, a municipal corporation hereinafter called the "PUD." The City and the PUD are sometimes referred to individually in this Agreement as "Party"; the City and the PUD are sometimes referred together in this Agreement as "Parties." WITNESSETH: WHEREAS, a long history of contractual wholesale water sales has been in existence between the City and the PUD, and the Parties hereto desire to continue said contractual relationship and to continue the sale of wholesale water by the City to the PUD as set forth herein; and WHEREAS, the City and the PUD realize certain mutual benefits from cooperative efforts in the operation and maintenance of their respective water systems and desire to cooperate in planning for the future supply of their customers; and WHEREAS, the City's primary obligation is to supply water to current City residents and businesses, and that the PUD's purchase of City water for use in the Eastern Port Angeles Area and other areas as may be appropriate helps ensure that the infrastructure is in place to serve the needs of future City water customers; thereto: NOW THEREFORE, in consideration of the agreements set forth, the City agrees to deliver and sell to the PUD, and the PUD agrees to buy from the City, wholesale water under the following provisions: 1 DEFINITIONS Capitalized terms used in this Agreement, unless otherwise defined herein, shall have the meaning set forth in this Section. (a) "Agreement" means this Wholesale Water Agreement between the City and the PUD, together with all exhibits hereto, as the same may be amended or modified by the Parties from time to time pursuant to the terms hereof. (b) "Aid to Construction" means a contribution paid by a PUD water customer for a specific water system addition or improvement that is in addition to the normal fees paid by a PUD water customer when requesting either a new water service or an upgraded water service. (c) "CPI-U" means the U. S. Bureau of Labor Statistics Seattle-Tacoma- Bremerton consumer price index for urban consumers, all items, or its successor index. (d) "Eastern Port Angeles Area" shall mean that area served by the PUD's Gales Addition, Mount Angeles, and Monroe area water systems, along with customers served by the City within this area. A map of the Eastern Port Angeles Area showing the points of delivery is in Exhibit A. (e) "Effective Date" means the date on which this Agreement becomes effective pursuant to Section 14. (f) "Emergency Condition" means that period of time required to complete repairs to the System caused by an act, condition, circumstance, or event outside of the City's or PUD's control. 2 (g) "Good Utility Practice" means practices, methods, and acts engaged in or approved by a significant portion of the water utility industry at the time a decision is to be made; or if there are no such practices, methods, and acts with respect to any specific conditions or circumstances, any of the practices, methods, and acts that, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety, and expedition. Good Utility Practice is intended to refer to practices, methods, or acts generally accepted in the Pacific Northwest. (h) "Line Extension" means a water line that is part of the PUD's water distribution system and the total cost of the water line was paid for by the customer. (i) "Maintenance Cost" shall mean all costs and expenses relating to the maintenance or repair of the transmission line between the City limits and the Gales Addition Reservoir or its replacement, including, but not limited to, direct labor and the fringe benefits of the employees performing such labor, equipment, tools, materials, supplies, insurance premiums, contract services, legal services, inspections, taxes, payments in lieu of taxes (other than those imposed by the City that shall not be in included), administrative, overhead, and other direct expenses chargeable to the water line maintenance or repair. Costs and expenses shall be calculated at the same rate the Party charges its other activities for such costs and expenses. (j) "Major Capital Improvement" means a capital improvement to the PUD's water system within the Eastern Port Angeles Area with a cost of $100,000 or more and increased by the CPI-U since the effective date of this Agreement and financed by long-term financing. When obtaining financing for Major Capital Improvements, the PUD shall secure financing at the lowest possible total cost. The PUD shall limit the term of any long-term financing for Major Capital Improvements to twenty-five (25) years or less, except when such financing is obtained through the Washington State Public Works loan program construction loan or the Drinking Water State Revolving fund program or their successors, where the term can be up to the maximum allowed by the program, or unless both Parties agree to other financing terms. (k) "Maximum Daily Demand" shall mean the highest demand for water placed on the System by the PUD for atwenty-four (24) hour period expressed in million cubic feet per day (mcfd). In this Agreement, 7.48 gallons per cubic foot shall be used as the conversion factor. (I) "PAMC" means the Port Angeles Municipal Code, as amended. (m) "System" means the water supply, collections, and pumping facilities located on the Elwha River, together with any water transmission, storage, and treatment facilities, and any other facilities required to deliver water to the Points of Delivery (see Section 2). 2 POINTS OF DELIVERY The City shall deliver water to the PUD at the Gales Addition Reservoir and at the Baker Street Intertie, as shown on Exhibit A. The PUD may request service at another delivery point subject to the approval of the City, except that master water meters may be added by the provisions of Section 9 of the Agreement. Such approval shall not be 4 unreasonably withheld, consistent with the concept that the System is not a distribution system and the PUD has the responsibility for constructing and maintaining a distribution system adequate for its service area. The PUD shall be responsible for paying all costs associated with any additional requested delivery point. The PUD shall prepare the design for the proposed delivery point, submit it to, and receive the approval of, the City prior to the installation. The design shall include the necessary piping and valves, metering equipment of standard manufacture, and suitable isolating devices as appropriate. If mutually agreed upon, the meter shall be of a type capable of transmitting continuous readings in a format acceptable to the City. The City shall own the meter and pay for maintenance, repair, and testing of the meter (see Section 13). 3 QUANTITY OF WATER The PUD's Maximum Daily Demand shall be limited to 175,000 cubic feet (1,309,000 gallons) per day without prior consent of the City, whose consent shall not be unreasonably withheld, through the term of this Agreement. Should the water supplied under this Agreement be used to serve PUD water customers outside the Eastern Port Angeles Area, with the consent of the City, whose consent shall not be unreasonably withheld, the PUD's permitted Maximum Daily Demand shall be increased at the rate of 50 cubic feet (375 gallons) per day per acre of additional territory served, or as mutually agreed. Reasonable notice shall be given to the City by the PUD respecting any material change in water volume required or characteristic of water 5 service. The PUD agrees to obtain prior approval of the City for any new customer or combination of new customers that are projected to increase the PUD's monthly water usage under this Agreement by 25,000 cubic feet (187,000 gallons) in any given month; such consent shall not be unreasonably withheld. The PUD also agrees to obtain the prior approval of the City when its total water usage under this Agreement is projected to exceed 3.5 million cubic feet (26.2 million gallons) in any given month; such approval shall not be unreasonably withheld. The PUD agrees to manage its water system to stabilize demand on the System. The PUD agrees to construct all new and replacement facilities within the Eastern Port Angeles Area to a standard that meets or exceeds current City standards or as said standards may be hereafter amended. The PUD agrees to maintain a water shortage response plan for the Eastern Port Angeles Area that is substantially the same as the City's water shortage response plan as described in Chapter 13.46 PAMC or as said Chapter may be hereafter amended throughout the Agreement period. In the event of water supply or capacity problems, the PUD shall implement the plan in the Eastern Port Angeles Area upon notification by the City, and at the same level implemented by the City. 4 QUALITY OF WATER The City shall operate and maintain the System in order to supply to the PUD drinking water that meets water quality standards of the Washington State Department of Health and the U.S. Environmental Protection Agency, including periodic revisions to these standards. All water 6 supplied by the City for use or sale by the PUD shall be upon the express condition that after it passes the point of delivery, the same becomes the property of the PUD. The City shall not be liable for any damages or loss resulting from degradation of water quality that may occur beyond said points. Further, the City shall not be responsible for changes in water quality or operating problems that may result from mixing different sources of water in the PUD's system. 5 AVAILABILITY OF WATER The City will design, construct, maintain, install, and operate the System in accordance with Good Utility Practice in order to provide reliability of service. However, it is understood and agreed that the City makes no guarantee and does not warrant as to pressure, flow rate, quantity, or continuity of service. Therefore, the City shall not be held liable for losses or damage from a deficiency or failure to supply water due to accidents, acts of God, and any conditions beyond the reasonable control of the City, or due to negligence of the City. The foregoing release shall not be effective to the extent any claims, losses, harm, liabilities, damages, costs, and expenses are the result of the City's gross negligence or willful misconduct. In the event of a condition that may disrupt service to the PUD, the City shall immediately notify the PUD through oral or written notification, and shall restore service and make water available as soon as it can reasonably do so. In the event of scheduled maintenance, alterations, construction, extensions, or connections, the City shall provide oral or written notification to the PUD a minimum of two (2) weeks prior to the work and schedule such work to minimize the potentialdisruption of service to PUD. 7 The PUD, after review and agreement by the City, whose agreement will not be unreasonably withheld, may at any time use the water supplied under this Agreement to serve water customers outside the Eastern Port Angeles Area. 6 TRANSMISSION LINE The PUD agrees to reimburse the City for its portion of the Maintenance Costs of the transmission line between the City limits and the Gales Addition Reservoir. Should the City be unable to respond to an emergency maintenance condition on the transmission line between the City limits and the Gales Addition Reservoir in a timely manner, the PUD may respond to the emergency maintenance condition and the City shall reimburse the PUD for the City's portion of Maintenance Costs of the transmission line. The PUD's annual cost of its portion of maintenance costs shall not exceed $75,000.00. This maximum annual maintenance cost shall increase by the CPI-U from the effective date of this Agreement. Should in any given year the PUD's maintenance costs reach the maximum annual maintenance costs as described above, the Parties shall enter into discussions regarding methods to improve the reliability of the transmission line between the City limits and the Gales Addition Reservoir. Upon mutual agreement that the transmission line needs to be upgraded (either Party's agreement shall not be unreasonably withheld), the City shall begin the process of upgrading the transmission line. Except for circumstances beyond the control of the City, the City shall complete the upgrade of the transmission line between the City limits and the Gales Addition Reservoir within three (3) years of the mutual decision to upgrade the line. Any such transmission line upgrade shall be sized, at a minimum, to serve the projected water requirements of the Eastern Port Angeles Area for the next thirty (30) years. After the upgrade of the transmission line between the City limits and the Gales Addition Reservoir, the PUD shall be responsible for its portion of the Maintenance Costs, together with its portion of the depreciation expense of the completed upgrade to the transmission line. The depreciation expense associated with any upgrade to the transmission line that is capitalized on the books of the City shall be two (2) percent of the replacement cost per year for a period not to exceed fifty (50) years. The PUD's portion of the maintenance costs on the existing transmission line or the PUD's portion of the maintenance and depreciation costs of the replacement transmission line between the City Limits and the Gales Addition Reservoir shall be the number of PUD water customers within the Eastern Port Angeles Area divided by the total number of water customers within the Eastern Port Angeles Area. The City's portion of the maintenance costs on the existing transmission line or the City's portion of the maintenance and depreciation costs of the replacement transmission line between the City Limits and the Gales Addition Reservoir shall be the number of City water customers within the Eastern Port Angeles Area divided by the total number of water customers within the Eastern Port Angeles Area. 9 7 STORAGE CAPACITY The PUD will cause to have a comprehensive study completed within two (2) years of the effective date of this Agreement to determine the required capacity and elevation for a new reservoir that will meet the needs of the Eastern Port Angeles Area water system for the next thirty (30) years. This study will be accomplished using Washington Department of Health design standards for Standby Storage, Fire Flow Storage, and Equalization Storage. Once this study is complete, the PUD will use due diligence to acquire a site for a new reservoir and build the new reservoir and associated infrastructure within five (5) years of the effective date of this Agreement. All reasonable efforts will be made to construct the reservoir such that its normal operating level will be at an elevation that will be equal to or higher than the normal operating level of the City's Mill Creek Reservoir. 8 REGIONAL WATER AGREEMENT The City and the PUD agree to begin discussion on a regional water agreement for the Eastern Port Angeles Area. The discussions on a regional water agreement between the City and the PUD shall continue until such time as an agreement is reached or either Party elects to discontinue the discussions. It is the intent of this regional water agreement to plan, design, construct, operate, and maintain water pumping, treatment, transmission, and storage facilities required to meet the present and future water needs of the Eastern Port Angeles Area using aone-utility concept. Under the one- utility concept, all planning, design, construction, operating, and 10 maintenance costs are shared by the participating utilities based on their present and future usage of the water System. 9 TRANSFER OF FACILITIES 9.1 Prior to Transfer of Facilities per Master Meter Both Parties to the Agreement recognize that the City may annex a portion or all of the PUD's water service territory in the Eastern Port Angeles Area. The Parties also realize that it is in the best interest of the Parties to operate the interconnected water systems at the lowest possible cost. To achieve this goal, the Parties agree that at the time of any future annexation, any PUD water customers within the area of the annexation shall become City water customers. The water distribution system downstream of a master water meter shall remain under the operation, maintenance, and ownership of the PUD until such time that the number of City water customers served by the master water meter exceeds fifty (50) percent of all water customers within the Eastern Port Angeles Area served by said master water meter (see Exhibit A). While the water distribution system beyond the master water meter remains under the operation, maintenance, and ownership of the PUD, all new connections to that portion of the PUD's water system shall be installed and any associated fees collected by the PUD. For any City water customers beyond the master water meter, while said water distribution system remains under the operation, maintenance, and ownership of the PUD, the City shall read and bill its water customers served on the PUD's water distribution system on a monthly basis. Within ten (10) days of reading said customers' water meters, the City will forward to the PUD these customers' water readings in a format 11 acceptable to the PUD. The PUD shall within twenty (20) days of receipt of said water meter readings, bill the City for the cost of the water distributed to City customers on the PUD's system at a cost of ninety (90) percent of the current PUD water rate schedule at the time of the billing. 9.2 After Transfer of Facilities per Master Meter When the number of City water customers served by a master water meter exceeds fifty (50) percent of the number of water customers in the Eastern Port Angeles Area served by said master water meter, it shall no longer be practical for the PUD to maintain the water system beyond the said master water meter up to the point of the next master water meter, if any, whether the next master water meter is either existing or mutually agreed to by the Parties. Since at that time continued maintenance on the part of the PUD shall be impracticable, the water distribution system within the Eastern Port Angeles Area beyond the master water meter to the point of the next master water meter, if any, whether existing or mutually agreed to by the Parties shall become essentially unserviceable on the part of the PUD and shall be transferred to the City according to the terms of this Agreement. Any master water meter(s) mutually agreed to by the Parties, if installed, shall be relocated or installed at the sole cost of the PUD. Any facilities located on the City's side of a master meter shall be purchased by the City under the terms of this section. If the Parties fail to mutually agree on the location of a master water meter(s) on that portion of the PUD water distribution system that extends beyond the Eastern Urban Growth Area, the master water meter(s) shall be located at the outside boundary of the Eastern Urban Growth Area. The cost to install the master water meter(s) at the outside boundary of the Eastern Urban Growth Area shall be the sole responsibility of the PUD. Should the boundaries of the Eastern Urban Growth Area be 12 extended and the City elects to acquire the PUD water distribution system, in accordance with the provisions of this Agreement, between the existing master water meter(s) and the extended outside boundary of the Eastern Urban Growth Area, the existing master water meter(s) shall be relocated to or a new master water meter(s) installed at the extended outside boundary of the Eastern Urban Growth Area at the sole cost of the City. At such time as when the number of City customers served by a master water meter exceeds 50 percent of the number of water customers in the Eastern Port Angeles Area served by said master water meter (see Exhibit A), the PUD's water distribution system served by said master water meter shall be sold to the City at the cost of that portion of the PUD's water distribution system, including any easements or rights-of--way expressly for the installation and maintenance of that portion of the PUD's water distribution system less any depreciation except for Major Capital Improvements since the effective date of this Agreement. Major Capital Improvements shall be transferred to the City at a cost equal to two-thirds (2/3) of the cost of the Major Capital Improvement less two-thirds (2/3) of the Aid to Construction for the Major Capital Improvement, with the resulting amount depreciated in a straight line over fifty (50) years; plus one-third (1/3) of the remaining principal balance of the long-term financing for the Major Capital Improvement. In addition, the cost of this portion of the PUD's water distribution system to the City shall not include the book value of any water Line Extension within this portion of the PUD's water distribution system since January 1, 1999. Any water Line Extensions that are under the PUD's water line sharing policy that are acquired by the City under this Agreement will continue to be under the PUD's water line sharing policy as administered by the City. 13 At such time as the City acquires that portion of the PUD's water distribution system beyond a master water meter, all new connections to that portion of the City's water system shall be installed and any associated fees collected by the City. For any PUD water customers on the City's water system, after acquisition of that portion of the water system by the City, the PUD shall read and bill its water customers remaining on the City's newly acquired water distribution system on a monthly basis. Within ten (10) days of reading said customers' water meters, the PUD will forward to the City said water meter readings in a format acceptable to the City. The City shall within twenty (20) days of receipt of the water meter readings, bill the PUD for the cost of the water distributed to said PUD customers at a cost of ninety (90) percent of the current PUD water rate schedule at the time of the billing. 9.3 After Fifty (50) Percent Annexation of Eastern Port Angeles Area When the number of City water customers exceeds fifty (50) percent of all water customers in the Eastern Port Angeles Area, it shall no longer be practical for the PUD to maintain any PUD water system infrastructure, together with any water distribution facilities that are directly connected to said infrastructure that is required for water service to all the water customers in the Eastern Port Angeles Area. Since at that time continued maintenance on the part of the PUD shall be impracticable, any PUD water system infrastructure, together with any water distribution facilities that are directly connected to said infrastructure, that is required for water service to all the water customers in the Eastern Port Angeles Area shall become essentially unserviceable on the part of the PUD and shall be sold to the City at the cost of that portion of the PUD's water system including any easements or rights-of-way expressly for the installation and maintenance of that portion of the PUD's water system less any 14 depreciation except for Major Capital Improvements financed with long- term financing since the effective date of this Agreement. Major Capital Improvements shall be transferred to the City at a cost equal to two-thirds (2/3) of the cost of the Major Capital Improvement less two-thirds (2/3) of the Aid to Construction for the Major Capital Improvement, with the resulting amount depreciated in a straight line over fifty (50) years; plus one-third (1/3) of the remaining principal balance of the long-term financing for the Major Capital Improvement. In addition, the cost of this portion of the PUD's water distribution system to the City shall not include the book value of any water Line Extension within this portion of the PUD's water distribution system since January 1, 1999. Any water Line Extensions that are under the PUD's water line sharing policy that are acquired by the City under this Agreement will continue to be under the PUD's water line sharing policy as administered by the City. 9.4 Other Provisions At any time during this Agreement, either Party may at its sole cost move or install a new master water meter to accelerate the transfer of a portion of the PUD's water distribution system to the City. When a master water meter location has been mutually agreed to by the Parties and is not installed, the PUD shall read and bill its water customers beyond the location of the mutually agreed to master water meter on a monthly basis. Within ten (10) days of reading said customers' water meters, the PUD will forward to the City the total of the said water meter readings in a format acceptable to the City. The City shall within twenty (20) days of receipt of the total of the water meter readings, bill the PUD for the cost of the water distributed to said PUD customers at the rate specified in Section 10 of the Agreement. 15 Within one (1) year of the effective date of this Agreement, the current value of the PUD's water system within the Eastern Port Angeles Area shall be determined by mutual agreement between one (1) representative of the City and one (1) representative of the PUD. 10 RATES In order to provide stable rates over the term of this Agreement, rates for wholesale water sold to the PUD at each point of delivery shall be based upon a percentage of the cost per 100 cubic feet billed under the City's current residential rate. Wholesale rates to the PUD shall be rounded to the nearest penny. For calendar year 2006, wholesale rates are as follows: Gales Addition Reservoir: $1.25 per 100 cubic feet per month (High Elevation Points of Delivery) Baker Street Intertie: $1.19 per 100 cubic feet per month (Low Elevation Points of Delivery) Any future changes to wholesale rates shall be based on the following multipliers: Gales Addition Reservoir: (High Elevation Points of .89 times the cost per 100 cubic feet under the City's residential rate Delivery) Baker Street Intertie: (Low Elevation Points of 85 times the cost per 100 cubic feet under the City's residential rate. Delivery) 16 The City shall adjust the rates described above upon thirty (30) days notice if the rates to the City's residential customers are changed. If necessary to meet the 30-day notice requirement, the 30-day notice will be based on the City staff's proposed rate increase for residential customers. 11 PAYMENTS The master water meters allowed within this Agreement shall be read by the City and the results recorded once each month. The City shall render a bill to the PUD monthly for water delivered during the previous monthly period. Payments made under this Agreement shall be remitted to the City via electronic funds transfer, as specified by the City's finance department. Payment to the City shall become due within twenty-five (25) days of issuance of the billing invoice or the due date printed on the invoice, whichever is earlier. A payment shall be deemed delinquent if more than ten (10) days past due. Delinquent wholesale water charge amounts shall accrue interest on the unpaid balance from the date of delinquency until paid, at the rate of one (1) percent per month. Failure of the PUD to pay the undisputed portion, as determined by the PUD, of any water bill issued under this Agreement for two (2) consecutive months may be considered a default under this Agreement, and the City may thereupon terminate this Agreement upon thirty (30) days prior written notice. 12 WATER RIGHTS The PUD has asserted claims that it has acquired an interest or ownership rights in one (1) or more water rights held by the City. One (1) or more of 17 those claims have been asserted in the lawsuit now pending in the Superior Court of Clallam County under Case No. 042007391. As a substantial and material consideration for this Agreement, the PUD agrees to stipulate to entry in that pending lawsuit of a judgment decreeing that the PUD has no right, title, interest, or ownership in or to any water right or permit in the name of or held by the City and dismissing all such claims with prejudice. As additional substantial and material consideration for this Agreement, the PUD hereby forever and irrevocably waives, relinquishes, and covenants not to assert, now or in the future, any claim to any right, title, interest, or ownership in or to any water right or permit in the name of or held by the City. The PUD agrees and acknowledges that the effect of this Section is a full, complete, absolute, and irrevocable release, waiver, and relinquishment of any claim that it now has or may have on any basis whatsoever to any right, interest, title, or ownership in or to any water right or permit in the name of or held by the City. 13 MASTER METERS The City shall own, read, repair, and maintain the master water meters provided for in this Agreement. The master meters shall be tested by the City periodically, but not less than once every three (3) years, to assure their continuing accuracy and conformance to the standards of measurement and service accepted by the water industry. The first test of the master meters associated with this Agreement shall be within six (6) months of the effective date of this Agreement. The City shall give reasonable notice to the PUD of the time such test is to be made so that the PUD may observe the testing. The cost of conducting such tests shall be borne by the City. The PUD may also request a master meter test at any time, and the test will be performed by the City at a mutually agreed upon time so that the PUD may observe the testing. If the City test of the 18 meter indicates that the meter is accurate within two (2) percent, and the PUD disagrees, the PUD may request a second test of the meter performed by an independent meter testing service approved by the City. If the meter is accurate within two (2) percent, the PUD shall pay for the cost of both tests. If the second test reveals that the meter is inaccurate, the City shall pay for the cost of both tests. If a meter is tested and found to be inaccurate, the past billing will be adjusted by applying the correction factor between the as-found master meter test value and the actual value for the water delivered through said master meter since the time the meter reading increase was first observed by the PUD, provided that the discrepancy was brought to the attention of the City within ninety (90) days of the meter reading increase. Should the PUD fail to notify the City within ninety (90) days of discovery of the meter reading increase and the meter is tested and found to be inaccurate, the past billing adjustment will be limited to ninety (90) days prior to the notification of the meter reading increase to the City by the PUD. 14 TERM OF AGREEMENT This Agreement shall be effective as of 2400 hours on the date of execution of this Agreement by both Parties. The initial term of this Agreement shall be for thirty (30) years. Until terminated, this Agreement shall automatically renew for successive periods of twenty (20) years upon the expiration of the initial term or of any renewal term. This Agreement may be terminated upon mutual agreement of both Parties at any time. In addition, fifteen (15) years from the effective date of the Agreement or any time thereafter, either Party may give to the other written notice of termination. If written notice of termination is given, this Agreement shall terminate on (a) the termination date stated in the notice or (b) the date fifteen (15) years after written notice of termination is given, whichever is 19 later, provided that any termination date that falls within the last five (5) years of a renewal period, the effective termination date shall be the last date of that renewal period. All liabilities and obligations accrued hereunder or payments due under Section 9 of this Agreement shall survive termination and shall continue in effect until satisfied. 15 NOTICES Any notice or request made to or by either Party to this Agreement shall be made in writing to the representative of the other Party at the following addresses by personal service or by certified mail, postage prepaid. Personal service of a notice is received on the date it is served. Certified mail is received on the date of delivery by the Postal Service. Public Utility District No. 1 of Clallam County General Manager 2431 East Highway 101 P.O. Box 1090 Port Angeles, WA 98362 City of Port Angeles Director of Public Works and Utilities 321 East Fifth Street P.O. Box 1150 Port Angeles, WA 98362 16 SALE OR ASSIGNMENT No assignment, sale, or transfer of this Agreement shall be made in whole or in part by any Party without the written consent of the other Party, which 20 shall not be unreasonably withheld, except such consent shall not be required when assignment or transfer is mandated by state law. Any successor or assignee shall be entitled to all benefits and shall be bound by all the obligations of this Agreement. No assignment, sale, or transfer of this Agreement shall relieve the Parties hereto of any obligations incurred hereunder. 17 UNCONTROLLABLE FORCES No Party shall be considered to be in breach of the Agreement on account of any failure to perform as required by this Agreement if such failure is the result of Uncontrollable Forces. The term "Uncontrollable Forces" means any cause or causes which by exercise of due diligence the Party failing to perform could not reasonably avoid and that, by the exercise of due diligence, the Party has been unable to overcome. Nothing in this Section shall be construed as requiring a Party to settle any strike, lockout, or labor dispute in which it may be involved, or to accept any permit, certificate, contract, or any other agreement or authorization necessary for the performance of this Agreement which contains terms and conditions that a Party in good faith determines are unduly burdensome or otherwise unacceptable. 18 RELEASE No Party, its directors, members of its governing body, officers, or employees shall be liable to the other Party for any incidental, indirect, special, exemplary, punitive, or consequential damages, whether arising in 21 contract, tort, strict liability, or otherwise, that may result from the performance or non-performance of this Agreement. The foregoing release shall not be effective to the extent any claims, losses, harm, liabilities, damages, costs, and expenses are the result of the gross negligence or willful misconduct by the City or the PUD. 19 RESOLUTION OF DISPUTES Both Parties agree that any dispute that arises out of the interpretation, enforcement, performance, or any other aspect of this Agreement shall be resolved by submitting the same to binding arbitration, which shall proceed according to the rules and regulations of the American Arbitration Association; provided, however, that each Party shall select a nominating person within ten (10) days of notice of the dispute from the other Party. The City shall select one (1) nominating person, and the PUD shall select one (1) nominating person. The two (2) nominating persons shall then meet and promptly select the arbitrator who shall be an experienced and impartial arbitrator. If the nominating persons, within thirty (30) days of the first notice, do not select a person who agrees to serve as arbitrator, the arbitrator shall be selected by a Superior Court Judge of Clallam County. 20 SEVERABILITY If within five (5) years of the date this Agreement is first signed by the Parties, any provision of this Agreement or the application of any such provision shall be held to be invalid due to lack of authority of a Party, all other provisions of this Agreement and their application shall not be affected thereby but shall remain in force and effect unless a court holds 22 they are not severable from the invalid provision. If more than five (5) years from the date this Agreement is first signed by the Parties, any provision of this Agreement or the application of any such provision shall be held to be invalid as a result of lack of authority of a Party, this entire Agreement shall be held invalid. This paragraph is not intended to limit the Agreement of the Parties to arbitrate disputes as provided in Section 19 above. IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their respective authorized officials. Executed as of this 16th day of August , 2006. CITY O~ PORT ANGELES Karen A. 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