BOARD MEETING AGENDA February 21, 2018

Transcription

1 BOARD MEETING AGENDA February 21, 2018 Board President Richard Burke Vice President Bernice Bagnall Secretary Dick Schmidt Treasurer Jim Duggan Acting Secretary Jim Doane To prepare to address the Board, please fill out the Public Comment Form located on the table near the main door to the meeting room. All testimony is electronically recorded. You are not required to give your address when speaking to the Board of Commissioners, only your name. Public participation is encouraged. Assistive listening devices are available upon request 48 hours prior to the day of the meeting by calling (503) For additional questions or assistance, see the District Recorder seated near the windows. Meetings are streamed live on and are broadcast by Tualatin Valley Community Television (TVCTV) Government Access Programming at a later date. To obtain the monthly programming schedule, contact TVCTV at (503) or visit For online meeting information, Commissioner bios and more, visit VISION Delivering the best water service value MISSION STATEMENT To provide our community quality water and customer service VALUES Reliability Integrity Stewardship Excellence Safety

2 EXECUTIVE SESSION 6:00 PM MAIN CONFERENCE ROOM An executive session of the Board is called under ORS (2)(e) to conduct deliberations with persons designated by the governing body to negotiate real property transactions, ORS (2)(f) to consider information or records that are exempt by law from public inspection and ORS (2)(h) to consult with counsel concerning the legal rights and duties of a public body with regard to current litigation or litigation likely to be filed. REGULAR SESSION 7:00 PM CALL TO ORDER REPORTS BY THE CHIEF EXECUTIVE OFFICER AND MANAGEMENT STAFF COMMISSIONER COMMUNICATIONS A. Reports of meetings attended B. Topics to be raised by the Commissioners PUBLIC COMMENT This time is set aside for persons wishing to address the Board on items on the Consent Agenda and matters not on the agenda. Additional public comment will be invited on agenda items as they are presented. Each person is limited to five minutes, unless an extension is granted by the Board. Should three or more people testify on the same topic, each person will be limited to three minutes. 1. CONSENT AGENDA These items are considered to be routine and may be approved in one motion without separate discussion. Any Board members may request that an item be removed by motion for discussion and separate action. Any items requested to be removed from the Consent Agenda for separate discussion will be considered immediately after the Board has approved those items which do not require discussion. A. Approve the January 17, 2018 regular meeting minutes. B. Approve the February 6, 2018 work session minutes. 2. BUSINESS AGENDA A. Consider adopting Resolution No , a resolution amending system development charges for the Tualatin Valley Water District and declaring an effective date. B. Consider adopting Resolution No , a resolution approving the Intergovernmental Agreement between the City of Beaverton and Tualatin Valley Water District Relating to the Provision of Domestic Water.

3 3. PUBLIC HEARING A. Consider the following actions related to the Willamette Intake Facilities intergovernmental agreement to form the Willamette Intake Facilities Commission, an intergovernmental entity formed under ORS Chapter 190 between Tualatin Valley Water District and the cities of Hillsboro, Sherwood, Beaverton, Tigard and Wilsonville: Consider approving a motion to read by title only Ordinance No ; Conduct a public hearing; Consider adopting Ordinance No ; and Consider approving a motion authorizing the Chief Executive Officer to execute the intergovernmental agreement following execution by all other parties. 4. BUSINESS AGENDA (CONTINUED) A. Consider the following actions regarding the Willamette Intake Facilities: Consider adopting Resolution No , a resolution approving the Agreement for Transfer, Purchase and Sale of the Willamette Intake Facilities between Tualatin Valley Water District and the City of Beaverton; Consider adopting Resolution No , a resolution approving the Agreement for Transfer, Purchase and Sale of the Willamette Intake Facilities between Tualatin Valley Water District and the City of Hillsboro; Consider adopting Resolution No , a resolution approving the Agreement for Transfer, Purchase and Sale of the Willamette Intake Facilities between Tualatin Valley Water District and the City of Sherwood; and Consider adopting Resolution No , a resolution approving the Agreement for Transfer, Purchase and Sale of the Willamette Intake Facilities between Tualatin Valley Water District and the City of Tigard. B. Consider appointing a representative and alternate from the TVWD Board to serve on the newly formed Willamette Intake Facilities Commission. ADJOURNMENT

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5 Link back to agenda 1A Board Meeting Minutes January 17, 2018 REGULAR SESSION 7:00 PM CALL TO ORDER Commissioners Present: Bernice Bagnall; Richard Burke; Jim Doane, PE; Dick Schmidt Commissioner Absent: Jim Duggan, PE Staff Present: Mark Knudson, PE, Chief Executive Officer; Clark Balfour, General Counsel; Andrew Carlstrom, Customer Service Manager; Dave Kraska, PE, Water Supply Program Director; Paul Matthews, Chief Financial Officer; Carrie Pak, PE, Chief Engineer; Collin Fleming, Building and Grounds Maintenance Supervisor; Tod Burton, Financial Planning Debt Project Manager; Debbie Werner, District Recorder Other Attendees: Wendy Paris; Tom Willms REPORTS BY THE CHIEF EXECUTIVE OFFICER AND MANAGEMENT STAFF Mr. Kraska presented the Safety Minute on smoke alarm and fire extinguisher recalls. Mr. Knudson described the recent District computer network upgrade, Oregon Administrative Rules amendment regarding water master plans and upcoming meetings and staff activities (see attached memo). Mr. Kraska gave the department report on Willamette Water Supply Program (WWSP) key accomplishments, upcoming projects and ongoing construction (see attached presentation). In response to questions, he said the estimated cost of a butterfly valve included in the SW Tonquin Road waterline installation is more than $100,000 and that he is pleased with how projects are progressing. COMMISSIONER COMMUNICATIONS A. Reports of meetings attended Commissioners described and submitted a list of meetings they attended in the last month (see attached forms). B. Topics to be raised by the Commissioners There was none.

6 PUBLIC COMMENT A. Wendy Paris, District customer, described a recent experience with a new water meter and accompanying water quality issues. Mr. Knudson directed Engineering and Operations staff to follow up with Ms. Paris and provide water quality testing results. 1. PUBLIC HEARING A. Consider approving a motion to read by title only the draft ordinance approving the Willamette Intake Facilities intergovernmental agreement to form the Willamette Intake Facilities Commission, an intergovernmental entity formed under ORS Chapter 190 between Tualatin Valley Water District and the cities of Hillsboro, Sherwood, Beaverton, Tigard and Wilsonville, and conduct a public hearing to receive oral testimony or written comments, close the hearing and direct that the ordinance be brought back for a second reading and adoption at the February 21, 2018 Board meeting. Commissioner Burke opened the public hearing. Motion was made by Bagnall, seconded by Schmidt, to read the ordinance by title only. The motion passed unanimously with Bagnall, Burke, Doane and Schmidt voting in favor. Mr. Balfour read the ordinance title. Mr. Balfour described the terms of the Willamette Intake Facilities (WIF) intergovernmental agreement, including its purpose, parties, assets, governance, managing agency, organization, expansion/upgrade provisions, advisory committees, finances, land considerations, water rights, related plans, withdrawal process, lease of capacity, system usage and default/performance provisions (see attached presentation). In response to a question, he said that if one member cannot vote, the number of votes needed to take action adjusts automatically. The same is true for the number of members required to reach a quorum. There was no testimony. The public hearing was closed. 2. CONSENT AGENDA A. Approve the December 20, 2017 regular meeting minutes. Commissioner Burke asked if there were any objections to approving the Consent Agenda. There were none, and the Consent Agenda was approved unanimously.

7 3. BUSINESS AGENDA A. Consider adopting Resolution No , a resolution adopting the investment policy for the Tualatin Valley Water District. Mr. Burton described the key elements, investment objectives, strategy and proposed changes to the District s investment policy (see attached presentation). Motion was made by Doane, seconded by Schmidt, to adopt Resolution No , a resolution adopting the investment policy for the Tualatin Valley Water District. The motion passed unanimously with Bagnall, Burke, Doane and Schmidt voting in favor. B. Consider adopting Resolution No , a resolution adopting a supplemental budget for the biennium to fund and authorize positions within the Willamette Water Supply Program. Mr. Matthews gave an overview of the presentation before Mr. Kraska described the staffing structure of the WWSP, expanded managing agency activities and associated staffing needs, as well as discussed next steps (see attached presentation). In response to a question, he said that a manager is generally in charge of more staff as compared to a supervisor. Mr. Matthews explained the supplemental budget process, proposed budget actions and upcoming activities related to the WIF. Motion was made by Bagnall, seconded by Schmidt, to adopt Resolution No , a resolution adopting a supplemental budget for the biennium to fund and authorize positions within the Willamette Water Supply Program. The motion passed unanimously with Bagnall, Burke, Doane and Schmidt voting in favor. ADJOURNMENT There being no further business, President Burke adjourned the meeting at 8:10 p.m. Richard Burke, President Dick Schmidt, Secretary

8 MEMO Date: January 17, 2018 To: Tualatin Valley Water District Board of Commissioners From: Mark Knudson, CEO Re: Chief Executive Officer and Management Staff Report The following items will be covered during the report by the CEO and management staff: 1. Safety Minute Dave Kraska from the Willamette Water Supply Program Department. 2. Network Refresh Over the past MLK weekend, TVWD IT staff successfully restructured and reconfigured the District s existing computer network. This has been a long planned, scheduled activity that included replacing a large number of computer switches and related devices as well as updating some of the wiring of these devices to conform with new standards and implement better technology to improve the reliability, efficiency and security of the District s network. While this sounds a little bit like inside baseball, it s very notable that this significant activity was completed with no impact to District customers. Tim Boylan and his IT team did an amazing job planning and coordinated with our staff to make sure that it all happened with essentially no noticeable affect to our mission of providing quality water and customer service to our community. 3. Amendment to Oregon Administrative Rules for Water Master Plans. At TVWD s September Board meeting, I explained that the Oregon Health Authority (OHA) was considering an amendment to the Oregon Administrative Rules (OAR Chapter 333, Division 61), which would add a requirement for water providers to include a seismic risk assessment and mitigation plan to the required scope of water system master plans. Based on the Board s feedback and the District s experience from having completed a seismic risk assessment as part of our Master Plan in 2014, the District assumed an active role in providing input and comment on the proposed rule. I am pleased to report that last week OHA moved forward with the proposed rule requiring most water systems to conduct a seismic risk assessment. We think this new rule will result in significant benefits in improving the preparedness and resilience of water systems throughout the state. I also want to thank Todd Perimon for leading the team responsible for helping draft the rule, which included representatives from the Oregon Health 1850 SW 170th Avenue, Beaverton, Oregon // phone // fax //

9 CEO & Management Staff Report to the TVWD Board of Commissioners January 17, 2018 Page 2 Authority, Oregon Water Utility Council, Special Districts Association of Oregon and the League of Oregon Cities. 4. Joint Meeting with Hillsboro Scheduled. Our annual joint meeting with the Hillsboro Utilities Commission is scheduled for Wednesday, March 14, at 5:45 p.m. at District headquarters. 5. Dan Barstow is Retiring. Just a heads up that Dan Barstow 21 year employee with the District s accounting team will be retiring at the end of this month. Dan has a remarkable mind for numbers, facts and figures, and he will be missed at many levels. The Commissioners are invited to attend Dan s farewell celebration on Tuesday, January 30 at 4:00 p.m. 6. CEO Activities. I will be out of the office Thursday and Friday this week attending the Water Research Foundation board meeting in Savannah, Georgia. While I am gone, Carrie Pak will be Acting in Capacity for the CEO. I will be checking occasionally while I m gone and will be available via cell phone. I will be back in the office on Monday, January Department Report. In keeping with the District s mission to provide our community with quality water and customer service, Dave Kraska, the Willamette Water Supply Program Director, will present the Department Report this evening.

10 1/18/2018 Willamette Water Supply Program Department Report January 17, 2018 WWSP Progress Summary Presentation Outline Key Accomplishments Forward Focus Construction Update 9 1

11 1/18/2018 Key Accomplishments Progressed procurements PLE_1.0 design (executed) Survey services (executed) DEA contract renewal (executed) Corrosion consulting services (executed) RWF_1.0 Construction Manager/General Contractor (2 nd early Daily Journal of Commerce notice; solicitation prep) WTP_1.0 (alt. delivery exemption Local Contract Review Board (LCRB) pending; 2 nd early DJC notice; design solicitation prep) Completed land use permitting strategy Developed plan and schedule for updating Master Plans Real estate Prepared offer benefit package for RES_1.0 site Prepared draft annual rebaseline Progressed multiple intergovernmental agreements (IGAs) and other agreements Initiated facilities seismic design guidance Advanced designs 10 pipelines (PLM_1.1, PLM_1.2, PLM_4.1, PLM_4.3, PLM_5.1, PLM_5.2, PLM_5.3, PLW_1.1 Extension, PLW_1.2, PLW_1.3) RWF_1.0 WTP concept design report Continued preparation for PLW_1.1 Extension construction change order Continued pipelines construction (PLM_2.0, PLM_3.0, PLW_1.1) 10 Project Delivery Progress Work Package RWF_1.0 PLM_1.1 PLM_1.2 PLM_1.3 PLM_2.0 PLM_3.0 WTP_1.0 PLM_4.1 PLM_4.2 PLM_4.3 PLM_5.1 PLM_5.2 PLM_5.3 RES_1.0 PLW_1.1 PLW_1.1 Ext. PLW_1.2 PLW_1.3 PLW_2.0 PLE_1.0 Concept/ Prelim. Routing 30%/50% 60%/70% 90% 100% Complete Design Active Work Construction 11 2

12 1/18/2018 Protect Safety/Admin./Outreach/Finance People Clear & Controls the Path /Quality, Value, & Risk/GIS/WG Deliver the Projects (Safety) Safety Program Mgt Contractors Safety Mgt Safety Training Enable the Team (Admin./Controls/Procurement/GIS) Financial, Schedule, GIS Data, Reporting & Records Management Procurements o RWF_1.0 CM/GC o WTP_1.0 Design o RES_1.0 Landscape Architect o Program Management Office Space Planning o PLW_1.1 Extension Baseline 3.1 Development Program Dashboard Program Management Plan Annual Update Key Top Priority Next Top Priority Still Important (Permits/Real Estate/Governmental) Joint Permit Application (JPA)/Biological Assessment/Cultural o Monitoring & Responses o Supplemental Surveys o State Historic Preservation Office Prog. Agmt./Inadvertent Discovery Plan Land Use o Water Treatment Plant (WTP) Partitioning Clean Water Services Provider Letter Real Estate o RES_1.0 Offer Benefit o Easements & Rights of Entry (ROE) IGAs/Agreements o PLW_1.1 Newland Mods o PLW_1.1 Extension Newland o PLM_5.1 Construction IGA o PLM_5.1 Tigard IGA o PLM_5.1 Polygon o PLM_5.2 West Hills o PLW_1.3 Butternut o Willamette Governance Group IGAs & Wilsonville Ground Lease o PLM_4.2 Design IGA Projects Permit Inventories Master Plans Update (Planning/Design/Construction/Risk) Design o RWF_1.0 o PLM_1.1, PLM_1.2 o PLM_4.1, PLM_4.3 o PLM_5.1, PLM_5.2, PLM_5.3 o PLW_1.1 Extension, PLW_1.2, PLW_1.3 o PLE_1.0 o WTP_1.0 Conceptual Design o RES_1.0 Conceptual Design Construction o PLM_2.0 o PLM_3.0 o PLW_1.1 Portland General Electric Service Coordination Semiannual Risk Update PLW_2.0 Orenco Amenity Facilities Seismic Design Checklist Controls Strategy Operations/Maintenance Planning Earn & Foster Trust (Outreach) Projects Support & Recurring Stakeholder Contact Real Estate Support 12 Forward Focus Continue procurements RWF_1.0 CM/GC (solicitation prep.) WTP_1.0 (Alt. delivery exemption LCRB; design solicitation prep.) PLM_1.1 and PLM_1.2 (invitation to bid prep.) PLM_5.1 (Washington Co. invitation to bid prep.) PLW_1.1 Extension construction change (request for quote) Address JPA comments from resource agencies Conduct additional wetlands and cultural resource surveys Begin preparing for WTP property partitioning Progress property (RES_1.0 site) and ROE acquisitions (as needed) Review and refine annual rebaseline Progress IGAs and agreements Advance facilities seismic design guidance Continue design 10 pipeline work packages (PLM_1.1, PLM_1.2, PLM_4.1, PLM_4.3, PLM_5.1, PLM_5.2, PLM_5.3, PLW_1.1 Extension, PLW_1.2, PLW_1.3) PLE_1.0 alternatives RWF_1.0 WTP_1.0 conceptual design report RES_1.0 conceptual design (for land use) Continue pipelines construction (PLM_2.0, PLM_3.0, PLW_1.1) 13 3

13 1/18/2018 Construction Update Projects currently in construction PLW_1.1 (South Hillsboro) PLM_3.0 (124 th Ave.) PLM_2.0 (Kinsman Rd.) 14 PLM_2.0 Partners: Oregon Department of Transportation and City of Wilsonville Contractor: Emery and Sons Designer: CH2M Current and Planned Activities: Fencing Preliminary Deficiency List Final Submittals 15 4

14 1/18/2018 PLM_2.0 Construction Photos 16 PLM_2.0 Progress Status Construction Cost (Emery and Sons) Total contractor price $3,876,346 Total cost to date $3,774,612 Percent complete 97.4% Construction Schedule Construction notice to proceed (NTP) July 3, 2016 Substantial completion date June 30, 2018 Percent time elapsed 70.8% Executed Change Orders Total change order amount $106,019 Percent of original price 2.8% 17 5

15 1/18/2018 PLM_2.0 Notable Topics Partner Coordination No issues; road to open early Potential Claims No significant issues Delivery Challenges None 18 PLM_3.0 Partner: Washington Co. Contractor: Kerr Contractors Oregon Designer: HDR Current and Planned Activities: Continuing waterline installation on SW Tonquin Rd. from railroad crossing toward 124 th Ave. (1,100 linear feet) Installed air valve vaults and 66 inline butterfly valve NW natural gas line and road construction to follow on Tonquin Rd. 19 6

16 1/18/2018 Construction Photos PLM_ PLM_3.0 Progress Status Construction Cost (Kerr Contractors) Total contractor price $9,578,378 Total cost to date $1,212,322 Percent complete 12.7% Construction Schedule Construction NTP April 1, 2016 Substantial completion date December 31, 2018 Percent time elapsed 54.5% Change Orders Total change orders to date $564,993 Percent of original price 5.9% Status Date: Through September (quarterly invoicing) 21 7

17 1/18/2018 PLM_3.0 Notable Topics Partner Coordination Washington County concerned with overall schedule Potential Claims Unforeseen conditions Delivery Challenges Continued slow progress on waterline work 22 PLW_1.1 Partner: Coordinated with Newland Contractor: Kerr Contractors Oregon Designer: Kennedy/Jenks Current and Planned Activities: TV Hwy turnout 30 piping and vaults Air valve vaults on 48 mainline Fix gasket issue on north end and repeat preliminary pressurization 23 8

18 1/18/2018 Construction Photos PLW_ PLW_1.1 Progress Status Construction Cost (Kerr Contractors) Total contractor price $3,525,991 Total cost to date $2,666,463 Percent complete 75.6% Construction Schedule Construction NTP March 1, 2017 Substantial completion date September 29, 2017 Percent time elapsed 100% Change Orders Total change orders to date $9,361 Percent of original price 0.03% 25 9

19 1/18/2018 PLW_1.1 Notable Topics Partner Coordination No current impacts to Newland projects Amendment to memorandum of understanding under way Potential Claims None Delivery Challenges Kerr behind schedule Valve/actuator/seismic controller supplier late delivery Gasket repairs delaying pressure test completion 26 QUESTIONS 27 10

20 1/18/2018 Willamette Intake Facilities IGA January 17, 2018 Regular Meeting Clark Balfour General Counsel Willamette Intake Facilities Intergovernmental Agreement I. Purpose: Sets forth the terms for the joint ownership, management and operation of the Intake Facilities in a prudent, economic, and efficient manner to provide water to the Willamette River Water Treatment Plant (WRWTP) and the Willamette Water Supply System (WWSS) Six parties 22 whereas s establishing the basis and background 60 pages excluding exhibits 29 11

21 1/18/2018 Willamette Intake Facilities IGA Summary II. Parties and Assets: Creates the Willamette Intake Facilities (WIF) Commission, a Chapter 190 entity between TVWD, Wilsonville, Sherwood, Hillsboro, Beaverton and Tigard to own, operate, maintain, manage, construct, repair and replace the WIF. WIF assets: existing and expanded intake facility assets at the WRWTP consisting of new screens, intake pipe, caisson, pump station building, instrumentation and control (I&C) and seismic improvements. WWSS only facilities not included: raw water pipe, electrical ductwork, control building, surge tanks, I&C, pumps. There is a defined system separation point between WWSS and WIF. 30 Willamette Intake Facilities IGA Summary III. Governance: Six member Board with one alternate each. Each entity has one vote. Member and alternate appointed by boards or councils. Board manages the business affairs of the WIF Commission for the mutual benefit of all (powers and duties listed in Section 4.7). Board appoints Managing Agency as staff. Approving votes require five of six. Unanimous vote required on joinder of new members, amendment of the agreement and dissolution of Commission

22 1/18/2018 Willamette Intake Facilities IGA Summary IV. Managing Agency: TVWD is Managing Agency until 2032: Until 2026, Wilsonville will continue to manage the intake to serve the WRWTP. TVWD will have responsibility for the WIF Commission and all matters related to the expansion project. From 2026 to 2032, TVWD will be the sole Managing Agency responsible for the WIF to deliver water to the WRWTP and the WWSS facilities. Post 2032, the Managing Agency will be appointed to six year terms with annual review and opportunity for change of Managing Agency through a proposal process. Exhibit 6 is the Initial TVWD Management Plan. Draft Annual Work Plan developed by TVWD. Staffing Plan under formulation by TVWD. Powers and Duties outlined in Section Notes: 1. Appointed by governing bodies of each Party 2. Provides its and Management Committee s recommendations to Board 3. Provides support to and consults with all committees 4. Provides recommendations to Managing Agency 5. Serve as liaisons to Parties governing bodies 6. Provides recommendations to Management Committee WIF Operations Committee 6 WIF Organization WIF Board of Commissioners 1 WIF Managing Agency 2, 3 WIF Management Committee 4, 5 WIF Finance Committee 6 WIF Operator Other WIF Committees 6 13

23 1/18/2018 Willamette Intake Facilities IGA Summary V. Expansion and Upgrade: 120 to 150 million gallons per day (MGD) Managed by TVWD/WWSP Allocation of Capacity Willamette Intake Facilities Capacity Ownership Entity Capacity (mgd) (1) Percent Wilsonville % Tualatin Valley Water District % Sherwood % Tigard % Hillsboro % Beaverton % Total % 34 Willamette Intake Facilities IGA Summary V. Expansion and Upgrade Continued: Allocation of Buy In for Existing Facilities Resulting Capacity and Cost of Purchase for WIF Assets Acquired from TVWD Acquired Capacity (MGD) from TVWD by Party by Asset Project Element Wilsonville TVWD Sherwood Tigard Tualatin Hillsboro Beaverton Total Screening Intake Pipe Wetwell Pump Station Building Cost of Purchase ($) from TVWD by Party by Asset Project Element Wilsonville TVWD Sherwood Tigard Tualatin Hillsboro Beaverton Total Screening $ $ $ $ $ $ $ $ Intake Pipe $ $ $ 50,462 $ 219,399 $ $ 529,482 $ 73,133 $ 872,476 Wetwell $ $ $ 80,739 $ 351,038 $ $ 847,171 $ 117,013 $ 1,395,961 Pump Station Building $ $ $ 41,355 $ 179,802 $ $ 433,923 $ 59,934 $ 715,014 Total $ $ $ 172,555 $ 750,239 $ $ 1,810,577 $ 250,080 $ 2,983,

24 1/18/2018 Willamette Intake Facilities IGA Summary V. Expansion and Upgrade Continued: TVWD Minimum Capacity Guarantee of design capacity for TVWD (56.5 MGD), Wilsonville (20 MGD) and Sherwood (5 MGD). Others must reduce to accommodate these thresholds if actual capacity is less than 150 MGD. Expansion: Provision for future expansion. 36 Willamette Intake Facilities IGA Summary VI. Advisory Committees: Management Committee CEOs, City Managers or designees Members serve as liaisons to each respective governing body Provides input and recommendations to the Managing Agency Finance Committee People knowledgeable in municipal finance laws and practices Provides recommendations to the Management Committee Recommends financial procedures to be implemented by the Managing Agency Operations Committee People technically knowledgeable in water system operations or engineering Managing Agency to advise and consult with the Operations Committee Operations Committee to respond to requests from the Management Committee Other committees as needed 37 15

25 1/18/2018 Willamette Intake Facilities IGA Summary VII. Finances: Financial Reporting and Budget Approval Process Managing Agency drafts budget and submits to Ops and Finance committees Ops and Finance committees meet, review and revise budget with Managing Agency Ops and Finance committees recommend budget to Management Committee (no later than March 15) Following any final revisions, Managing Agency to distribute to the WIF Board (April) VIII. Land: Easement for facilities. There are two easements: From Wilsonville and TVWD, as property owners, to the WIF Commission for the intake facility footprint From Wilsonville and TVWD to the WWSS (TVWD, Hillsboro, Beaverton and Tigard) for the WWSS facilities from the system separation point through the remainder of the Wilsonville and TVWD property 38 Willamette Intake Facilities IGA Summary IX. Water Rights: Each party responsible to bring water rights. TVWD, Tigard, Sherwood rely on Willamette River Water Coalition right. Perfection of water rights limited to owned WIF capacity unless otherwise approved by the Board X. Plans: Operations Plan Complete prior to startup of WWSS Curtailment Plan Emergency Response Plan Capital Improvement Plan 39 16

26 1/18/2018 Willamette Intake Facilities IGA Summary XI. Withdrawal Process: Notice Right of first offer/sale Wilsonville and TVWD IGA right of first offer still applies to TVWD s 56.5 MGD and Wilsonville s 25 MGD. After satisfaction of the TVWD/Wilsonville right of first offer, then the right of first offer extended to the entire group (like Joint Water Commission). The price and terms are negotiated. 40 Willamette Intake Facilities IGA Summary XII. Lease of Capacity: Leasing of capacity and water provisions Special Wilsonville process because of existing provisions (First Offer) Firm and interruptible leases available XIII. System Usage: Overuse provisions, terms, remedies and compensation 41 17

27 1/18/2018 Willamette Intake Facilities IGA Summary XIV. Default and Performance: Provisions for Default, Notice and Opportunity for Cure Remedies Loss of voting privileges Monetary losses Termination of water service subject to certain limits and details related to availability of supplies Dispute resolution procedures 42 Resolution Adopting the Investment Policy Resolution No Tod Burton Financial Planning & Debt Project Manager January 17,

28 1/18/2018 District s Investment Policy Key Elements District adopts Investment Policy annually Allows the District to invest in securities with maturities exceeding 18 months Required by ORS Recommendations by District s professional investment advisor Investment objectives Authorized investments Requirements for portfolio diversification 44 Investment Objectives Guiding Principles Remain Unchanged Safety Liquidity Limit risk Legality Return 45 19

29 1/18/2018 Investment Strategy Balancing Risk and Return Yields have risen over the last two years Interest rate risk the longer the maturity the more sensitive the market value of the portfolio is to changes in interest rates TVWD has stayed shorter in the market Capital expenditures for water supply and in District infrastructure Attractive Local Government Investment Pool (LGIP) yield Meet regularly with investment advisor to refine strategy Analyze District cashflow needs and market trends Establish average maturity benchmarks 46 Balancing Risk and Return Investment Strategy TVWD generally holds securities to maturity (book yield) As interest rates increase, District is positioned to take advantage of higher rates As interest rates increase, some securities may lose market value; however, District earns the book yield on investments Keeping focused on the total portfolio yield Average maturity benchmarks allows District to anticipate but not time market trends 47 20

30 1/18/2018 Proposed Changes to the Investment Policy Minor Edits to Improve Clarity Use of consistent spelling of advisor Change title of glossary term on page 16 from Prudent Man Rule to Prudent Person Rule 48 Staff Findings and Recommendation Findings Proposed Resolution No complies with ORS Follows Oregon Short Term Fund Board guidelines Incorporates minor edits recommended by the District s Investment Advisor Recommendation Staff recommends adopting Resolution No , a resolution adopting the Investment Policy for the Tualatin Valley Water District 49 21

31 1/18/2018 Willamette Water Supply Program Staffing Plan and Supplemental Budget Request January 17, 2017 Overview of Presentation Willamette Water Supply Program (WWSP) staffing plan Supplemental budget process Resolution No

32 1/18/2018 Staffing Plans for the Willamette Water Supply Program and the Managing Agency January 17, 2018 WWSP Staffing Designed to Complete and Manage Interrelated Tasks Design and Build the Infrastructure Control Finances and Schedule Overall Management and Coordination Obtain Approvals From Agencies Anticipate and Avoid or Manage Risks Acquire Real Estate 53 23

33 1/18/ WWSP Program Management Office Executive Committee Mark Knudson / KevinHanway Office of the Director Legal Counsel Cable Huston ProgramManager Bill VanDerveer ProgramDirector Dave Kraska ProgramCoordinator JoelleBennett ExecutiveAdminstrative Assistant FayeBranton Permitting, Communications, and Water Resources Manager Planning, Design &Construction Quality, Risk, Real Estate & Delivery Finance, Controls & Administration Safety &Security Permitting, Communications, and ResourcesManager Niki Iverson Engineering & Construction Manager Mike Britch ProgramDelivery & Real EstateManager ToddPerimon Finance &Administrative Supervisor JustinCarlton Safety &Security Supervisor Mike Jacobs Communications & Public Affairs Supervisor MarlysMock Public & Business OutreachSpecialist DavidMarciniak Permitting and Resources Coordinator JillChomycia EIT Faride Abzade DesignManager MattGribbins Conveyance Design Manager Russ Snow GISAnalyst ScottFortman RWF/WTP Design Manager Tim Tekippe Construction Manager AndreTolme DeputyConstruction Manager KristinaMcLean ProjectDelivery Coordinator DeborahRose QualitySupport staff Procurement & Contracts Administrator SkipHenkel Controls Manager JeremyTaylor Documents &Controls Specialist JanetAnton ProgramScheduler RichEdwards Construction Health & Safety Coordinator Mike Doherty ControlsSpecialist DanPeterson Conveyance ProjectManager NickAugustus Conveyance ProjectManager CorianneHart Conveyance ProjectManager BrendanRobless Conveyance ProjectManager EricWard RWF ProjectManager JennMinton AdministrativeAssistant VirginiaAnderson Engineering Intern JustinCollinson Managing Agency Activities Will Expand the Scope of the WWSP Control Finances and Schedule Anticipate and Avoid or Manage Risks Design and Build the Infrastructure Overall Management and Coordination Acquire Real Estate Obtain Approvals From Agencies Willamette Intake Facilities (WIF), Willamette River Water Coalition (WRWC), Willamette Water Supply System (WWSS) Managing Agency Administration Managing Agency Activities Meetings Facilitation Records Administration Responding to Requests (public, media) Communications Legislative Updates Annual Work Plans Budgeting Capital Projects Management Operations and Maintenance Administration 55 24

34 1/18/2018 Program Activities Will Continue to Grow Through 2024 $300M $280.8M Estimated Annual Expenditure $250M $200M $150M $100M $50M $0M $19.2M 444% $31.1M $51.6M $87.8M $68.7M $179.8M $178.2M $168.5M $116.4M $40.6M $6.2M Baseline Staffing Changes Will Happen Over Time Executive Committee Mark Knudson / KevinHanway Office of the Director ProgramDirector Dave Kraska Legal Counsel Cable Huston ProgramManager Bill VanDerveer ProgramCoordinator JoelleBennett ExecutiveAdminstrative Assistant FayeBranton Permitting, Communications, and Water Resources Manager Permitting, Communications, and ResourcesManager TRANSITION Niki Iverson Planning, Design &Construction Engineering & Construction Manager Mike Britch Quality, Risk, Real Estate & Delivery ProgramDelivery & Real EstateManager ToddPerimon Finance, Controls & Administration Finance &Administrative Supervisor JustinCarlton Safety &Security Safety &Security Supervisor Mike Jacobs Communications & Public Affairs Supervisor MarlysMock Public & Business OutreachSpecialist DavidMarciniak Permitting and Resources Coordinator JillChomycia EIT Faride Abzade Conveyance ProjectManager NickAugustus DesignManager MattGribbins Conveyance Design Manager Russ Snow Conveyance ProjectManager CorianneHart GISAnalyst ScottFortman RWF ProjectManager JennMinton Conveyance ProjectManager BrendanRobless Construction Manager AndreTolme DeputyConstruction Manager KristinaMcLean Conveyance ProjectManager EricWard ProjectDelivery Coordinator DeborahRose QualitySupport staff Procurement & Contracts Administrator SkipHenkel Controls Manager JeremyTaylor Documents &Controls Specialist JanetAnton ProgramScheduler RichEdwards ControlsSpecialist DanPeterson AdministrativeAssistant VirginiaAnderson Construction Health & Safety Coordinator Mike Doherty Engineering Intern JustinCollinson 25

35 1/18/2018 We Reviewed Staffing Needs in Light of New Responsibilities, Increased Activities, and Team Transition Office of the Director Permitting and Public Involvement Planning, Design and Construction Quality, Risk, Real Estate and Delivery Finance, Controls and Administration Safety and Security 58 Summary of New WWSP Positions New Position Deputy Director Admin Assistant Permitting Manager Supervisor Deputy Engineering and Construction Manager Communications Assistant Water Treatment Plant Project Manager Commissioning and Startup Manager Construction Cost Estimator Construction Management Support TVWD or Consultant TVWD TVWD TVWD TVWD Consultant Consultant Consultant Consultant Consultant 59 26

36 1/18/2018 Planned Next Steps Refine position descriptions Confirm TVWD positions Perform grade review 60 Supplemental Budget Process Oregon Local Budget Law Requires specific notice of meeting Resources and requirements must balance Based on the action of the Board of Commissioners Passing Resolution No implements the supplemental budget

37 1/18/2018 Resources and Requirements Resources Recognition of increases in Sales to Other Funds Capital Outlay in Willamette Water Supply Program Fund (Fund 15) will be recognized as Sales to Other Funds rather than capital outlays paid to outside contractors Requirements Reduction in appropriation of General Fund General Operating Contingency Increase in appropriation for General Fund Personnel Services 62 Budget Actions Description FY2018 FY2019 Biennium Total General Fund Resources Sales to Other Funds (Fund 15) $151,000 $474,000 $625,000 Total Resources $151,000 $474,000 $625,000 Requirements Personnel Services $214,000 $682,000 $896,000 Reduction in General Operating Contingency (63,000) (208,000) (271,000) Total Requirements $151,000 $474,000 $625,

38 1/18/2018 Upcoming Activities Prepare proposed budgets for the Willamette Intake Facilities (WIF) Commission Propose a supplemental budget for TVWD: Create a new fund within the District for the WIF similar to the WRWC Fund Provide appropriations within the new fund that authorize expenditures Provide appropriations within the District s General Fund to fund the District s dues to the WIF Commission TVWD s supplemental budget is required for the WIF Commission to adopt its budget 64 Findings and Recommendations Findings WWSP staffing plan recommends four new positions New positions will be funded largely by existing appropriations within the WWSP budget District s financial position is strong and can support the new positions Recommendations Adopt Resolution No , a resolution adopting a supplemental budget to fund and authorize four positions within the WWSP 65 29

39 1/18/2018 Questions and Answers WWSP Staffing Plan and Supplemental Budget Request January 17,

40 Signed and approved

41 Signed and approved

42 Signed and approved

43 Signed and approved

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45 Link back to agenda 1B Board Work Session Minutes February 6, 2018 WORK SESSION 6:00 PM CALL TO ORDER Commissioners Present: Bernice Bagnall; Richard Burke; Jim Doane, PE; Jim Duggan, PE; Dick Schmidt Staff Present: Mark Knudson, PE, Chief Executive Officer; Clark Balfour, General Counsel; Carrie Pak, PE, Chief Engineer; Dave Kraska, PE, Water Supply Program Director; Paul Matthews, Chief Financial Officer; Andrew Carlstrom, Customer Service Manager; Bob Shields, Finance and Accounting Supervisor; Pete Boone, PE, Senior Engineer; Joel Cary, Water Resources Division Manager; Joe Healy, Senior Management Analyst; Andrea Watson, Communications and Public Affairs Supervisor; Debbie Werner, District Recorder ANNOUNCEMENTS Mr. Knudson presented the Safety Minute on tsunami warning and response. He also gave updates on Portland s Cryptosporidium detections, an upcoming work session topic and his conference attendance later in the week (see attached memo). 1. DISCUSSION ITEMS A. Update on Affordability Issues Mr. Matthews described industry affordability trends and definitions, District customer income demographics, types of assistance programs and Rate Advisory Committee recommendations (see attached presentation). Commissioner feedback included: The hope that additional affordability strategies are generated given anticipated rate increases Favoring targeted strategies to allow greater benefit from those who need it most Taking care to not abandon costs of service Describing a scenario where a property management company can pass through higher water charges due to leaks to renters and then pocketing the leak adjustment rebate February 6, 2018 work session minutes Page 1 of 3

46 In response to the latter, Mr. Matthews said staff can review the leak adjustment policy for potential mitigating strategies. And in response to another question, he said available demographic data are not refined enough to know the percentage of customers that are in rental units and master metered, but staff has access to statistics that break down rental and owneroccupied housing by neighborhood as well as Supplemental Nutrition Assistance Program statistics. B. Options for Adjusting the District s System Development Charges (SDCs) for Changes in the Cost of Construction Mr. Matthews reviewed SDC methodology, past practices, comparisons with other communities and potential options for implementation (see attached presentation). In response to questions, he said: In 2014, there was no sudden increase in developers making payments prior to the second in the two step SDC increase. Developers are most concerned when SDC increases occur after they have already generated their business plans, effectively shrinking profit margins. He will provide information on non water related SDC amounts charged by other agencies during his presentation at the February Board meeting. If the District does not increase SDCs, ratepayers end up subsidizing a greater portion of water system improvements. Commissioners said they are interested in implementing a single, full increase at the February Board meeting. C. TVWD Board Representative to the Willamette Intake Facility Commission Commissioner Doane indicated interest in serving as the primary representative, and Commissioner Schmidt as the alternate, to the Willamette Intake Facility Commission. Board action is anticipated at the February Board meeting. Mr. Knudson encouraged both Commissioners to consider who amongst the agencies, when representatives names are known in the coming months, might be the best fit for the presiding officer role. D. TVWD Beaverton Service Area Agreement Mr. Knudson provided background information on the need for service area agreements, both agencies objectives, status of negotiations, components of the agreement, outcomes, observations and next steps (see attached presentation). In response to questions, staff said: Customers will not see a change on their bills during the interim service window; it is the City s obligation to notify them of changes. February 6, 2018 work session minutes Page 2 of 3

47 The Red Tail Golf Course is currently owned by the City of Portland and staff is unaware of proposals that would result in impending redevelopment. When withdrawals occur in multiple steps within a single withdrawal area, such as Waterhouse, reimbursements to the District will occur over time to match the staggered timing anticipated for the withdrawals. The effects on anticipated rate increases can be discussed during the next financial plan update. E. Gold Plan Improvements for TVWD s Contract Backflow Testing Mr. Cary proposed a subscription based plan, described the billing timing change, benefits of the improvements, elements of program administration and communication efforts and next steps (see attached presentation). Commissioners on the Gold Plan expressed appreciation for the service. ADJOURNMENT There being no further business, President Burke adjourned the meeting at 7:58 p.m. Richard Burke, President Dick Schmidt, Secretary February 6, 2018 work session minutes Page 3 of 3

48 MEMO Date: February 6, 2018 To: TVWD Board of Commissioners From: Mark Knudson, CEO Re: CEO Announcements I will cover the following items during the CEO s Announcements at the work session: 1. Be Sure to Use Microphones Just a reminder to please be sure to use your microphone whenever you are speaking during the work session this evening. Also, please be sure to turn off your microphone when you are not speaking. 2. Safety Minute I will present the safety minute this evening. 3. Cryptosporidium Update Portland had yet another crypto positive sample. Two Cryptosporidium oocysts were detected in a 50 liter sample collected on Tuesday, January 30. Prior to that detection, Cryptosporidium was last detected from the Bull Run Watershed intake on January 15, 2018, when one oocyst was detected in a 50 liter sample. Portland continues to provide routine updates and has posted all Cryptosporidium results on their website. 4. Agenda Planning In response to multiple requests, we will include the topic of Board Policy Updates on the agenda for the March 6 Board work session. 5. Out of the Office A quick reminder that several of us will be attending the annual conference of the Special Districts Association of Oregon (SDAO) in Seaside next week. I will be out of the office late Thursday, February 8 through Saturday, February 10. While I am gone, Andrew Carlstrom will be AIC for the CEO. I will be back in the office on Monday, February Board Communications Log There are no updates to the Board communications log this month SW 170th Avenue, Beaverton, Oregon // phone // fax //

49 2/7/2018 Update on Affordability Issues Board Work Session February 6, 2018 Overview Affordability Industry Trends Demographics Trends Rate Advisory Committee (RAC) Recommendations Affordability Issues Other Issues 10 1

50 2/7/2018 Industry Trends on Affordability Update on Affordability Issues February 6, 2018 Customers Experience in Other Parts of the Economy Computing Cost Performance 12 2

51 2/7/2018 How Others Grow Revenue Wireless Usage Over Time 13 TVWD Water Consumption Trends Population in Thousands Gallons per capital per day (gpcd) TVWD Population Daily gpdc 3

52 2/7/2018 TVWD Water Consumption Trends Population in Thousands Billions of Gallons TVWD Population Sales (Gallons) Carriers Alter Business Models Internet Traffic in Gigabytes per Second 16 4

53 2/7/2018 Water Utilities as Natural Monopolies Very high fixed costs Impractical to have more than one firm Most efficient number of firms is one 17 Can Housing Become Affordable? 18 5

54 2/7/2018 Using MHI to Define Affordability Median Household Income (MHI) Originally developed for wastewater utilities Measure of community s ability to pay Affordability tests were also developed for drinking water utilities Affordability has ranged from 1.5% to 3.0% (typically 2.0% to 2.5%) Rating Agencies consider affordability and MHI 19 Remembering Statistics Mean Average Susceptible to outliers Median Sort and order Middle 50 th Percentile Mode Count Most frequent 20 6

55 2/7/2018 Issues With Using MHI Poor Indicator of Individual Ability to Pay Community wide measure Does not capture impacts across diverse communities Better Definitions Assess affordability across the community s income distribution Challenges of data availability timeliness and applicability 21 Diversity of Median Household Income at TVWD Median Household Income Community Aloha $67,673 $60,297 Beaverton $59,620 $55,115 Bethany $117,056 Cedar Hills $70,153 $68,793 Cedar Mill $105,347 $106,429 Hillsboro $70,180 $64,197 Metzger $49,107 Oak Hills $83,421 Rockcreek $76,997 Garden Home $79,771 Tigard $65,

56 2/7/2018 Distribution of Household Income 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% $5,000 $12,500 $20,000 $30,000 $42,500 $62,500 $87,500 $125,000 $175,000 $200,000 or more Bethany Cedar Mill Metzger 23 Types of Assistance Programs Programs Temporary Assistance: Assistance provided on a short term or one time basis Water Efficiency: Utilities subsidize water efficiency measures (conservation) Flexible Terms: Arrearage forgiveness, bill timing adjustment, moving from bi monthly to monthly billing, etc. Lifeline Rates: A subsidized rate for a fixed amount of water (essential needs) Bill Discount: Reduction in bill, usually long term; applied to rate structure Types of Customer Assistance Programs Bill Discount Flexible Terms Temporary Assistance Water Efficiency Lifeline Rate Source: U.S.EPA,Drinking Water and Wastewater Utility Customer Assistance Programs,p

57 2/7/2018 Issue 1 Affordability and Rate Design Review of RAC Recommendations Monthly billing Levelized billing Temporary/emergency assistance Penalty forgiveness Low income rate Issue 2 Common Service Consolidation Issue 3 Duplex Billing Issue 4 Non Emergency Hydrant Water Use Issue 5 Multi Year Rate Adjustments 25 Discussion Update on Affordability Issues February 6,

58 2/7/2018 Options for Adjusting System Development Charges (SDCs) Board Work Session February 6, 2018 Overview Review of methodology Discuss past practices Present two options One step, effective March 1 Two steps, effective March 1 and July

59 2/7/2018 Review of Methodology Ordinance No Enacted by the Board, effective August 17, 2012 Requires the District to review SDCs annually Adjustment in SDCs based on change in Engineering News Record (ENR) Construction Cost Index (CCI) for Seattle Complies with Oregon law 29 Historical SDC Adjustments SDC for 5/8 inch by 3/4 inch Meter $8,000 $7,000 $6,000 $5,000 $4,000 SDC $3,000 Trend $2,000 $1,000 $0 Mar 12 Mar 13 Mar 14 Mar 15 Mar 16 Mar

60 2/7/2018 Options One Step Option 7.7% increase March 1 st $527 increase from $6,831 to $7,358 Two Step Option 5% increase on March 1 st $342 increase from $6,831 to $7, % increase on July 1 st $185 increase from $7,173 to $7, Comparison to Other Communities $12,000 $10,000 Water System Development Charge $8,000 $6,000 $4,000 $2,000 $

61 2/7/2018 Effect on SDC Revenue Volatility Depends on number of new connections between March and July Through December $282,779 unfavorable variance in SDCs Best Estimate of Effect About $12,000 per month for four months $50, Discussion Options for Adjusting SDCs February 6,

62 2/7/2018 TVWD-Beaverton Service Area Agreement TVWD Work Session February 6, 2018 Overview Why TVWD Needs Service Area Agreements Objectives of the Parties Features in the Draft Agreement Key Outcomes and Observations Next Steps 36 14

63 2/7/2018 Why TVWD Needs Service Area Agreements Regional Planning and Cooperation Hillsboro TVWD Urban Services Agreement (2003) Tigard TVWD Urban Services Agreement (2006) Perpetual agreements Establish durable service area boundaries Comprehensive Compliance with ORS 195 Certainty allows parties to make improvements Supports economic development 37 Why TVWD Needs Service Area Agreements A Long Term Agreement with Beaverton Enhances Water System Planning Plan for growth Plan for aging infrastructure Plan for resiliency Financial Certainty Capital and operating budgets Financial forecast Predictable rates and affordability System Operations and Maintenance Customer Service 38 15

64 2/7/2018 Why TVWD Needs Service Area Agreements Relationship is Governed by State Statutes ORS 195 Urban Services Agreements ORS 197 Services within boundaries ORS Withdrawal of Facilities of Water District Local water mains, service installations, structures, facilities and improvements in the area withdrawn are subject to transfer Assets used to serve remaining customers are exempt from withdrawal o Facilities needed to maintain operations of system o Supply, treatment, transmission, pump stations and storage o Board meeting location within the jurisdictional boundaries 39 Why TVWD Needs Service Area Agreements TVWD and Beaverton are Closely Connected 40 16

65 2/7/2018 Long term financial certainty Service area boundary / customer base Service to future growth areas Certainty of facility requirements Objectives of the Parties TVWD Future supply requirements Potential revenue from underutilized assets Limit financial impacts of withdrawals Total revenue Predictable schedule and withdrawal process Fair compensation for withdrawal and transfer transactions 41 Lower rates Beaverton rate versus TVWD rate Water service to all Beaverton citizens Existing City boundary Future annexations Objectives of the Parties Beaverton Participation in the Willamette water supply system (WWSS) Intake and WWSS capacity ownership Reliability and resiliency Utilization of City s new Willamette water right 42 17

66 2/7/2018 TVWD Beaverton Service Area Agreement Current Status of IGA Negotiations Negotiations underway for the past year Significant progress has been made but it s complicated January 2018: Staff agreement on key elements of a draft agreement Draft agreement prepared February 2018: Work sessions by TVWD and Beaverton Finalize agreement Approval by Beaverton City Council Approval by TVWD Board we are here 43 Term: 40 years Features in the Draft Agreement Term, Known and Annexation Withdrawals Known Withdrawals and Annexation Withdrawals South of US 26 and west of Scholls Ferry Road TVWD provides service until effective date of withdrawal Once withdrawn, customers become Beaverton s TVWD shall provide interim service or wheeling TVWD serves annexations for two years or to end of biennium No withdrawal of TVWD headquarters service area 44 18

67 2/7/2018 Known Withdrawals 45 Features in the Draft Agreement Schedule for Known Withdrawals Area TVWD Accounts Description Notice of Withdrawal * Effective Date Wheeling Begins Area 2 21 Millikan Way UR By March /1/18 FY Area Davis/Oak/Hart/Bany By March /1/18 FY Area 4 2,730 Waterhouse By March /1/18 FY Area 5 3 TV Hwy/170th By March /1/18 FY Area Scholls Fry/Hall (west) By March /1/18 FY Total 4,087 * withdrawals noticed by March 31, become effective July

68 2/7/2018 Features in the Draft Agreement What is Interim Service? How it Works TVWD is interim provider for new Beaverton customers TVWD provides full service o Supply, transmission and distribution o TVWD reads meters and bills new Beaverton customers Customers still get the Best Water Service Value New Beaverton customers do not vote for TVWD Board TVWD has discretion on duration of Interim Service Who Pays New Beaverton customers pay TVWD at TVWD retail rate 47 Features in the Draft Agreement What is Wheeling Service? How it Works TVWD takes Beaverton finished water from Joint Water Commission (JWC) Water moves through TVWD transmission system Water returned to Beaverton at local distribution/meter Beaverton s JWC water meets demands of new customers Who Pays Beaverton pays JWC for water supply Beaverton pays TVWD for use of TVWD transmission and storage assets used for delivery TVWD establishes wheeling rates based on cost of service Beaverton bills new customers 48 20

69 2/7/2018 Features in the Draft Agreement Wheeling Provides Mutual Benefits Beaverton receives: Withdraws customers and local distribution assets sooner Limits expense of duplicative assets to serve new customers TVWD receives: Reimbursement from City for use of TVWD infrastructure TVWD operates and maintains the TVWD system Supply source provided by Beaverton not TVWD Certainty of service area Reduced risk of investments in future supply and distribution Beneficial use of otherwise underutilized assets Withdrawal and transfer plans and schedules 49 Features in the Draft Agreement Deferred Withdrawals Deferred Withdrawal Areas North of US 26 or east of Scholls Ferry Road No withdrawals for first 20 years TVWD has no obligation to provide wheeling or interim service after 20 years 50 21

70 2/7/2018 Deferred Withdrawal Areas 51 Features in the Draft Agreement Special Deferred Withdrawal Areas TVWD Headquarters Service Area Exempt from withdrawal for duration of agreement Essential facilities for continued service of remaining customers (Board meetings within jurisdiction) Preserves viable service area Red Tail Golf Course and Area 10 Deferred withdrawal but Area 10 may be subject to withdrawal if o Proposal for redevelopment of golf course o Proposal must include > 45% of golf course property o If withdrawn, withdrawal to include all of Area

71 2/7/2018 Headquarters Service Area and Red Tail Golf Course 53 Headquarters Service Area and Red Tail Golf Course 54 23

72 2/7/2018 Features in the Draft Agreement Schedule and Process for Annexation Withdrawals Schedule and Process for Annexation Withdrawals Limited to south of US 26 and west of Scholls Ferry Road Once withdrawn, customers become Beaverton s If District not service provider, can withdraw without notice If District is service provider o Minimum six months notice o District provides inventory of assets subject to withdrawal o City provides withdrawal plan o District to provide Interim Service or Wheeling Limited to then biennium at District s discretion o Exceptions for small withdrawal areas Limits to avoid serial small withdrawals 55 Features in the Draft Agreement Requirements for Withdrawal and Transfer Plans City to prepare a Withdrawal Plan for each withdrawal area Defined boundaries and properties Schedule for withdrawal and complete transfer plan TVWD provides inventory of assets per ORS Service plan (Interim vs Wheeling vs direct by City) City to prepare a Transfer Plan for each withdrawal area Transfer area and customers Project schedule Final inventory of assets City s capital improvements and schedule to serve Separation plan 56 24

73 2/7/2018 Features in the Draft Agreement Obligation for City to Assume TVWD Debt Obligation for City to Assume Outstanding Debt For any withdrawal effective before July 2, 2020, City has no obligation to assume District s outstanding debt For any withdrawal after July 2, 2020, City shall assume proportionate share of District s debt for remaining duration of agreement o Includes Annexation Withdrawals o Includes withdrawals after 2038 in deferred areas Formula for calculation of debt to be assumed by City o Based on annual average demand for three years 57 Features in the Draft Agreement Reimbursement to TVWD for Withdrawals Fixed compensation for each Known Withdrawal areas Area TVWD Accounts Payment to TVWD Payment Schedule Area 2 21 $15,000 Area $25,000 Area 4 2,730 $240,000 About $60,000/yr Area 5 3 $10,000 Area $50,000 About $25,000/yr Area 10 deferred $25,000 Total 4,087 $365,000 Cost schedule for future Annexation Withdrawals Costs based on experience at Cedar Hills Crossing Withdrawal Plans and Transfer Plans reduce TVWD risks Costs May Include Project management Plan reviews Design coordination Shutdown planning & coordination Meter transfer Abandonment of unused assets (pipe, services, hydrants, meters) Account history transfer Customer communication 58 25

74 2/7/2018 Features in the Draft Agreement Other Features System Development Charges (SDCs) TVWD retains previously paid SDCs New SDCs go to service provider as of effective date of withdrawal (applies to annexation withdrawals) Service provider provides plan review services Franchise Fees and Public Rights of Way (ROW) Charges District pays ROW fees based on gross revenue City shall not charge TVWD lineal foot charge ROW fees apply to Interim Service by exclude Wheeling 59 Features in the Draft Agreement Other Features CEO and Mayor may mutually agree to adjustments to: Time periods and formats for notice Content of withdrawal plans and transfer plans Duration of service to Area 6B Changes in future reimbursement schedule Annual meeting of TVWD Board and City Council Management oversight, review and coordination Exchange of Capital Improvement Plans Mutually agree to Operations and Maintenance Plan Exchange of mapping and records 60 26

75 2/7/2018 Features in the Draft Agreement Beaverton Participation in Willamette Supply Beaverton to buy five million gallons per day (MGD) of capacity in Willamette system Ongoing construction of capacity to serve Beaverton Need to complete WWSS agreement with Hillsboro Recovery of costs to date plus payment of future cost share 61 Features in the Draft Agreement Financial Impacts to TVWD of Known Withdrawals Description [1] FY 18 FY 19 FY 20 FY 21 Wheeled Meters (year end) [2][3] ,107 4,107 Projected Loss in Demand (CCF) 0 87, , ,746 Projected Loss in Retail Revenue [4] $0.0 $0.5 $6.0 $6.6 Projected Wheeling Revenue [5] $0.0 $0.1 $1.7 $1.8 Net Financial Impact $0.0 ($0.3) ($4.3) ($4.8) Assumptions: [1] Dollar values in millions. [2] 100% of Areas 3 & 5 go to wheeling beginning October [3] All areas are 100% wheeled beginning July [4] TVWD retail revenue increases per financial forecast. [5] Wheeling rate increases at 5% per year

76 2/7/2018 Outcomes Mutual Interests Become Opportunities TVWD Financial certainty Service area certainty Schedule certainty Reduced financial risk of investments in assets Withdrawal and transfer plans and schedules Deferred withdrawal north of US 26 and east of 210 Obligation for City to assume future debt Wheeling revenue and use of existing assets Beaverton Uniform rates in the City (mostly) Withdrawals happen sooner at lower capital cost Annexation withdraws south of US 26 and west of 210 Annexation withdraws in South Cooper Mountain Entry into Willamette Water Supply System TVWD Interests Beaverton Interests Opportunities 63 Observations The TVWD Beaverton IGA Creates a Legacy Implementation will be challenging Institutionalizes TVWD s leadership as State s second largest regional water retailer State s second largest water manager (supply, transmission, retail and wholesale) with roles beyond jurisdiction boundaries Creates responsibilities to exercise leadership Board to set tone and vision Management to implement o Efficient and reliable systems and operations o Effective, durable and influential relationships Shapes and secures TVWD s influence and vital role in region 64 28

77 2/7/2018 Next Steps Questions and comments TVWD and Beaverton staff finalize IGA Beaverton City Council considers approval on February 20, 2018 TVWD Board considers approval on February 21, Questions 29

78 2/7/2018 Contract Backflow Testing Gold Plan Improvements Joel Cary Water Resources Division Manager Proposed Subscription Based Plan Current Gold Plan $35 charge Proposed per assembly subscription based work is completed model Based on existing Same UB level systems of service, charged assessed once annually (i.e., No hassle service courtesy of TVWD subscription) $50 credit towards repairs Offset from peak billing periods 68 30

79 2/7/2018 Timing of Gold Plan Charge Offset from peak billing moves to once annual* $ Historical Application of Charges $ $ Proposed Charges $ $ *Enforcement Charges $ Benefits? Customer oriented, reduces IT resources, streamlines program administration 69 IT Components Reduced complexity less network development One primary billing event, two smaller billing events Staging for Utility Billing system replacement 70 31

80 2/7/2018 Program Administration Subscription model reflects changes in contract testing Gold Plan moves to location level All assemblies included in plan = $70 71 Communications Table Draft Communications Plan and Timeline = Completed, on track = Planned, on track = Off track 72 32

81 2/7/2018 Looking Ahead Consider revising charges in next budget cycle Gold Plan charge Enforcement testing What can a new customer information system (CIS) do? 73 33

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83 Link back to agenda 2A To: From: Board of Commissioners Paul L. Matthews, Chief Financial Officer Date: February 21, 2018 Subject: Annual Adjustment to the System Development Charge Requested Board Action: Consider adopting a resolution amending system development charges for the Tualatin Valley Water District and declaring an effective date. Key Concepts: Ordinance No requires the District to annually review its system development charges (SDCs) in relation to the Engineering News Records (ENR) Construction Cost Index (CCI) for Seattle. The CCI for Seattle increased by 7.72% annually from December 2016 to December This is a larger increase than what the District typically experiences. Consistent with Ordinance No and Oregon law, the proposed resolution sets an effective date of March 1, 2018 for the increase to the District s SDCs of approximately 7.72%. Background: The District s SDC ordinance (Ordinance No ) requires an annual review of the District s SDCs in relation to the ENR CCI for Seattle. The December 2016 to December 2017 CCI (the index specified in the SDC ordinance) increased by 7.72%. The average annual rate of growth in the CCI since December 2011 has been approximately 3.6%. The increase in the SDC for a 5/8 x 3/4 inch meter would be $527, from $6,831 to $7,358. In keeping with the District s practice of notifying interested parties, staff contacted the representative of the Home Builders Association of Metropolitan Portland (HBA) in January to apprise them of the change in the CCI. Additionally, on February 13, the District mailed letters to 365 builders and developers with pending purchases of meters in the District s database. These notifications are not required under Oregon law. Budget Impact: The SDC per equivalent residential unit (ERU) would increase from $6,831 to $7,358, or $527 per ERU. The increase in the SDC is likely to generate approximately $550,000 in additional revenue through the biennial budget ending June 30, 2019 based on budgeted installation projections.

84 Page 2 of 2 February 21, 2018 Annual Adjustment to the System Development Charge Staff Contact Information: Paul L. Matthews; Chief Financial Officer; ; paul.matthews@tvwd.org Bob Shields; Finance and Accounting Supervisor; ; bob.shields@tvwd.org Attachments: Proposed resolution Management Staff Initials: Chief Executive Officer Customer Service Manager N/A Chief Engineer IT Services Director N/A Chief Financial Officer Human Resources Director N/A General Counsel Water Supply Program Director N/A

85 RESOLUTION NO A RESOLUTION AMENDING SYSTEM DEVELOPMENT CHARGES FOR THE TUALATIN VALLEY WATER DISTRICT AND DECLARING AN EFFECTIVE DATE. WHEREAS, on July 18, 2012, the Board of Commissioners adopted Ordinance No System Development Charge Ordinance to impose system development charges (SDCs) and other related procedures to comply with ORS to ORS , inclusive, to provide revenues necessary for capital improvements constructed and to be constructed; and WHEREAS, in accordance with the methodology identified in Section 4 of Ordinance No , the administrative staff of the District calculated the amount of the SDC to be imposed by the Board of Commissioners to collect the statutorily authorized, necessary revenues; and WHEREAS, Section 9 B of Ordinance No requires the District to review its SDCs annually in relation to the Engineering News Record (ENR) Construction Cost Index (CCI) (Seattle); and WHEREAS, construction costs have increased 7.72% between December 2016 and December 2017 as evidenced by the ENR CCI (Seattle); and WHEREAS, pursuant to Section 9 of Ordinance No , the Board of Commissioners by this resolution amends the SDC for the District as set forth below. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE TUALATIN VALLEY WATER DISTRICT THAT: Section 1: Resolution No is hereby repealed and superseded by this resolution effective at 7:00 A.M., Pacific Standard Time on March 1, Section 2: Prior to making a connection of non District water facilities to the District s water system, the applicant for such a connection shall pay in full the SDC to the District, except that there shall be no SDC for a fireline. Section 3: Further, the Board directs staff, for any calendar year, during which the Board has not adjusted SDCs based on a revised capital improvements or facilities plan, to adjust SDCs March 1 for each the ensuing year thereafter, as calculated by staff based on the change, from December of the prior year to December of the current year, in the Engineering News Record (ENR) Construction Cost Index (CCI) (Seattle). Section 4 (a): Pursuant to Section 3 above, the SDC is calculated for a 5/8 x 3/4 inch meter by a weighting factor. The weighting factors adopted by the Board are the American Water Works Association safe operating capacities for displacement type meters. Page 1 of 3

86 The SDC for meter sizes up to 1 1/2 inches is: Reimbursement Fee Improvement Fee Administration Total SDC $ 1,288/ERU 5,949/ERU 121/ERU $ 7,358/ERU Meter Size Weighting Factors (ERUs) Charge 5/8 x 3/4 inch 1.0 $ 7,358 ¾ x ¾ inch ,037 1 inch , inch ,790 Section 4 (b): Pursuant to Sections 4 above, for meters over 1.5 inch, the SDC shall be determined based on the customer s anticipated water usage. Anticipated peak day water usage will be divided by the peak day system design flow of 844 gallons per day per equivalent residential unit (ERU) to determine peak day ERUs. Anticipated average daily water usage will be divided by 358 gallons per day per ERU to determine average day ERUs (storage ERUs). Peak Day SDC cost is: Reimbursement Fee Improvement Fee Peak Day SDC cost $ 848 per peak day ERU 5,203 per peak day ERU $6,051 per peak day ERU Storage SDC cost is: Reimbursement Fee Improvement Fee Storage SDC cost $ 563 per storage ERU 744 per storage ERU $1,307 per storage ERU The SDC shall be the sum of the peak day SDC cost per ERU multiplied by the peak day ERUs and the storage SDC cost per ERU multiplied by the storage ERUs. Section 4 (c): The SDC paid for meters larger than 1 1/2 inches as of the effective date of this resolution may be adjusted upward based on actual usage pursuant to an SDC agreement to be executed with the District. If during the term of the SDC agreement, the usage is greater than 110% of anticipated volume during a 12 month period, an additional SDC may be charged, using the same techniques for calculating peak day and storage ERUs and multiplying the peak day SDC cost per ERU and the storage cost per ERU then in effect. Section 4 (d): The SDC paid for a residential ¾ inch or 1 inch water meter, in the circumstance where a larger meter is required only for the purpose of meeting a residential multi purpose fire sprinkler system requirement, will consist of the SDC for the appropriate size meter that would be required without the multi purpose fire sprinkler system plus 18% of the difference between the price of the SDC for the meter size meeting the domestic water requirements and the SDC for the meter size meeting the fire sprinkler requirement. The 18% factor represents the approximate storage cost component of the SDC. Should the customer regularly use the capacity of the ¾ inch or 1 inch meter to Page 2 of 3

87 meet its domestic needs, the customer will be required to pay the remainder of the SDC at the current rate then in effect. Section 4 (e): If the customer has been charged by the District for an illegal connection and requests a contract for payment of the SDC, the District may withhold the option of providing a contract for said payment of SDC. Section 4 (f): If the SDC is financed as permitted by ORS , the financing charge established by the District is 9.0% as authorized in ORS Legal Rate of Interest and for a maximum term of 10 years. Approved and adopted at a regular meeting held on the 21 st day of February Richard Burke, President Dick Schmidt, Secretary Page 3 of 3

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89 Link back to agenda 2B To: From: Board of Commissioners Mark Knudson, PE, Chief Executive Officer Date: February 21, 2018 Subject: Adoption of a Resolution Approving an Intergovernmental Agreement Between the City of Beaverton and Tualatin Valley Water District Relating to the Provision of Domestic Water Requested Board Action: Consider adopting a resolution approving the Intergovernmental Agreement Between the City of Beaverton and Tualatin Valley Water District Relating to the Provision of Domestic Water. Key Concepts: During the past year, TVWD staff has met with City of Beaverton staff to prepare an intergovernmental agreement (IGA) to establish long term certainty and definition of the water service area boundaries of both agencies and to provide for orderly withdrawal of territory by Beaverton in certain areas. Staffs of the two agencies have completed drafting of the proposed Intergovernmental Agreement Between City of Beaverton and Tualatin Valley Water District Relating to the Provision of Domestic Water attached hereto and referred to as the Agreement. An overview of the draft Agreement was provided to the Board at the February 6, 2018 Work Session. Background: During the past year, TVWD staff has met with City of Beaverton staff with the goal of preparing an intergovernmental agreement (IGA) to establish long term certainty and definition of the water service area boundaries of both agencies. The Board has previously been briefed on ongoing negotiations with the City of Beaverton concerning development of this new service area agreement with the City. Staffs of the two agencies have completed drafting a proposed IGA, and it is now ready for Board consideration and approval. Staff recommends the Board approve the Intergovernmental Agreement Between City of Beaverton and Tualatin Valley Water District Relating to the Provision of Domestic Water (Agreement). The Agreement provides certainty for TVWD service area boundaries and a method to manage Beaverton annexations in specified areas through an orderly process. An overview of this Agreement was provided to the TVWD Board at the February 6, 2018 Work Session. Budget Impact: The IGA is not expected to have a significant impact on the expenditures within the biennial budget. During the initial phases of implementing the IGA, most of the withdrawn customers will receive

90 Page 2 of 2 February 21, 2018 TVWD Beaverton Service Area Agreement interim service from the District. Under interim service, the District will continue to provide all operations and maintenance services, and make expenditures for purchase water. Assuming most customers receive interim services, changes to the District s expenditures for biennial budget will be minimal. As the City migrates customers from interim service to wheeled services, TVWD will experience a reduction in purchased water costs but may increase expenditures for meter reading since TVWD provides meter reading services to the City under a separate agreement, and the City intends to read meters monthly rather than bimonthly. Rate increases could be 0.5% to 1.5% higher per year for seven years depending on the speed at which the City migrates customers from interim service, to wheeling service, and then to complete separation. Staff Contact Information: Mark Knudson, PE; Chief Executive Officer; ; mark.knudson@tvwd.org Clark Balfour; General Counsel; ; clark.balfour@tvwd.org Attachments: Proposed resolution Intergovernmental Agreement Between City of Beaverton and Tualatin Valley Water District Relating to the Provision of Domestic Water Management Staff Initials: Chief Executive Officer Customer Service Manager N/A Chief Engineer IT Services Director N/A Chief Financial Officer Human Resources Director N/A General Counsel Water Supply Program Director N/A

91 RESOLUTION NO A RESOLUTION APPROVING THE INTERGOVERNMENTAL AGREEMENT BETWEEN THE CITY OF BEAVERTON AND TUALATIN VALLEY WATER DISTRICT RELATING TO THE PROVISION OF DOMESTIC WATER WHEREAS, on or about April 7, 2002, the District and City of Beaverton entered into the Agreement For Provision of Domestic Water within the service territories of each Party which was renewed in 2007 but lapsed in 2012; and WHEREAS, the Parties wish to enter into a new agreement providing for the establishment of service area boundaries and a process for the orderly withdrawal and transfer of territory and water service to the City of Beaverton pursuant to ORS ; and WHEREAS, the District and Beaverton have negotiated the Intergovernmental Agreement between the City of Beaverton and Tualatin Valley Water District Relating to the Provision of Domestic Water, attached hereto as Exhibit 1 and incorporated by reference, (Agreement); and WHEREAS, the approval of this Agreement between the District and Beaverton is a condition precedent to District s consent to Beaverton s participation in the Willamette Water Supply System (WWSS) with District and the City of Hillsboro, which also may include additional municipal water providers; and WHEREAS, the approval of this Agreement between the District and Beaverton is a condition precedent to District s consent to Beaverton obtaining proportionate ownership in the Water Intake Facility that will be owned and governed by a separate Willamette Intake Facilities Agreement (WIF Agreement) between District, Wilsonville, Hillsboro, Sherwood, Tigard and Beaverton to provide for cost allocations for the purchase and sale of the existing intake and expansion thereof to approximately 150 million gallons per day as well as the ongoing operation, maintenance, repair and replacement of the intake facilities; and WHEREAS, the approval of this Agreement is a condition precedent of District s consent to Beaverton s purchase of District s existing capacity in the Willamette Intake Facilities and entry into the Agreement for Transfer, Purchase and Sale of the Willamette Facilities (Agreement), which provides for purchase of a proportionate interest in the existing facilities and a commitment to participate in the permitting, design and construction of the expansion of the facilities to achieve a capacity of 150 million gallons per day, and being fully advised. NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE TUALATIN VALLEY WATER DISTRICT THAT: Section 1: The Intergovernmental Agreement Between the City of Beaverton and Tualatin Valley Water District Relating to the Provision of Domestic Water, attached hereto as Exhibit 1, is hereby approved. Section 2: The Chief Executive Officer is authorized to execute the Agreement. The Board recognizes that there may be edits and corrections to the final Agreement and the Chief Executive Officer is authorized to accept amendments and sign on behalf of the District so long as the amendments do not substantially change the Agreement and such amendments are approved by General Counsel. Page 1 of 2

92 Section 3: There are related agreements to this Agreement, some of them specified in the Recitals, and the Chief Executive Officer is authorized to defer signature to this Agreement pending final approvals and signatures on any or all related documents as the Chief Executive Officer deems appropriate in his exercise of discretion and professional judgment. Approved and adopted at a regular meeting held on the 21 st day of February Richard Burke, President Dick Schmidt, Secretary Page 2 of 2

93 INTERGOVERNMENTAL AGREEMENT BETWEEN CITY OF BEAVERTON AND TUALATIN VALLEY WATER DISTRICT RELATING TO THE PROVISION OF DOMESTIC WATER This Intergovernmental Agreement ( Agreement ) is executed and entered into as of the date last signed ( Effective Date ) by and between the City of Beaverton, an Oregon municipal corporation ( City ), and the Tualatin Valley Water District ( District ), an Oregon domestic water supply district (each referred to herein as a Party and collectively as Parties ). RECITALS A. ORS authorizes the Parties to enter into intergovernmental agreements for the performance of any or all functions and activities each Party has authority to perform. B. ORS establishes a process for some facilities of a water district to be turned over to a city upon withdrawal of an area from a water district. C. The Parties previously entered into an Intergovernmental Agreement for Provision of Domestic Water on April 17, 2002, which agreement the Parties renewed in 2007, and which agreement lapsed on June 30, D. The Parties desire to build on their history of regional cooperation to ensure a costeffective provision of safe and reliable water services to present and future customers, while preserving beneficial opportunities for the sustainable development of each Party s Water System. E. The Parties anticipate that, pursuant to ORS , they will enter into an urban service agreement in the future. Prior to doing so, the Parties desire to enter into this Agreement to acknowledge their Current Service Areas, establish timelines for the withdrawal of areas from the District s Current Service Area to the City s Service Area, and provide options for the transfer of service in the withdrawn areas, including the cooperative provision of services within specified territorial areas. Based on the foregoing, the Parties agree as follows: DEFINITIONS In addition to the words and phrases defined in this Agreement, when capitalized the following words and phrases shall have the meaning set forth in these definitions: Annexation Withdrawal Area: Any area that: (a) is outside the City s Territorial Area as of the Effective Date; (b) is neither a Known Withdrawal Area nor a Deferred Withdrawal Area, (c) is or becomes available for annexation to the City on or after the Effective Date, and (d) is Page 1

94 not within the territorial boundary of another district that provides domestic water service. City s Water System: The Water System owned, operated and maintained by the City. Current Service Area: A Party s Service Area on the Effective Date of this Agreement, as depicted in Exhibit A. Deferred Withdrawal Area: A portion of District s Current Service Area which, as of the Effective Date, is situated within the City s Territorial Area and which, pursuant to this Agreement, the City shall not withdraw from the District s Service Area prior to January 1, 2038 as set forth in Article 3. District s Water System: The Water System owned, operated and maintained by the District. Headquarters Service Area: The portion of District s Current Service Area that includes the District s existing headquarters facility (located at 1850 SW 170th Ave) and the territory surrounding the headquarters facility that is south of the centerline of West Baseline Road and SW Jenkins Road, west of the centerline of SW 158th Avenue, north of the boundary of Tualatin Hills Nature Park, and east of the centerline of SW 170th Avenue, as depicted on Exhibit C. Interim Water Services: Water Services provided by the District on a temporary basis to the City in a Withdrawal Area after the effective date of a Withdrawal. Known Withdrawal Area: A portion of District s Current Service Area which, as of the Effective Date, is situated within the City s Territorial Area and which, pursuant to this Agreement, the Parties intend to be withdrawn by the City from the District s Current Service Area and become part of the City s Service Area as set forth in Article 3. Outstanding Debt: Liabilities and indebtedness contracted by the District prior to the effective date of a Withdrawal that, pursuant to ORS and ORS , the City must assume when the City withdraws an area from the District s Territorial Area, including an obligation resulting from the District issuing bonds pursuant to ORS Chapter 287A, ORS , or as otherwise may be allowed by Oregon law. Redtail Golf Course Area: A portion of Withdrawal Area 10 consisting of tax lots 1S123DC04200, 1S , and 1S Separation Plan: A plan for the complete separation of the City s Water System from the District s Water System that, when implemented, allows the City to provide Water Services to a Withdrawal Area without reliance on the District s Water System. Service Area: The portion of a Party s Territorial Area in which that Party actually provides Water Services. Territorial Area: The entire area within a Party s municipal boundaries in which it is authorized to provide a service or implement a regulation, whether or not a service is Page 2

95 currently being provided or a regulation has been imposed. Transfer Area: The specific Withdrawal Area or portion of a Withdrawal Area to be included in a Transfer Plan for which a Transfer of Water Services will occur. Transfer of Water Services: A process determined by the Parties under this Agreement whereby Water Services to a Withdrawal Area fully transfers from the District and becomes provided by the City on or after the effective date of a Withdrawal. Transfer Plan: A plan developed by the City pursuant to Article 4 and which identifies the process by which a Transfer of Water Services will occur. Urban Reserve Area 6B: The portion of the geographic area identified as Area 6B in Metro Ordinance , dated April 21, 2011, which, as of the Effective Date, remains outside the City s Territorial Area, as depicted on Exhibit C. Water Services: The development, operation, and maintenance of a Water System necessary to serve retail customers including, but not limited to, water supply, storage, fire flow, rate setting, system development charge policies and procedures, and account administration. Water Supply: The resources and facilities used for the source, production, treatment and transmission of finished drinking water for human consumption. Water System: A system for the provision to the public of piped water for human consumption. Wheeling Services: Services provided by the District to the City whereby District delivers water to the City on a wholesale basis at a point of delivery determined by the parties and subject to the Wheeling Service Rate established in this Agreement. Wheeling Service Rate: The charge imposed by the District for providing Wheeling Services. Willamette Water Supply System or WWSS: The water supply system infrastructure, including intake facilities, raw water pipelines, a water treatment plant, finished water pipelines, storage, and related facilities being developed by the Willamette Water Supply Program to produce and deliver potable water to the District, the City of Hillsboro, and other providers. Withdrawal: The process by which an area will be withdrawn from the District and become part of the City s Service Area pursuant to the terms of this Agreement. Withdrawal Area: A Withdrawal Area is a portion of District s Current Service Area or a portion of District s Territorial Area which the Parties agree may be withdrawn from the District and become part of the City s Service Area pursuant to the terms of this Agreement. Without further modification as to whether the area is a Known Withdrawal Area, a Deferred Withdrawal Area, or an Annexation Withdrawal Area, Withdrawal Area refers collectively Page 3

96 to any type of Withdrawal Area. Withdrawal Plan: A plan described in this Agreement as set forth in Section 3.5, the purpose of which is to guide the process of Withdrawal, including, but not limited to, identification of the area being withdrawn, a schedule, an inventory of assets being transferred, and identification of how the area will be served prior to Transfer of Water Services. Withdrawal Schedule: The schedule of time periods by which the Parties intend to complete the Withdrawal of a Withdrawal Area as set forth in this Agreement. Article 1. Term and Termination AGREEMENT 1.1. This Agreement s term commences upon the Effective Date and continues to January 1, 2058 ( Term ), unless extended or terminated earlier by mutual consent of the parties. Article 2. Service Areas 2.1. Each Party shall provide Water Services in its own Service Area and, except as provided in this Agreement or in event of a public health emergency as defined by Oregon law, neither Party may provide Service in the Service Area of the other Party The Parties acknowledge that each Party s Current Service Area is as depicted in Exhibit A: Map of Current Service Areas. During the Term, each Party s Current Service Area may be modified pursuant to this Agreement The Parties do not intend for this Agreement to modify any portion of a Current Service Area that is not expressly addressed in this Agreement. Article 3. Withdrawal Areas; Schedule and Process for Withdrawal; Withdrawal Plans; Service to Withdrawn Areas 3.1. Location of Withdrawal Areas Each Known Withdrawal Area as described in this Agreement is depicted on Exhibit B: Map of Known Withdrawal Areas Each Deferred Withdrawal Area as described in this Agreement is depicted on Exhibit C: Map of Deferred Withdrawal Areas Annexation Withdrawal Areas as described in this Agreement are unknown as of the Effective Date and are not depicted on either Exhibit B or Exhibit C Notwithstanding the other provisions of this Section 3.1, any area within the Page 4

97 City s Territorial Area as of the Effective Date, which is not depicted as either a Known Withdrawal Area on Exhibit B or a Deferred Withdrawal Area on Exhibit C shall be deemed: a Deferred Withdrawal Area if the area is situated either north of the existing centerline of Highway 26 or east of the existing centerline of Oregon Highway 210 (Scholls Ferry Road); or an Annexation Withdrawal Area if the area is situated south of the existing centerline of Highway 26 and west of the existing centerline of Oregon Highway 210 (Scholls Ferry Road) Schedule and Process for Withdrawal of Known Withdrawal Areas Unless the Parties agree in writing to a different schedule, the City shall take all steps necessary and in conformance with any applicable statutory procedures to complete the Withdrawal of each Known Withdrawal Area that is identified on the schedule set forth in Exhibit D: Withdrawal Schedule No less than three (3) months prior to the scheduled effective date for Withdrawal of each Known Withdrawal Area, the District shall, consistent with Section , identify and provide the City with an initial inventory of assets that will be transferred to the City upon Withdrawal No less than two (2) months prior to the scheduled effective date for Withdrawal of each Known Withdrawal Area, the City shall develop and provide to the District a Withdrawal Plan that is consistent with the provisions of Section In the event the City is unable to complete the Withdrawal of a Known Withdrawal Area in conformance with the Withdrawal Schedule: The City shall develop a revised schedule for Withdrawal of that Known Withdrawal Area and complete the Withdrawal of the Known Withdrawal Area no more than one year from the date identified in the original Withdrawal Schedule If the City fails to complete the Withdrawal in conformance with the revised schedule developed pursuant to Section , the Known Withdrawal Area shall become a Deferred Withdrawal Area subject to the provisions of Section Exception for Headquarters Service Area. Notwithstanding any description or depiction of a Known Withdrawal Area, the Headquarters Service Area is exempt from withdrawal by the City for so long as the District s administrative headquarters remains within the Headquarters Service Area and serves as the principal location where the District s governing body regularly holds its public meetings. For such time as the Page 5

98 exemption from withdrawal provided in this section remains in effect, the District shall provide Service to the Headquarters Service Area Schedule and Process for Withdrawal of Annexation Withdrawal Areas The Parties acknowledge that each Party has authority to annex territory to their respective Territorial Areas in conformance with applicable state, regional, and local laws. The Parties do not intend for this Agreement to limit either Party s authority to annex property to their respective Territorial Areas The City shall provide notice to District of any proposed annexation that would have the effect of bringing any portion of District s Territorial Area within the City s Territorial Area. The City shall provide the required notice within six months after the City submits or receives any such proposal To the extent that an Annexation Withdrawal Area includes a portion of the District s Current Service Area situated either north of the existing centerline of Highway 26 or east of the existing centerline of Oregon Highway 210 (Scholls Ferry Road), that portion of the District s Current Service Area so situated is hereby deemed a Deferred Withdrawal Area subject to the schedule and process for Withdrawal of Deferred Withdrawal Areas pursuant to Section Any portion of an Annexation Withdrawal Area that is situated south of the existing centerline of Highway 26 and west of the existing centerline of Oregon Highway 210 (Scholls Ferry Road) is subject to the provisions of Section and For any portion of an Annexation Withdrawal Area identified in Section to which (as of the date of the notice of proposed annexation provided to the District under Section 3.3.2) the District is not then providing Service, the City may provide Service to the area upon or after annexation and the District has no obligation to provide or assist the City in providing Service to the area. To the extent such an area is within the District s Territorial Area, the City may withdraw that area at any time upon or after annexation of the area to the City Except as provided in Section 3.3.8, for any portion of an Annexation Withdrawal Area identified in Section that is not described by Section 3.3.5, the City may, upon or after annexation of the area to the City, withdraw the area from the District, subject to the following provisions: The City shall provide notice of Withdrawal to District prior to the effective date of the Withdrawal, which notice shall identify the scheduled effective date of the Withdrawal; The City shall provide the notice of Withdrawal required under Section Page 6

99 at least six months prior to the scheduled effective date of the Withdrawal and will endeavor to provide notice prior to that time to give the Parties more time to coordinate the Withdrawal; No less than three (3) months prior to the scheduled effective date for Withdrawal of each Annexation Withdrawal Area, the District shall, consistent with Section , identify and provide the City with an initial inventory of assets that will be transferred to the City upon Withdrawal No less than two (2) months prior to the scheduled effective date for Withdrawal, the City shall develop and provide to the District a Withdrawal Plan that is consistent with the provision of Section 3.5; District shall continue to provide Service to the area until the effective date of the Withdrawal; In the event the City is unable to complete the scheduled Withdrawal of an Annexation Withdrawal Area by the effective date identified in the notice, withdraw of the area shall be governed by Section 3.2.4; In an Annexation Withdrawal Area identified in Section that is not described by Sections 3.3.5, if the City cannot provide Water Services directly to the withdrawn area, the City shall request District either to provide Interim Water Services on behalf of the City to customers, or to provide Wheeling Services to the City, upon Withdrawal Unless provision of both Interim Water Services and Wheeling Services would reasonably be expected to have a material and adverse effect on the District s business or financial conditions, the District shall, at its election, provide either Interim Water Services on behalf of the City to customers or provide Wheeling Services to the City In the event City requests, and the District elects to provide, Interim Water Services pursuant to Section , District shall not be obligated to provide Interim Water Services beyond its then-current fiscal biennium, and District may elect at any time, after six (6) months notice to City, to provide Wheeling Services instead Notwithstanding any other provision in this Section 3.3.7, if the Annexation Withdrawal Area is all or a portion of Urban Reserve Area 6B, the District shall provide Interim Water Services to maintain Water Services to all District customers existing as of the effective date of Withdrawal until such time as the City provides Water Services. Upon the effective date of such Withdrawal, District shall be obligated to provide Water Services only to the same level provided immediately prior to the Withdrawal, and the City shall be obligated for any increase to the level of Water Services or to any investments to the Water System necessary to Page 7

100 maintain such service, provided that the Parties may enter into a specific agreement for District to provide Interim Water Services or Wheeling Services to the withdrawn area Exception for Small Withdrawal Areas The provision set forth in Section shall not apply to the City s Withdrawal of an area if the combined service capacity of the area is less than or equal to ten existing single family residential units or the equivalent capacity of such units on the District s System; In the event the City withdraws an area subject to Section , the exception in shall not be available to the City for any area adjacent to, or within 2,000 feet of, the withdrawn area until the beginning of the District s next fiscal biennium Notwithstanding any provision of this Section 3.3.8, the Parties shall coordinate the Withdrawal of any area from the District s Service Area to ensure customers in that area receive uninterrupted Service during the transition Schedule and Process for Withdrawal of Deferred Withdrawal Areas On or before January 1, 2036, the City may provide written notice to the District that it intends to withdraw some or all of the Deferred Withdrawal Areas effective on or after January 1, Deferred Withdrawal Areas not included within the scope of the City s notice shall remain within the District s Service Area until at least January 1, If the city provides timely notice to the District of the City s intent to withdraw some or all of the Deferred Withdrawal Areas, the City shall: Prepare and provide to District a schedule for the Withdrawal of each Deferred Withdrawal Area ( Deferred Withdrawal Area Schedule ). The City shall provide the Deferred Withdrawal Area Schedule to the District on or before October 1, Unless the Parties agree in writing to a different schedule, the City shall take all steps necessary and in conformance with any applicable statutory procedures to complete the Withdrawal of each Deferred Withdrawal Area by the dates identified in the Deferred Withdrawal Area Schedule In the event the City is unable to complete the Withdrawal of a Deferred Withdrawal Area in conformance with the Deferred Withdrawal Area Schedule: The City shall develop a revised schedule for Withdrawal of that Deferred Withdrawal Area and complete the Withdrawal of the Deferred Page 8

101 Withdrawal Area within one year from the effective date identified in the original Deferred Withdrawal Area Schedule If the City fails to complete the Withdrawal in conformance with the revised schedule developed pursuant to Section , the City s notice of intent to withdraw provided pursuant to Section shall be deemed not to include any reference to the portion of the Deferred Withdrawal Area not withdrawn The City may provide written notice to the District at any time on or before January 1, 2046, that it intends to withdraw some or all of any Deferred Withdrawal Areas effective on or after January 1, Upon such notice, the provisions of Sections and apply, with dates read as ten years later. Deferred Withdrawal Areas not included within the scope of the City s notice described in this section shall remain within the District s Service Area for the entire Term of this Agreement No less than two (2) months prior to the scheduled effective date for Withdrawal of each Deferred Withdrawal Area, the City shall develop and provide to the District a Withdrawal Plan that is consistent with the provision of Section The Parties shall provide Water Services to a Deferred Withdrawal Area in the same manner as they provide Water Services to a Withdrawal Area pursuant to Section Exception for Withdrawal Area 10. Notwithstanding any description or depiction of Withdrawal Area 10 on Exhibit C as a Deferred Withdrawal Area, Withdrawal Area 10 shall be subject to the following: Each of the following events related to the Redtail Golf Course Area shall provide the City with authority to Withdraw the entirety of Withdrawal Area 10 if the event applies to any portion of the three tax lots comprising the Redtail Golf Course Area and to an area that is equal to or greater than 35% of the area comprising all three tax lots: A third-party initiated zone change as part of a specific development proposal; A City-initiated zone change processed at the request of the property owner or any person authorized in writing to act as an agent of the owner or contract purchaser as part of specific development proposal; or A notice provided by the City to the District that the property owner or any person authorized in writing to act as an agent of the owner or contract purchaser has indicated an intent to develop the property under zoning other than the Washington County Institutional zone. Page 9

102 Upon the occurrence of any event described in Section , the City may provide notice to the District of the City s intent to withdraw the entirety of Withdrawal Area 10. After the City has provided such notice to the District, the City shall work with the property owner or its delegate to identify all facilities necessary for the City to provide Service to the proposed development and to the remainder of Withdrawal Area The City shall initiate Withdrawal of Withdrawal Area 10 following the procedures in Section Notwithstanding any other provision in this Agreement, upon Withdrawal of Withdrawal Area 10 or a portion of Withdrawal Area 10, District shall have no obligation to provide Interim Water Services or Wheeling Services to the City for the area withdrawn Withdrawal of Withdrawal Area 10 shall be subject to the provisions of Section relating to the City s obligation to assume the District s Outstanding Debt in that area Withdrawal Plans Each Withdrawal Plan required under this Agreement shall identify the following: A description of the boundaries of the District s Territorial Area to be withdrawn, including identification of specific tax lots within the described boundaries; A schedule identifying the date on which the City intends the Withdrawal to take effect A schedule identifying the dates and process by which the City shall notify the District s current customers within a Withdrawal Area of the Withdrawal; A proposed schedule for the development of a Transfer Plan as set forth in Article 4; Consistent with the requirements of ORS , an initial inventory of District assets to be turned over to the City and District assets to remain the property of the District. The final inventory of assets to be turned over to the City shall be identified in the Transfer Plan for the Withdrawal Area, as set forth in Section A proposal, pursuant to the terms of Section 3.6, for how Service will be provided to the Withdrawal Area upon the effective date of the Withdrawal. Page 10

103 3.6. Service to Withdrawal Areas Prior to the effective date of the Withdrawal of a Withdrawal Area, District shall continue to provide Service to all customers within that Withdrawal Area Service upon Withdrawal of a Withdrawal Area Except as otherwise provided under Section , Section , and Section 3.3.7, City shall provide all Water Services to all customers in a Withdrawal Area beginning on the effective date of a Withdrawal Notwithstanding Section , upon request of the City, the District shall provide Interim Water Services to customers in a Known Withdrawal Area on behalf of the City until such time as Wheeling Services are provided or a Transfer of Water Services occurs pursuant to Article Notwithstanding Section , upon request of the City, the District shall provide Wheeling Services to a Known Withdrawal Area until such time a Transfer of Water Services occurs pursuant to Article For any Withdrawal Area where District is not required to provide Interim Water Services or Wheeling Services pursuant to Section , Section , or Section 3.3.7, the Parties may mutually agree to have District provide such services Obligation to Assume Outstanding Debt For any Withdrawal effective on or before July 2, 2020, the City has no obligation to assume District s Outstanding Debt applicable to a withdrawn Withdrawal Area For any Withdrawal effective after July 2, 2020, the City shall assume a proportionate share of the District s Outstanding Debt based on a proportion of the average annual demand of the customers withdrawn to the District s total average annual demand for the three fiscal years preceding the effective date of the Withdrawal Notwithstanding the other provisions of this Section 3.7, at any time during the Term of this Agreement: Section shall apply to the Withdrawal of any area designated as Urban Reserve Area 6B if the Withdrawal occurs simultaneously with the annexation of the same area to the City; and Section shall apply to the Withdrawal of any area designated as Urban Reserve Area 6B if the Withdrawal occurs after the annexation of the same area to the City. Page 11

104 Article 4. Transfer of Service in Withdrawal Areas; Transfer Plans The Parties shall develop the specific process and terms by which a Transfer of Water Services will occur in each Withdrawal Area The Transfer of Water Services for each Withdrawal Area shall follow all applicable statutory procedures and be conducted pursuant to a Transfer Plan developed pursuant to this Article The City shall develop a Transfer Plan for each Withdrawal Area. The City shall provide the District a reasonable opportunity to review and comment on the Transfer Plan. The Transfer Plan shall include: Identification of the Transfer Area A project schedule A final inventory of assets turned over to the City A description of any new facilities required for successful separation of the City s Water System serving the Transfer Area from the District s Water System A schedule for capital improvements required by the City A Separation Plan. The Separation Plan shall include a plan for complete separation of the City s Water System from the District s Water System in a manner that does not require the City to use the District s Water System for source, storage, transmission, distribution, fire flow or any other aspect of District s Water System for the City s customers. The Separation Plan shall include a schedule for the implementation of Water System separation A schedule of anticipated work required to be performed by the District A plan for communication with affected customers The City shall reimburse the District for District s actual, documented and reasonable costs for materials and services incurred for no purpose other than District s involvement in completing each Transfer Plan The reimbursement required pursuant to Section 4.4 shall be as established in Exhibit E: Transfer Plan Reimbursement Schedule. The amounts and methodology in Exhibit E are stipulated and negotiated by the Parties and the City shall not be obligated to reimburse District for any amounts other than those stipulated in Exhibit E In consideration for, and as a condition to receiving, the reimbursement amount set forth in in Exhibit E, District shall use commercially reasonable Page 12

105 efforts to take all actions, and to assist and cooperate with the City in taking all actions, necessary, proper, or advisable in the preparation and implementation of each Transfer Plan so as to result in an orderly, expeditious, and efficient Transfer of Water Services Unless the Parties agree otherwise as set forth in Exhibit E, the City shall remit one-half of the reimbursement required pursuant to Section 4.4 at the initiation of Transfer of Water Services, and the remainder when the Transfer of Water Services is complete and all customer accounts are formally switched to the City. No reimbursement required by this Section 4.4 shall be made during periods in which District is providing Wheeling Services If the Parties disagree on the reimbursement owed to the District under the terms of this Section 4.4 and Exhibit E, the District shall nevertheless proceed promptly to effect the Transfer of Water Services called for by a Transfer Plan and the Parties will resolve the dispute pursuant to Article 9. Article 5. Water Supply 5.1. Each Party is responsible for obtaining its own Water Supply and delivering the water for use in its Service Area, now and in the future Interim Water Services Where this Agreement requires District to provide Interim Water Services, such services shall include the following: The District shall bill Customers at District s standard retail rate schedule The District shall provide Water System operation and maintenance, including source of Water Supply City and District shall cooperate to provide a joint customer communications and customer support plan. In the event the Parties are unable to agree to a customer communications and customer support plan, each Party may develop its own such plans Wheeling Services Where this Agreement requires District to provide Wheeling Services, such services shall be provided on the following terms: The District, in its sole discretion, shall establish the points of Water Supply The Parties shall mutually agree to a point of delivery to the City or to any specific customer of the City. Page 13

106 In the event a master meter is used at the point of delivery, the City shall pay for the meter and the District shall own, install, operate and maintain the meter Wheeling Service Rate and Methodology: The rate District will charge to the City for Wheeling Services shall be as established in Exhibit F: Wheeling Service Rate and Methodology Payment provisions The District shall periodically measure and record the quantity used at each point of delivery and state in an invoice to the City the amount due after application of the Wheeling Service Rate City shall pay invoiced amounts within 30 days of receipt of invoice The City is solely obligated to pay the invoiced amount Termination of a Wheeling Services City may terminate Wheeling Services when City has developed its own Water System so that it no longer requires the District s Water System to serve a Withdrawal Area Pursuant to provisions of the Transfer Plan, the City shall provide District with advance notice of the date Wheeling Services will terminate. The City shall provide the advanced notice to the District at least six months prior to the date the Wheeling Services will terminate, which date shall coincide with the last day of the District s fiscal biennium Any water delivered by District to City pursuant to Section 5.3 is deemed to have come from City-owned sources. City shall ensure that the Joint Water Commission or the Willamette Water Supply System, as applicable, has duly and correctly noted the amount of water delivered by the District as being debited to the City s water account even though the delivered water may be drawn by District at its own connection points to each water supply system The Parties acknowledge that District has multiple water sources and the actual water provided by District to the City may be from a source other than the source identified by the City. District shall provide water at the same quality it provides to its retail customers in compliance with state and federal laws. Article 6. Implementation, Oversight, Management, and Charges 6.1. By executing this Agreement, the City delegates all necessary authority to the Mayor to execute any agreement necessary to implement this Agreement By executing this Agreement, District delegates all necessary authority to its Page 14

107 Chief Executive Officer to execute any agreement necessary to implement this Agreement The City hereby delegates to the Mayor, and the District hereby delegates to the Chief Executive Officer, authority to negotiate and to agree to amendments to this Agreement for the purpose of making the Parties performance more efficient and cost effective if such amendments modify the following: The time period in which a notice must be provided; The format or content of any required notice; The specific content of a Withdrawal Plan, a Transfer Plan, or a Separation Plan, including refinements to the actual area being withdrawn; The time period during which District will provide Interim Water Services in Urban Reserve Area 6B after Withdrawal; or The amount of the reimbursement the City will provide to the District as set forth in Section Beginning in 2020, the Parties governing bodies shall hold a joint public meeting in each even-numbered year to review past and future performance under this Agreement Each Party shall designate a management-level individual to serve on a Management Committee that oversees and manages the Parties rights and obligations under this Agreement. The Management Committee shall meet at least annually and as frequently as the Parties deem necessary, and each Party agrees to make a good faith effort to provide the other Party with at least two weeks notice when requesting such a meeting, and to convene sufficient engineering, financial, operation and planning staff as needed The Parties shall meet and confer on the implementation of all outstanding or incomplete Transfer Plans on no less than an annual basis. Notwithstanding the foregoing, the Parties may meet and confer on a more regular basis and each Party agrees to make a good faith effort to provide the other Party with at least two weeks notice when requesting such a meeting The Parties shall exchange their respective multi-year Capital Improvement Programs at least once every two years when such plans have been updated or when major project scopes or schedules have been revised Within six months following the Effective Date, the Parties shall jointly prepare an Operations and Maintenance Plan for purposes of establishing obligations each Party has for: Operation and maintenance standards for areas withdrawn by City and Page 15

108 operated and maintained by District, including expectations and procedures for leak response and repair; Financial procedures such as accounting for sources of Water Supply furnished by City for Wheeling Services by District as well as billing; Operation, maintenance, metering and billing for emergency interties. The Parties will execute a separate agreement to establish their cooperation with respect to the operation, maintenance, metering and billing for emergency interties; and Protocols for the communication of daily water demand to the Joint Water Commission and WWSS, including an accounting and reporting of water demand and a determination of the quantity of water to be wheeled The Operation and Maintenance Plan shall be reviewed and (if needed) updated at least once every two years Mapping Data Sharing District shall provide the City with existing maps and other available asset maintenance records for known District assets within each Withdrawal Area. District shall provide maps and records in available formats, including GIS and AutoCAD file formats, as applicable. District shall maintain maps and records for each Withdrawal Area and annually shall provide the City an updated version of the maps and records until a Withdrawal Area is withdrawn pursuant to Article 3. District records shall include known information available to the District, and City acknowledges accuracy and completeness of the available records is not assured and is subject to verification by the City District shall work with the City to assist in the City s development of Transfer Plans and planning of proposed annexations. District shall provide the City available information from the District s latest Master Plan for each Withdrawal Area and for areas within a specific annexation proposal, including available information on current and forecasted population, projected water demands, and recommended Water System improvements. District shall provide the City with available results of Water System hydraulic modeling, including water availability and fire flow results, to assist in the City s development of Transfer Plans. City acknowledges District s hydraulic modeling and Water System analyses are based on the existing configuration of District s Water System in its entirety and may not be representative of specific Withdrawal Areas or analyses of proposed Transfer Plans and future annexations System Development Charge Coordination. Prior to the effective date of a Withdrawal, the District shall be entitled to system development charges relating to any development within a Withdrawal Area. The City shall be entitled to Page 16

109 system development charges relating to development in a Withdrawal Area only upon and after the effective date of a Withdrawal. The Party entitled to a system development charge shall bear responsibility for conducting the plan review for the development proposal giving rise to the system development charge District is subject to the City s Utility Facilities in the Public Rights of Way ordinance, as currently in effect and as may be amended from time to time. Pursuant to that ordinance, City shall charge District a rights-of-way fee based solely on the gross revenue the District derives from the operation of utility facilities in the City, and not based on the diameter or linear feet of utility facilities the District has within the City. District shall promptly pay the City s rights-of-way fee as required under the ordinance. This provision does not affect any registration fee, license fee, or other fee the District may owe the City For purposes of administering the City s Utility Facilities in the Public Rights of Way ordinance, the District s gross revenue shall include revenue from customers provided Interim Water Services, but shall exclude revenue from Wheeling Services provided to the City. Article 7. Willamette Water Supply System 7.1. District hereby consents to the admission of City as a party to the proposed Willamette Water Supply System ( WWSS ) City acknowledges that City s participation in the WWSS is contingent upon approval by the City of Hillsboro City s participation in the WWSS includes the opportunity to own five (5) million gallons per day ( MGD ) of capacity in the WWSS consisting of intake facilities, raw water transmission pipelines, a water treatment plant, finished water transmission pipelines, and storage The Parties acknowledge that the details of the City s participation in the WWSS will be the subject of a separate agreement(s) with other parties District hereby consents to City s participation in the Willamette Water Supply Program The City and District shall work to finalize the alignment of the WWSS pipeline(s) that may extend through the City. Such alignments will be confirmed by separate agreement. Article 8. Default 8.1. Generally. A Party is deemed in Default of this Agreement if a Party fails to keep, perform and observe any substantial promise, covenant or agreement set forth in this Agreement (including the failure to make a required payment when due) or there is an Event of Default under the terms of any WWSS-related Page 17

110 agreement Notice of Default and Cure A written notice of Default ( Notice of Default ) shall be delivered to the Party in Default ( Defaulting Party ) by the non-defaulting party ( Non- Defaulting Party ) A Notice of Default must specify the nature and factual circumstances of the Default and provide a specified period to cure the Default or otherwise reasonably commence to cure the Default in a diligent manner. A reasonable cure period ( Cure Period ) shall be deemed to be 30 days from receipt of the Notice of Default, unless a longer time for cure is set by the Non- Defaulting Party and contained in the Notice of Default. The Notice of Default may also include a demand that the Parties engage in the Dispute Resolution process set forth in Article Response by Defaulting Party Upon delivery of a Notice of Default, the Defaulting Party must: Cure the Default by the Cure Period set forth in the Notice of Default; State why the Default cannot be cured within the Cure Period, what efforts the Defaulting Party has made to Cure the Default, and provide a reasonable plan to cure the Default; or Request Dispute Resolution pursuant to Article The Non-Defaulting Party must approve any plan for cure set forth in the Defaulting Party s response and, if not approved, an Event of Default will be declared Failure to Cure Failure to cure a Default shall be deemed an Event of Default The Non-Defaulting Party shall give written notice to the Defaulting Party of said failure to cure by delivery of a written Declaration of an Event of Default Request for Dispute Resolution. Upon the Defaulting Party s receipt of a Notice of Default, until 15 days following the delivery to the Defaulting Party of any Declaration of an Event of Default, either Party may demand that the Parties engage in the Dispute Resolution process set forth in Article 9. Article 9. Dispute Resolution 9.1. Any controversy or claim arising out of or relating to this Agreement, or the Page 18

111 breach thereof, shall be resolved as provided in the Article Disputes Involving Withdrawal Plans, Transfer Plans and Separation Plans The Parties shall base each Withdrawal Plan, each Transfer Plan, and each Separation Plan contemplated by this Agreement on prudent utility practices If a dispute concerning the performance of duties to finalize a Withdrawal Plan, a Transfer Plan, or a Separation Plan arises between the Parties, each will make a reasonable effort to reach an informal resolution of the matter that is fair and equitable to both In the event the Parties are unable to agree on one or more specific elements of a proposed Withdrawal Plan, Transfer Plan, or Separation Plan, the Parties shall mutually engage an independent, third party engineer, or other appropriate expert, for the purpose of evaluating and resolving the disputed element(s) of the proposed Withdrawal Plan, Transfer Plan, or Separation Plan The City shall use a Technical Advisory Committee to review all work products of the selected expert, at least one member of which shall include a District staff member The cost of resolving disputes involving Withdrawal Plans, Transfer Plans, or Separation Plans under this Section 9.2 will be equally shared by the Parties and all staff time by each Party will be paid by the respective Party and will not be subject to reimbursement Other Disputes If a dispute other than as described in Section 9.2 arises between the Parties concerning the performance of duties under this Agreement, the Parties each will make a reasonable effort to reach an informal resolution of the matter that is fair and equitable to both If the Parties are unable to resolve a dispute informally, despite reasonable efforts, the Parties will first attempt to resolve the dispute by formal negotiation prior to any other contested case process. If formal negotiation fails to resolve the dispute, the Parties may, but are not required to, submit the matter to non-binding mediation. Only after these steps have been exhausted will the matter be submitted to arbitration as set forth in Section Arbitration Step 1 Formal Negotiation Each Party shall designate a person to negotiate on the Party s behalf. Others may be present and assist the negotiators, but the designated negotiators alone will have the authority to reach a final resolution of the dispute for their respective Party. Page 19

112 The issues of the dispute shall be reduced to writing and the negotiators, together with any of their assistants, shall then meet and attempt to resolve the dispute. If the dispute is resolved with this step, there shall be a written determination of such resolution signed by each negotiator, the terms of which shall be binding upon the Parties If the Parties do no resolve the dispute within 30 days after first meeting and attempting to resolve the dispute, the dispute will proceed to Step Arbitration Step 2 - Mediation If the dispute cannot be resolved within 30 days of initiation of Step 1, a Party may request in writing that the matter be submitted to non-binding mediation Neither Party is required to accept an offer of mediation. If one Party rejects the other s request to mediate, the dispute will proceed to Step 3, unless the Parties agree to continue to negotiate If the offer of mediation is accepted, the Parties shall use good-faith efforts to select the mediator within 14 days. If they cannot agree, the Parties shall request a list of five mediators from an entity or firm providing mediation services. The Parties will attempt to mutually agree on a mediator from the list provided, but if they cannot agree, each Party shall select one name and the two mediators shall jointly select a third mediator. The dispute shall be heard by the third mediator. Mediation should be scheduled within 14 days of selection of the mediator, or as soon as possible, based on availability. The mediation may follow a procedural format that seems appropriate for the particular dispute, or as determined by the mediator in the absence of an agreed-to procedure The common cost of the mediation shall be borne equally by the Parties, who otherwise shall each bear their own costs and fees therefore. If the dispute is resolved at this step, then a written determination of such resolution shall be signed by each negotiator and the terms of the written determination shall be binding upon the Parties If a written settlement agreement is not reached by the Parties within 60 days from the date of the delivery of the written request to mediate, or such longer time frame as may be agreed upon in writing by the Parties, then the dispute will proceed to Step Arbitration Step 3 - Arbitration After exhaustion of Steps 1 and 2 above, the matter shall be referred to Arbitration Service of Portland, Inc., or such other arbitration organization or arbitrator as the Parties may agree, for final and binding arbitration in accordance with the Oregon Uniform Arbitration Act, ORS et seq. Page 20

113 The arbitrator shall have the authority to order such remedies as the arbitrator considers just and appropriate under the circumstances of the arbitration proceeding, including awards of specific performance, injunctive and declaratory relief, and other equitable remedies; provided, however, the arbitrator has no authority to award punitive damages or other exemplary relief and may award other relief, including attorney fees, costs and expenses, only in accord with this Agreement The arbitration hearing shall take place in Washington County, Oregon, under the laws of the State of Oregon, and in accordance with the rules of Arbitration Service of Portland, Inc., or such other selected arbitration organization. The arbitration shall be before a single arbitrator, unless the Parties agree to a panel of three arbitrators The common cost of the arbitration shall be shared equally between the Parties who otherwise shall each bear their own costs and fees therefore; provided, however, that notwithstanding other provisions of this Agreement, if a Party fails to proceed with arbitration, unsuccessfully challenges the arbitrator s award, or fails to comply with the arbitrator s award, the other Party is entitled to costs of suit, including reasonable attorney fees, for having to compel arbitration or defend or enforce the award Adequacy of Damages. The Parties acknowledge that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in this Agreement and hereby agree the Non-Defaulting Party may seek equitable relief, including injunction and specific performance, as a remedy for any such breach Limitation of Liabilities. Neither Party shall be liable in contract, tort, strict liability, warranty or otherwise for (a) any special, indirect, incidental, consequential, or non-economic damages resulting from or in any way related to the Agreement, such as, but not limited to, delay, disruption, loss of product, cost of capital, loss of anticipated profits or revenue, or loss of use of equipment or system; or (b) any damages of any sort whatsoever arising solely from the termination of the Agreement in accordance with its terms Attorney Fees. Except as provided in Section relating to a Party having to compel arbitration or defend or enforce an arbitration award, each Party shall bear its own legal fees and expert witness fees and all other costs in any Dispute Resolution process, including litigation. Article 10. Miscellaneous Implementation Costs: Except as otherwise provided in this Agreement, each Party shall pay its own costs and expenses incurred by it or on its behalf in connection with the preparation, execution, delivery, and performance of this Page 21

114 Agreement and each other agreement, document, instrument, and transaction contemplated by this Agreement District Assets: Upon Withdrawal, all assets District turns over to the City are delivered to the City AS IS without any representations or warranties as to fitness or reliability Emergency Agreements: No provision in this Agreement prevents the Parties from negotiating emergency supply or mutual aid agreements for short-term duration events Effect on Other Agreements: No provision in this Agreement affects the Parties participation in the Joint Water Commission or any other existing coordination agreement relating to Water Supply, meter reading, or data sharing Urban Services Agreement: The terms of any urban services agreement the Parties enter into to satisfy their obligations under ORS et seq. shall not conflict with the terms of this Agreement unless specifically agreed to by the Parties in the urban services agreement Compliance with Laws. Each Party shall comply with all laws applicable to its operations and obligations under this Agreement. If, due to any change in applicable law or regulation, or the interpretation thereof by a court or the applicable regulating body, performance of any provision of, or transaction contemplated by, this Agreement becomes impracticable or impossible, the Parties shall use reasonable efforts to identify and employ an alternative means to achieve the same or substantially the same result contemplated by this Agreement Good Faith and Fair Dealing. The performances required by the provisions of this Agreement shall be undertaken in good faith, with each Party dealing fairly with the other Further Assurances. At any time and from time to time after the Execution Date, the Parties shall cooperate with each other to execute and deliver any other documents, instruments of transfer or assignment, files, books and records, and do all further acts and things as may reasonably be required to carry out the intent of the Parties under this Agreement Time of the Essence. Time is of the essence of each and every provision of this Agreement. Unless business days are expressly provided for, all references to "days" herein shall refer to consecutive calendar days. If any date or time period provided for in this Agreement is or ends on a Saturday, Sunday or federal, state or legal holiday, then such date shall automatically be extended to the next day which is not a Saturday, Sunday or federal, state or legal holiday Applicable Law and Venue. This Agreement shall be construed and enforced in accordance with the laws of the State of Oregon, without resort to any jurisdiction s conflict of laws, rules, or doctrines. A Party shall file any lawsuit Page 22

115 regarding the interpretation or enforcement of this Agreement in the Circuit Court for Washington County Non Waiver. Failure by either Party to enforce a provision of the Agreement shall not constitute a continuing waiver, shall not constitute a relinquishment of the Party s right to performance in the future, and shall not operate as a waiver of the Party s right to enforce any other provision of the Agreement Assignment and Delegation. A Party shall not assign, sell, subcontract, dispose of or transfer rights or delegate its duties under the Agreement, either in whole or in part, without the other Party s prior written consent. The rights under the Agreement may not be assigned or transferred by operation of law, change of control, or merger without the prior written consent of the non-assigning, nontransferring Party; provided however, notwithstanding the foregoing, the City shall consent to the assignment or transfer of District s rights under the Agreement by operation of law, change of control, or merger of District with another Oregon public entity upon demonstration by District that the successor entity has agreed to be bound by all terms and conditions of the Agreement Binding Effect. All covenants, conditions, and terms of this Agreement shall extend to and be binding upon, and inure to the benefit of, the successors and assigns of the Parties hereto, if any Merger. This Agreement, including any attached exhibits, constitutes the entire and integrated agreement between the Parties and supersedes all prior contracts, negotiations, representations or agreements, either written or oral. All prior and contemporaneous agreements between the Parties on the matters contained in the Agreement are expressly merged and superseded by the Agreement Severability. If any term or provision, or portions of any term or provision, is determined to be illegal, invalid, void, or unenforceable, the remaining terms and provisions of the Agreement shall remain in full force if the essential terms and conditions of the Agreement for each Party remain valid, binding, and enforceable Notice. Any notice required or permitted under this Agreement shall be made in writing and shall be (i) delivered in person or (ii) sent by certified mail, return receipt requested, deposited in a United States Post Office with postage charges prepaid. The date on which notice is deemed complete is upon delivery if delivered in person or, if sent by mail, upon five days after mailing. Notice shall be delivered to: If to the City: Mayor City of Beaverton P.O. Box 4755 Beaverton, OR If to the District: Chief Executive Officer Tualatin Valley Water District 1850 SW 170th Ave Beaverton, OR Page 23

116 With copy to: City Attorney s Office P.O. Box 4755 Beaverton, OR Force Majeure Force Majeure Event Defined. Neither Party shall be held responsible for delay or default caused by war, insurrection, acts of terrorism, strikes, lockouts, labor disputes, riots, terrorist acts or other acts of political sabotage, volcanoes, floods, earthquakes, fires, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, governmental restrictions or priorities, severe weather, or any other uncontrollable or unforeseeable act or circumstance beyond a Party s reasonable control and without fault or negligence of the Party ( Force Majeure Event ) Reasonable Efforts to Remove or Eliminate Force Majeure Event. A Party affected by the Force Majeure Event shall make all reasonable efforts to remove or eliminate the cause of the Force Majeure Event and shall diligently pursue performance of its obligations under the Agreement after the Force Majeure Event ceases Written Notice; Effect of Delay. If there is a delay as a result of a Force Majeure Event, the Party delayed shall give written notice of the delay and the reason of the delay to the non-delayed Party within thirty days after the Party delayed learns of the Force Majeure Event. The Party delayed may request an extension of time up to the length of time of the delay due to a Force Majeure Event. Contractor shall not be entitled to additional compensation for delays that occur under this subsection Amendment. Except as otherwise provided in this Agreement, no provision of this Agreement may be waived, modified, amended, discharged, or terminated except by an instrument in writing signed by the Party against which the enforcement of such waiver, modification, amendment, discharge or termination is sought, and then only to the extent set forth in such writing Access to Records. Each Party shall maintain all books, documents, papers, and records relating to the Agreement in accordance with generally accepted accounting principles. Each Party shall maintain any other records pertinent to the Agreement in a manner that clearly documents the Party s performance. The Parties shall retain and keep accessible all fiscal records, books, documents, papers, plans, and writings related to the Agreement, for the later of (i) the minimum period required by applicable law or (ii) the conclusion of any audit, controversy, or litigation arising out of or relating to the Agreement. Page 24

117 Counterparts. This Agreement may be executed in one or more counterparts and by the different Parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, that all of which shall together constitute one and same instrument. Each copy of the Contract so executed shall constitute an original. The exchange of signed copies of the Contract by electronic mail in Portable Document Format, or its equivalent, shall constitute effective execution and delivery of the Contract. Signatures on the pages sent through electronic mail shall be deemed to be their original signatures for all purposes Captions. The captions and headings in this Agreement are for convenience of reference only and have no legal force or effect. Such captions and headings shall not be considered a part of this Agreement for purposes of interpreting, construing or applying this Agreement and will not define, limit, extend, explain or describe the scope or extent of this Agreement or any of its terms and conditions No Third-Party Beneficiaries. District and the City are the only parties to the Agreement and are the only parties entitled to enforce its terms. Nothing in the Agreement gives, is intended to give, or shall be construed to give or provide any benefit or right, either directly, indirectly, or otherwise, to third parties unless such third parties are identified by name in the Agreement and expressly described in the Agreement as intended beneficiaries. TUALATIN VALLEY WATER DISTRICT CITY OF BEAVERTON BY: Mark Knudson Chief Executive Officer Date: BY: Denny Doyle Mayor Date: Page 25

118 EXHIBIT A R D GREEN PKWY RD RD Legend THOMPSON Raleigh Water District RD Current Beaverton Service Area Tualatin Valley Water District Beaverton City Limits West Slope Water District CORNELL US 26 RD AVE 143RD AVE T V W D W A T E R D I S T R I C T WALKER CORNELL RD 185TH RD 158TH AVE ELINE RD BARNES R D MERLO RD JENKINS RD WALKER HILLS US TH AVE T V W D W A T E R D I S T R I C T 185TH AVE FARMINGTON AVE DAVIS RD RD CEDAR RD ALLEN CANYON BLVD RD W E S T S L O P E W A T E R D I S T R I C T BEAVERTON R A L E I G H W A T E R D I S T R I C T SCHOLLS HWY 8 FERRY RD SHAT 170TH BLVD DENNEY HWY RD RD TILE FLAT RD FERRY AVE 175TH HART RD WEIR RD RD MURRAY SCHOLLS B E A V E R T O N S E R V I C E A R E A BROCKMAN 135TH AVE ST 125TH AVE WALNU T FERRY 1 21ST AVE ST RD HALL 217 TIEDMAN BLVD AVE G REENBURG RD HOME GARDEN BLVD HALL RD OLESON T V W D W A T E R D I S T R I C T I-5 MULTN 62ND AV L ESSER R ROY ROGERS MOUNTAIN RD GAARDE ST Current Service Areas PUBLIC WORKS DEPARTMENT ENGINEERING DIVISION McDONALD ST Path: Y:\Water\Drinking Water Engineer Function\PAULA\TVWD Original Map\AB Exhibits\COB Current Service Area_Rev.mx BLVD AVE ± 0 2,500 5,000 Feet

119 EXHIBIT B R D GREEN PKWY RD RD Legend THOMPSON RD Beaverton City Limits Withdrawal Areas TVWD Headquarters Service Area 2 CORNELL US 26 Current Beaverton Service Area Raleigh Water District 3 4 RD AVE 143RD AVE T V W D W A T E R D I S T R I C T Tualatin Valley Water District West Slope Water District COB Service Area Fire Flow Only TH WALKER RD 4 158TH AVE CORNELL RD ELINE RD BARNES R D TILE 198TH AVE FLAT RD T V W D W A T E R D I S T R I C T 185TH AVE FERRY FARMINGTON AVE 175TH MERLO RD AVE 170TH DAVIS RD RD HART RD WEIR RD JENKINS RD BLVD MURRAY RD SCHOLLS WALK ER BROCKMAN 135TH AVE CEDAR B E A V E R T O N S E R V I C E A R E A ST 125TH AVE WALNU T FERRY 1 21ST AVE HILLS ALLEN ST RD DENNEY 116TH AVE RD HALL CANYON BLVD 217 HWY TIEDMAN 6 RD BLVD AVE G R EENBURG RD RD HOME BLVD HALL BEAVERTON GARDEN SCHOLLS RD OLESON US 26 W E S T S L O P E W A T E R D I S T R I C T R A L E I G H W A T E R D I S T R I C T T V W D W A T E R D I S T R I C T HWY 8 RD I-5 FERRY 62ND AV RD SHAT MULTN L ESSER R ROY ROGERS MOUNTAIN RD GAARDE ST Known Withdrawal Areas PUBLIC WORKS DEPARTMENT ENGINEERING DIVISION McDONALD ST Path: Y:\Water\Drinking Water Engineer Function\PAULA\TVWD Original Map\AB Exhibits\Known Withdrawal Areas.mxd BLVD AVE ± 0 2,500 5,000 Feet

120 PASS 217 EXHIBIT C D RD GERMANTOWN RD Legend Beaverton City Limits Current Beaverton USB ST JOHNS BRIDGE Withdrawal Areas 2 L WILLAM TVWD Headquarters Service Area 3 RD HELVETIA CORNELIUS PASS WEST SPRINGV ILLE UNION RD KAISER Deferred Withdrawal Areas 4 Current Beaverton Service Area 5 Raleigh Water District 6 Tualatin Valley Water District 10* West Slope Water District SKYLIN E Urban Reserve 6B COB Service Area Fire Flow Only US 30 *Area 10 not deferred under specific criteria in R D EVERGREEN PKWY RD RD THOMPSON RD CORNELL US 26 RD RD AVE D E F E R R E D W I T H D R A W A L A R E A 143RD AVE 185TH WALKER RD 4 158TH AVE CORNELL RD BASELINE RD BARNES R D ALLEY SEDALE RD TON RD HWY CLARK HILL RD CORNELIUS 209TH AVE TILE 198TH AVE FLAT RD T V W D W A T E R D I S T R I C T 185TH AVE FERRY FARMINGTON AVE 175TH MERLO RD AVE 170TH Urban Reserve 6B 5 DAVIS 3 RD RD HART RD WEIR RD JENKINS RD BLVD MURRAY RD SCHOLLS 2 WALKER BROCKMAN 135TH AVE CEDAR B E A V E R T O N S E R V I C E A R E A ST 125TH AVE WALNU T FERRY 1 21ST AVE HILLS ALLEN ST RD DENNEY 116TH AVE RD HALL CANYON BLVD HWY TIEDMAN 6 RD 10 BLVD AVE G R EENBURG RD RD HOME BLVD HALL BEAVERTON GARDEN SCHOLLS RD OL ESON US 26 W E S T S L O P E W A T E R D I S T R I C T R A L E I G H W A T E R D I S T R I C T HWY 8 RD D E F E R R E D W I T H D R A W A L A R E A T V W D W A T E R D I S T R I C T I-5 FERRY 62ND AV RD SHAT TUC MULTN C I T Y O F T I G A R D W A S H I N G T O N C O U N T Y L ESSER RD HWY 210 SCHOLLS ROY ROGERS MOU NTAIN RD GAARDE ST Deferred Withdrawal Areas PUBLIC WORKS DEPARTMENT ENGINEERING DIVISION McDONALD ST Path: Y:\Water\Drinking Water Engineer Function\PAULA\TVWD Original Map\AB Exhibits\4Deferred Withdrawal Areas Boundary as Written.mxd BLVD AVE ± 0 3,000 6,000 Feet K EN

121 Exhibit D Schedule of Withdrawal of TVWD Service Territory by City of Beaverton Area Description Notice of Withdrawal Approved * Effective Date Wheeling Begins 2 Millikan Way - UR NLT March 2018 Jul-18 FY Davis/Oak/Hart/Bany/170th NLT March 2018 Jul-18 FY Waterhouse NLT March 2018 Jul-18 FY TV/170th NLT March 2018 Jul-18 FY Scholls Ferry/Hall (west) NLT March 2018 Jul-18 FY * withdrawals completed no later than (NLT) March 31 of any year become effective on July 1

122 Areas Exhibit E Transfer Plan Reimbursement Schedule Reimbursement for TVWD Time Payment Schedule Area 2 $15,000 Area 3 $25,000 Area 4 Area 5 $10,000 Area 6 East of Scholls if Rezoned $25,000 Total $365,000 $240,000 in increments of roughly $60,000 per year $50,000 paid at $25,000 per year For transfers that take place in Deferred or Annexation Withdrawal Areas, the reimbursement amount will be the District s actual, documented and reasonable costs for materials and services that are used for no other purpose but to implement the Transfer Plan, not to exceed 10 percent of District billed fixed and consumption charges for the 12 months preceding the City s withdrawal of the transferred accounts. All other prerequisites being met, the following actives are presumed reimbursable: Project management, including attending coordination meetings Plan reviews Design coordination Construction site coordination and inspections Shut down planning, coordination, and implementation Meter transfers Removal of existing infrastructure not withdrawn by COB and not necessary for District Transfer of account information, including customer records and history By their written agreement, District and City management are authorized to design or modify a reimbursement payment schedule for a withdrawal area, but may not increase or decrease the maximum amount to be reimbursed relating to that area.

123 EXHIBIT F WHEELING SERVICE RATE METHODOLOGY The City of Beaverton (City) and the Tualatin Valley Water District (TVWD) are negotiating an intergovernmental agreement (IGA) that, among other things, will provide for the wheeling of water from sources of supply controlled by the City through infrastructure owned by TVWD. This exhibit presents the methodology to be used for establishing the cost to the City for TVWD to provide wheeling services. 1 GENERAL METHODOLOGY 1.1 INDUSTRY-STANDARD PRINCIPLES The proposed methodology is intended to be based on industry-standard cost-of-service principles. That is, the rates established by the methodology are intended to recover TVWD s cost of providing the wheeling services to the City using industry-standard approaches. The Parties also intend that the cost-of-service principles be consistent with the principles underlying the methodologies used by the Joint Water Commission, a joint venture that, among others, includes both the City and TVWD. 1.2 UTILITY BASIS OF DETERMINING REVENUE REQUIREMENTS The revenue requirements that are used to calculate the wheeling charges to the City will be based on the utility basis as described in this exhibit. Under the utility basis, the revenue requirements that are the basis for the wheeling charges include an amount for operations and maintenance costs described in Subsection of this exhibit, a return on investment described in Subsection 1.4.3, and replacement cost depreciation described in Subsection The City will not be charged for costs incurred by TVWD that are incurred exclusively in serving its retail customers. For those costs that are incurred for serving both the City s and TVWD s retail customers, the City shall be charged its proportionate share of the cost using standard costs-of-service principles such as those presented by the American Water Works Association (AWWA) in its Manual of Water Supply Practices M1, Principles of Water Rates, Fees and Charges, Seventh Edition, Denver: TYPES OF CUSTOMERS AND CUSTOMER CLASSES TVWD and the City anticipate that TVWD may have similar agreements with other water utilities in the Washington-County region. If TVWD enters other similar agreements, the charges to the City shall continue to be based on the proportionate cost of serving the City. The City and TVWD anticipate that TVWD will wheel water for the City to multiple areas and with differing service levels. These areas and service levels will be included in unique customer classes that accounted for the costs of serving each of the areas identified in an adopted withdrawal and transfer plan Types of Customers TVWD shall allocate costs based on a customer classification approach that follows cost-ofservice principles. TVWD shall classify customers as owners or nonowners, retail or wheeling,

124 Exhibit F Wheeling Service Rate Methodology February 14, 2018 Page 2 and by delivery area (e.g., pressure zone). Other classification factors may be implemented to further the cost-of-service objectives of the IGA Owner and Nonowner Customers Customer classes will be identified as either owner or nonowner customers. Owner customer classes will be those that are served directly by TVWD and are within TVWD s corporate boundaries or otherwise treated as TVWD direct retail customers. These customers are responsible for capitalizing the utility and will have the return on investment set by TVWD directly. Nonowner customers are those customers (e.g., the City) located outside TVWD s corporate boundaries. Rates for nonowner customers will be based on a return on investment described in Subsection of this Exhibit. Customers served directly by TVWD that are withdrawn pursuant to an adopted withdrawal plan, and identified as customers to be treated as retail customers in an adopted transfer plan, or are receiving interim service as provided for in the IGA, shall be treated as TVWD retail customers and pay the rates and charges then in effect for similarly situated TVWD customers as determined by the TVWD Board of Commissioners Retail and Wheeling Retail customer classes are those classes for which TVWD provides retail services. Under this methodology, retail service means TVWD provides and maintains all assets required to provide service to and including the customers water meter, TVWD provides all customer service including billing, TVWD provides facilities for fire flow requirements, and TVWD provides the source of supply. Wheeling customers are those City customers served by TVWD pursuant to an adopted withdrawal plan and transfer plan. The services provided by TVWD may vary by the withdrawal and transfer plans. Regardless of service levels identified in the withdrawal and service plans, the City provides the source of supply to TVWD in exchange for the water delivered to the wheeled customers. The source of supply exchanged from the City to TVWD must meet the operational standards established under the IGA Delivery Area TVWD will determine the charges for wheeled water using cost-of-service principles that allocate costs based on delivery areas served. The IGA establishes the proposed delivery areas. The cost of wheeled water will be determined based on the volume of water wheeled to these delivery areas. The delivery areas will be revised as necessary to meet the cost-of-service principles that underlies this IGA and the adopted withdrawal and transfer plans Summary of Customer Classes The table below lists the customer classes used in the wheeling rates.

125 Exhibit F Wheeling Service Rate Methodology February 14, 2018 Page 3 Table 1 Summary of Customer Classes Customer Class Description TVWD WC 385/435 TVWD deliveries in the Wolf Creek Service Area within Pressure Zones 385 and 435 TVWD WC-N 575 TVWD deliveries in the northern Wolf Creek Service Area within Pressure Zone 575 TVWD WC Other TVWD deliveries in the Wolf Creek Service Area not within another Class TVWD WC Cooper Mtn TVWD deliveries within the Cooper Mountain system TVWD M 426/498 TVWD deliveries within the Metzger Service Area within Pressure Zones 426 and 498 TVWD M Other All other TVWD deliveries within the Metzger Service Area COB Service Areas Wheeled deliveries to Beaverton Areas 1.4 DETERMINATION OF REVENUE REQUIREMENTS Operation and Maintenance Costs The operations and maintenance costs shall be those costs as set in TVWD s adopted budget for expenditures on personnel services, materials and services, and other appropriations categories that are not otherwise treated as capital expenditures. Operations and maintenance costs shall include appropriate allocation of TVWD s overhead costs following TVWD s indirect cost plan. Operations and maintenance costs exclude debt service and other expenditures that are capitalized as determined by TVWD s capitalization policies. Operation and maintenance costs assessed to the City will be adjusted annually to reflect TVWD s actual costs using the following methodology: 1. After the close of each fiscal year, TVWD will calculate the variance between the actual costs and the budget for TVWD s operation and maintenance costs charged to the City for that fiscal year. 2. The City will be credited any savings or charged any additional costs in addition to TVWD s operation and maintenance costs charged to the City for the then-current fiscal year. 3. Such credits or additional charges will be applied equally over the months remaining in the fiscal year following the calculation of the variance described above. This methodology may be adjusted and revised as mutually agreed by the parties as established in the IGA (ref Section 6.3 of the IGA) Replacement Cost Depreciation Expense Unless otherwise agreed to by the Parties, replacement cost depreciation expense shall be determined by the annual depreciation expense on assets that serve the City based on the depreciation expense used by TVWD in the preparation of its financial statements, adjusted by changes in the Engineering News Record s Construction Cost Index for Seattle. Replacement cost depreciation expense used for setting the wheeling rate shall be determined using the following formula:

126 Exhibit F Wheeling Service Rate Methodology February 14, 2018 Page 4 RCD n = AD n ENR n ENR a Where: RCD n = Replacement Cost Depreciation in year n AD n = Annual Depreciation on an asset at year n ENR n = Value of the Construction Cost Index for Seattle in year n as published by the Engineering News Record. ENR a = Value of the Construction Cost Index for Seattle in year the asset was estimated to be placed in service as published by the Engineering News Record. If the Engineering News Record s Construction Cost Index for Seattle is no longer published, the Parties shall select a comparable index to value the replacement cost deprecation Return on Investment The return on investment shall equal the rate of return multiplied by the rate base that serves the City Determination of Rate of Return The rate of return shall equal the interest rate as published by the State of Oregon Treasury Department entitled Oregon Bond Index Oregon A Rated 20 Year for the first date after the beginning of the calendar year for when the wheeling rates will be effective. If the Oregon Bond Index Oregon A Rated 20 Year is no longer published, the Parties shall select a comparable index to value the rate of return Determination of Rate Base Assets that are used and useful in the provision of water to the City shall be included in the rate base. Assets that are used solely for the provision of services to TVWD s retail customers shall not be included in the rate base. Each year TVWD shall undertake an analysis of the assets used to provide wheeling services to the City and revise the assets included in rate base as appropriate Criteria for Capitalization Only assets that have been or will be capitalized following standard accounting principles shall be included in rate base Value of Rate Base Asset Valuation The value used for the rate base shall be based on an estimate of each asset s reproduction cost new less depreciation. TVWD shall use the Engineering News Record s Construction Cost Index for Seattle to estimate the reproduction cost new less depreciation for assets. The formula for valuing rate base is:

127 Exhibit F Wheeling Service Rate Methodology February 14, 2018 Page 5 ENR n RCNLD n = BV n ENR a Where: RCNLD n = Replacement Cost New Less Depreciation in year n Book Value n = Book value (i.e., original cost of the asset minus the accumulated depreciation for the asset at original costs) of the asset in rate based at year n ENR n = Value of the Construction Cost Index for Seattle in year n as published by the Engineering News Record. ENR a = Value of the Construction Cost Index for Seattle in year the asset was estimated to be placed in service as published by the Engineering News Record. If the Engineering News Record s Construction Cost Index for Seattle is no longer published, the Parties shall select a comparable index to value the replacement cost deprecation. Construction work in progress (CWIP) will not be included in the rate base until the year in which an asset is reasonably expected to enter operations or as otherwise agreed to by the Parties Allowance for Working Capital In addition to the asset values as described in Section , the rate base shall also include an allowance for working capital equal to 45 days of budgeted expenditures for operations and maintenance costs as described in Section The allowance for working capital shall be allocated in the same manner as the operations and maintenance costs as described in Section Tracking Requirements of Fixed Assets TVWD shall follow a standard of care common for municipal utilities to maintain records of the value of assets in its rate base. The City and TVWD agree that a list of assets will be compiled separately, with such assets to be included in rate base until future assets are added or existing assets are retired Retirement of Fixed Assets When an asset is retired, the asset shall be removed from the list of assets included in the rate base. In some cases, the assets will be part of a group of assets. In those cases, the value of the asset shall be removed from the value of the group of assets Addition of Fixed Asset Each year TVWD will produce an estimate of the value of assets to be added to the rate base. As appropriate, the assets will be identified by function, purpose, acquisition cost, depreciation rate, and acquisition date. Unless otherwise agreed to, the acquisition costs will be the cost to be recorded in TVWD s financial statements.

128 Exhibit F Wheeling Service Rate Methodology February 14, 2018 Page 6 2 ALLOCATION OF REVENUE REQUIREMENTS The method of allocating each element of the revenue requirement is described below. 2.1 ALLOCATION OF RETURN ON INVESTMENT AND RATE BASE The rate base will be allocated to the City using the base/extra-capacity method as described in the AWWA s Manual of Water Supply Practices M1, Principles of Water Rates, Fees and Charges, Seventh Edition, Denver: Each element of rate base will be allocated to one or more water functions. Initially the water functions will include: A. Source of Supply (JWC/PWB) B. Aquifer Storage and Recovery (ASR) C. Fluoride/Regulators D. Terminal Storage Elevation 385/435 E. Terminal Storage Elevation 575 (Northern Wolf Creek) F. Storage Elevation 385/435 G. Storage Elevation 575 (Northern Wolf Creek) H. Storage Other (Wolf Creek) I. Emergency Backup J. Terminal Storage Cooper Mountain Elevation 385 K. Storage Cooper Mountain L. Storage Metzger Elevation 426/498 M. Emergency Pumping Metzger Elevation 426/498 N. Pumping Elevation 575 (Northern Wolf Creek) O. Pumping Wolf Creek Other P. Pumping Cooper Mountain Q. Pumping Metzger Elevation 426/498 R. Transmission Elevation 385/435 S. Transmission Elevation 575 (Northern Wolf Creek) T. Transmission Wolf Creek Other U. Transmission Cooper Mountain V. Transmission Metzger Elevation 426/498 W. Transmission Metzger Other X. Distribution Y. Direct Fire Z. Indirect Fire AA. Meters/Services

129 Exhibit F Wheeling Service Rate Methodology February 14, 2018 Page 7 BB. Meter Reading, Billing, and Customer Service CC. SCADA DD. Water Quality EE. Cross Connection FF. Retail Only GG. Indirect Additional water functions may be added to the allocation methodology when required to meet cost-of-service objectives. The allowance for working capital shall be allocated to functions based on the allocation of budgeted operations and maintenance expenditures. The following subsections provide functional overviews and define the functions Source of Supply Source of supply accounts for the infrastructure and operating costs to deliver potable water to the system. Under the wheeling agreement, TVWD s source of supply will be allocated exclusively to TVWD customers (including those City customers that receive Interim Services from TVWD as described in the IGA) since the City will provide its source to TVWD for wheeling to its customers A Source of Supply (JWC/PWB) The infrastructure and operating costs incurred to receive water from the JWC and the City of Portland. Source of supply will include the future Willamette Water Supply System when appropriate. This function is not allocated to the City since it will provide its own source of supply B Aquifer Storage and Recovery (ASR) Aquifer Storage and Recovery (ASR) accounts for the costs of the District s ASR facilities. This function is not allocated to the City since it will provide its own source of supply C Fluoride/Regulators TVWD owns and operates facilities that regulate the pressure within the TVWD system. Some of these facilities also include equipment that introduces fluoride into the water system. Source of supply provided to TVWD by the City will require these facilities for pressure regulations, metering, and, where available, fluoridation Storage In many cases TVWD s storage facilities provide multiple functions. The storage functions are described below Terminal Storage Terminal storage accounts for that portion of a finished water reservoir that is allocated for the use of pumping water to other storage facilities within the District. The phrase terminal storage can have other meanings in another context. But for this methodology, it is used to determine capacity requirements for pumping to higher pressure zones.

130 Exhibit F Wheeling Service Rate Methodology February 14, 2018 Page Distribution Storage Distribution storage is finished water storage that is used to meet the diurnal demands within a pressure zone, reduce peak-day demands on sources of supply, and/or meet fire flow requirements Emergency Backup Emergency storage is the portion of storage capacity that allows water to flow from higher pressure zones to lower pressure zones in emergencies. It also provides continuity of water service during water supply disruptions. This does not necessarily include capacity to provide water for fire flow requirements Storage Wolf Creek Storage is location dependent. Storage within the Wolf Creek system provides service to services within Wolf Creek rather than the Metzger service area D Terminal Storage Elevation 385/435 This function is terminal storage in the Wolf Creek system with a hydraulic grade line (HGL) of either 385 feet or 435 feet E Terminal Storage Elevation 575 (Northern Wolf Creek) This function is terminal storage in the Wolf Creek system with an HGL of 575 feet F Storage Elevation 385/435 This function is distribution storage in the Wolf Creek system with an HGL of 385 feet or 435 feet G Storage Elevation 575 (Northern Wolf Creek) This function is distribution storage in the Wolf Creek system with an HGL of 575 feet H Storage Other (Wolf Creek) This function is all other distribution storage in the Wolf Creek system with an HGL exceeding 575 feet except for that storage within the Cooper Mountain system I Emergency Backup That portion of storage in the Wolf Creek system that can be used to provide a backup service to lower pressure zones by allowing the water to flow down to a lower pressure zone in an emergency, and to provide continuity of water service during water supply disruptions Storage Cooper Mountain Because of the engineering constraints in serving the Cooper Mountain area, the distribution storage and pumping is operated together J Terminal Storage Cooper Mountain Elevation 385 Terminal Storage Cooper Mountain Elevation 385 is the storage in the 385-foot HGL that is used to pump water from the 385-foot system into the Cooper Mountain system.

131 Exhibit F Wheeling Service Rate Methodology February 14, 2018 Page K Storage Cooper Mountain Storage located within the Cooper Mountain area is operated as one system regardless of HGL. Engineering constraints require water to be pumped to higher pressure zones and cascaded down to lower zones. This function includes all distribution storage in the Cooper Mountain system L Storage Metzger Elevation 426/498 Due to engineering constraints in serving most of the Metzger area, the distribution storage and pumping is operated together. This function represents distribution storage in the Metzger area that serves the 426-foot and 498-foot pressure zones Pumping Pumping costs include the operations, maintenance, and ownership of the District s pumping systems. This includes the cost of power used to operate the District s pump stations M Emergency Pumping Metzger Elevation 426/498 The costs allocated to this function include the costs of ownership of the Washington County Supply Emergency Pump Station. These assets will be used to supply water from the Wolf Creek system to the Metzger system in the case of a major emergency that disrupts supply to the Metzger area from Portland N Pumping Elevation 575 (Northern Wolf Creek) This function includes the costs allocated to pumping water in the Wolf Creek system to the 575-foot pressure zone O Pumping Wolf Creek Other This function includes the costs allocated to pumping water in the Wolf Creek system to pressure zone higher than 575-feet, excluding the pumping in the Cooper Mountain system P Pumping Cooper Mountain Pumping within the Cooper Mountain system is combined into one function to reflect the operational constraints of serving the area. This function includes all pumping power and assets used to serve the Cooper Mountain system Q Pumping Metzger Elevation 426/498 Pumping in Metzger is combined into one function to reflect the operational constraints of serving the area. This function includes all pumping power and assets used to serve Metzger customers within the 426-foot and 498-foot pressure zones Transmission by Zone Pipe is allocated to function by estimating the overall value of pipe serving each function. Because of the limitation of historical accounting records, this estimate is based on pipe information from the District s Geographic Information System (GIS). The estimated age, diameter, and length of each segment of pipe within the District s GIS system is used to allocate the reproduction cost new of the facilities to function.

132 Exhibit F Wheeling Service Rate Methodology February 14, 2018 Page 10 Generally, distribution pipe is limited to pipe with a diameter of less than 12-inches. Transmission is generally pipe 12-inches or greater. However, there are pipes within the TVWD system that are smaller than 12 inches that are used as transmission pipes R Transmission Elevation 385/435 This function includes the costs allocated to operating, maintaining, and owning transmission pipe generally 12-inches or greater within the Wolf Creek system and the 385-foot and 435-foot pressure zone S Transmission Elevation 575 (Northern Wolf Creek) This function includes the costs allocated to operating, maintaining, and owning transmission pipe generally 12-inches or greater within the Wolf Creek system and the 575-foot pressure zone T Transmission Wolf Creek Other This function includes the costs allocated to operating, maintaining, and owning transmission pipe generally 12-inches or greater within the Wolf Creek system other than the pipe located within the 385-foot, 435-foot, or 575-foot pressure zone, or within the Cooper Mountain system U Transmission Cooper Mountain This function includes the costs allocated to operating, maintaining, and owning transmission pipe generally 12-inches or greater within the Cooper Mountain system V Transmission Metzger Elevation 426/498 This function includes the costs allocated to operating, maintaining, and owning transmission pipe generally 12-inches or greater within the 426-foot and 498-foot pressure zones in the Metzger area W Transmission Metzger Other This function includes the costs allocated to operating, maintaining, and owning transmission pipe generally 12-inches or greater within the Metzger area other than the pipe located within the 426-foot and 498-foot pressure zones X Distribution This function includes the costs allocated to operating, maintaining, and owning distribution pipe generally smaller than 12-inches regardless of location Fire Substantial investments in water systems are used to provide water for firefighting. These costs are divided into direct and indirect. Each is described below Y Direct Fire This function includes the costs of operating, owning, and maintain assets that are directly used for firefighting purposes. Generally, costs allocated to direct fire are related to the cost of public fire hydrants.

133 Exhibit F Wheeling Service Rate Methodology February 14, 2018 Page Z Indirect Fire This function includes the costs allocated to meet the fire flow requirements of the system. These costs are generally included in oversizing of storage and pumping facilities, and transmission and distribution pipes Customer Services The costs of managing the customer service systems are allocated to either the meters and services function or the meter reading, billing, and customer service function. The cost incurred by TVWD for these functions generally do not vary with the quantity of water delivered AA Meters/Services This function accounts for the costs of operating, maintaining, and owning water meters and the service lines that connect those water meters to the distribution system BB Meter Reading, Billing, and Customer Service This function accounts for the costs of reading meters, billing customers, and providing customer service functions such as move-ins, move-outs, and customer account inquiries Others Functions that are not otherwise categorized are listed below CC SCADA This function includes the cost of operating, maintaining, and owning the District s Supervisory Control and Data Acquisition (SCADA) system. This system is used to monitor and operate the water system DD Water Quality The costs associated with meeting the water quality needs of the distribution system are included in the Water Quality function EE Cross Connection The costs associated with meeting the cross-connection control requirements of the water system are included in the Cross Connection function FF Retail Only This function includes allocations of costs that serve TVWD retail customers only GG Indirect Indirect costs are those allocated to other functions based on the direct costs of each function. 2.2 ALLOCATION TO CUSTOMER CLASSES AND COST POOLS OF CUSTOMER CLASSES The rate base will be allocated to customer classes and groups of customer classes that participate in common cost pools.

134 Exhibit F Wheeling Service Rate Methodology February 14, 2018 Page Retail Customers Items that solely serve TVWD s customers will be allocated to retail customers Wheeling-Only Customers Items that serve only the City or other wheeling customers will be allocated as wheeling customers /435 Pressure Zone Customers Items the serve customers located within the 385-foot and 435-foot pressure zone Area 3 Customers Costs specific to customers located within the Cooper Mountain system Area 6 Customers Costs that serve customers within the Metzger service area within the 426-foot and 498-foot pressure zones. 2.3 ALLOCATION TO WATER CUSTOMER CHARACTERISTICS The functionalized items shall be allocated to the customer service characteristics listed below by the cost pools following the base/extra-capacity method described in the AWWA s Manual of Water Supply Practices M1, Principles of Water Rates, Fees and Charges Base Demands Base demands shall be identified as described in the AWWA s Manual of Water Supply Practices M1, Principles of Water Rates, Fees and Charges Peak-Day Demand Items required to meet peak-day demand shall be allocated to both base capacity and max-day extra capacity. The percentage allocated to the base capacity shall equal the quotient of the estimated quantity of water provided through a cost pool on an average-day basis divided by the estimate of the quantity of water provided during the peak day, all in millions of gallons per day (MGD). The remaining percentage (i.e., 100 percent minus the quotient described above) shall be allocated to max-day extra capacity Peak-Hour Demand Items required to meet peak-hour demand shall be allocated to base capacity, max-day extra capacity, and max-hour extra capacity. The percentage allocated to the base capacity shall equal the estimated quantity of water provided through a cost pool on an average-day basis in MGD divided by the estimate of the quantity of water provided through the same cost pools during the peak hour (in MGD). The percentage allocated to the max-day extra capacity shall equal the quotient of the estimated difference between the peak-day demand and the average-day demands, divided by the estimated peak-hour demand (in MGD). The remaining percentage shall be allocated to max-hour extra-capacity.

135 Exhibit F Wheeling Service Rate Methodology February 14, 2018 Page Customer Items that serve the customer, regardless of the customer s demands, shall be allocated based on the number of customers served by the customer service function. For wheeling customers, the customer service characteristic does not include the individual customers. Rather the customer service characteristic includes only the number of master meters or other City accounts used to serve the City Meter Meter-related items shall be allocated based on the number of equivalent meters as described in the AWWA s Manual of Water Supply Practices M1, Principles of Water Rates, Fees and Charges Fire Fire-related items shall be allocated based on the number of equivalent fire hydrants served. 2.4 ALLOCATION OF THE RETURN ON INVESTMENT The return on investment will be allocated based on the allocation of rate base. The return on investment will equal the value of the rate base as allocated in this exhibit times the rate of return identified in Section ALLOCATION OF COSTS BY CUSTOMER SERVICE CHARACTERISTIC The City will be allocated a percentage of the costs allocated to each customer service characteristic based on the base/extra-capacity method described in the AWWA s Manual of Water Supply Practices M1, Principles of Water Rates, Fees and Charges. The percentages of the City s total demands for each customer service characteristic shall be used to allocate costs to the City for base, max-day extra capacity, and max-hour extra capacity. Estimated peaking factors shall be used on estimates of average-day demand unless a more accurate method is reasonably available. 3.1 ALLOCATION OF REPLACEMENT COST DEPRECIATION EXPENSE Replacement Cost Depreciation expense shall be allocated by using the same procedure as for rate base. The allocation of the replacement cost depreciation expense will use the same percentages as for rate base. 3.2 ALLOCATION OF OPERATIONS AND MAINTENANCE COSTS Operations and maintenance costs will be functionalized and allocated in the same manner as rate base with the objective being an allocation methodology that follows cost-of-service principles. 4 DETERMINATION OF WHEELED QUANTITY As part of the IGA, the City is required to provide the water that TVWD will wheel to the City s customers as described elsewhere in the IGA and this Exhibit. This section describes the methodology to determine the amount of water to be delivered to TVWD by the City for the purposes of wheeling.

136 Exhibit F Wheeling Service Rate Methodology February 14, 2018 Page ALLOCATION BASIS Source of supply accounts for the infrastructure and operating costs to deliver potable water to TVWD s transmission and distribution system. Under the IGA, TVWD s source of supply will be used exclusively to serve TVWD s users. The City will provide its source of supply to TVWD for wheeling to the City s users. TVWD sources of supply include the Portland Water Bureau, JWC, and TVWD s ASR. TVWD sources of supply may change in the future. For example, TVWD is currently developing the Willamette Water Supply System to provide potable water to its customers Determining and Updating Allocation Percentage TVWD and the City will determine the percentage of the total demand required to serve users in the City s wheeling area using three-years historical customer billing records. This percentage is referred to as the Allocation Percentage. At the time of creating this memo, assuming all customers withdrawn from TVWD by the City receive wheeled water, the Allocation Percentage is 9.1%. This Allocation Percentage is determined by the demand from wheeled customers assumed from within Areas 2 through 6, as presented in Exhibit A to the IGA, as a percentage of total TVWD demand. Table 1 presents an example of the calculation of the Allocation Percentage. Table 2 Calculation of the Allocation Percentage FY2015 FY2016 FY2017 Average Beaverton Wheeled Areas (MGD) TVWD total (MGD) Percentage Wheeled 9.6% 8.9% 8.7% 9.1% TVWD and the City agree to update the Allocation Percentage at least annually or more frequently when the customers receiving wheeled water change. When on an annual basis, the updated Allocation Percentage will be effective beginning July 1 of the year in which the Allocation Percentage is calculated and will be based on the most recent 3 years of billing as of May 1 of that year. When the update is based on a change in the customers receiving wheeled water, the Allocation Percentage will be effective on the date that the change in wheeling customers is effective. The selection of the billing records for the historical 3-year calculation for the Beaverton Wheeled Area will include the metered demands (either at the retail meter, or if master metered, at the master meter) of the City s users receiving wheeled water. The selection of the billing records for the historical 3-year calculation of the TVWD Total will include all users of the TVWD system (both TVWD and the City s wheeled users). When the City separates a part of its system currently receiving wheeled water, those customers historical billing records will be excluded from the Allocation Percentage calculations.

137 Exhibit F Wheeling Service Rate Methodology February 14, 2018 Page Determining the Wheeled Quantity The Allocation Percentage determined in Section above will be applied to the daily meter readings of TVWD s sources of supply to determine the Wheeled Quantity of water required to serve the City s users. For example, on August 2, 2017, TVWD requested 14.5 MG from JWC. TVWD also had 26 MG from the Portland Water Bureau. Total supply for August 2 nd, was 40.5 MG. Table 3 Example of Determination of Wheeled Quantity August 2, 2017 Demands (Millions of Source Gallons) Joint Water Commission 14.5 Portland Water Bureau 26.0 ASR Well 0.0 Total 40.5 Using a 10% Allocation Percentage as an example, 4.05 MG (i.e., 40.5 MG * 10% = 4.05 MG) would be the Wheeled Quantity deemed to serve the City s users. Beaverton s Wheeled Quantity would be provided from the City s JWC source of supply and would be allocated to the City based on the daily meter readings connecting the TVWD system to the JWC s system. The difference between the total metered water at the point of interconnection of the TVWD and JWC system and the Wheeled Quantity would be allocated to TVWD. In this example, TVWD would be deemed to have taken MG (i.e., 14.5 MG 4.05 MG = MG) of the 14.5 MG for the use of its customers. 4.2 RAW WATER STORAGE TRACKING When the JWC is relying on stored raw water, the Wheeled Quantity calculated pursuant to Section above will be allocated to the City. The remaining water delivered to TVWD will be allocated to TVWD. 4.3 INVOICING The City shall make all arrangements for the provision and delivery of the Wheeled Quantity to TVWD from the JWC, and the payment for the Wheeled Quantity to JWC for the Wheeled Quantity provided to TVWD for wheeling to the City s customers. 5 NATURE OF CHARGES 5.1 FIXED MONTHLY CHARGE The cost allocated to the City s customer classes for O&M, return on investment, and replacement cost depreciation for the costs associated with meters and services, direct and indirect fire, and customer services will be paid to TVWD in equal monthly installments.

138 Exhibit F Wheeling Service Rate Methodology February 14, 2018 Page USAGE CHARGE All other costs allocated to the City s customer classes that are not recovered through the fixed monthly charge will be recovered through rates per hundred cubic feet of wheeled water as measured by the City at the City s customers retail meters. TVWD may require the City to provide proof of the accuracy of its measure of wheeled water through and audit or similar procedure. The City will pay TVWD for water wheeled to each of the City s customer classes at that rate. 6 EXAMPLE WHEELING RATES 6.1 EXAMPLE RATES Based on the wheeling methodology as described above, the resulting wheeling rates for the period beginning July 1, 2018 would be as summarized in Table 4 below. The wheeling rates presented in Table 4 are based on the following assumptions and limitations: 1. Table 4 presents an example only, and is not a commitment of future wheeling rates. 2. The example assumes that all Known Withdrawals are effective on July 1, The example assumes wheeling to all Known Withdrawal areas begins on July 1, Table 4 Example of Wheeling Rates Cost Category Area 2 Area 3 Area 4 Area 5 Area 6 Totals Finished Water $0 $0 $0 $0 $0 $0 In-System Treatment 3,963 17, ,279 5,283 4, ,245 Storage 8,706 34, ,820 11,606 34, ,450 Pumping 0 84, ,833 98,937 Transmission 9,603 74, ,747 12,802 49, ,875 Distribution 12,209 52, ,821 16,277 38, ,963 Direct Fire 1,234 5,143 24, ,292 34,427 Master Metering Meters/ Services Mtr Reading/ Billing/ Cust Svc SCADA 1,726 7,482 53,701 2,301 5,477 70,688 Retail Only Indirect Totals $37,442 $276,031 $1,150,851 $48,543 $150,718 $1,663,585 Wheeled Quantity (CCF) 23, , ,968 31,625 75, ,398 Cost per CCF $1.578 $2.685 $1.559 $1.535 $2.002 $1.713

139 Link back to agenda 3A To: From: Board of Commissioners Clark Balfour, General Counsel Date: February 21, 2018 Subject: Willamette Intake Facilities Commission Ordinance Requested Board Action: Consider the following actions related to the Willamette Intake Facilities intergovernmental agreement to form the Willamette Intake Facilities Commission, an intergovernmental entity formed under ORS Chapter 190 between Tualatin Valley Water District and the cities of Hillsboro, Sherwood, Beaverton, Tigard and Wilsonville: Consider approving a motion to read by title only Ordinance No ; Conduct a public hearing; Consider adopting Ordinance No ; and Consider approving a motion authorizing the Chief Executive Officer to execute the intergovernmental agreement following execution by all other parties. Key Concepts: The draft Willamette Intake Facilities Intergovernmental Agreement (WIF IGA) was provided to the Board at a work session on November 7, 2017 and then for further Board and public comment at the Board s regular meetings on November 15 and December 20, The WIF IGA will create the WIF Commission, an intergovernmental entity under ORS Chapter 190, comprised of the District and the cities of Wilsonville, Sherwood, Hillsboro, Beaverton and Tigard. Those other partners have engaged in similar review and analysis and all parties are scheduled for approval during the month of February. The adoption of the WIF IGA and creation of the intergovernmental entity must occur by ordinance which requires two readings at separate meetings by all parties. The Board read Ordinance No by title only at the January 17, 2018 meeting and conducted a public hearing. This is the second reading and public hearing prior to adoption. Attached is Ordinance No for a second reading and adoption at the February 21, 2018 meeting. The WIF IGA is an exhibit to the ordinance. Background: TVWD, along with the other named entities, negotiated the terms of the WIF IGA to provide for the ownership, design and construction of expanded capacity and upgrades, operation, maintenance, repair and replacement of the Willamette Intake Facilities at the existing Willamette River Water Treatment Plant (WRWTP). The WIF IGA further provides for the creation of the WIF Commission, which is an ORS Chapter 190 entity that would own and manage the WIF for the benefit of the existing WRWTP (in which

140 Page 2 of 2 February 21, 2018 Willamette Intake Facilities Ordinance TVWD is a part owner) and the to be constructed Willamette Water Supply System Water Treatment Plant (WWSS WTP). The WWSP will manage the expansion and upgrade of the intake. The adoption and creation of the WIF Commission must occur by ordinance and this provides for the first reading in January and second reading and adoption at the February 21 st meeting. Once passed, the ordinance will be effective 30 days hence. The effective date of the new entity will be April 6, A condition of Beaverton becoming a party to the WIF IGA and membership in the WIF Commission is approval of an agreement with the District entitled Intergovernmental Agreement Between the City of Beaverton and Tualatin Valley Water District Relating to the Provision of Domestic Water as to a water service boundary agreement. Staff has engaged in negotiations for this agreement and assumes that it will be approved prior to adoption of Ordinance If so, then the Board may proceed as set forth in the memorandum. If not, the Board may defer the second reading and elect to (1) wait until the water service boundary agreement is finalized or (2) determine that Beaverton will not be a signatory to the WIF IGA and the WIF Commission. This latter choice would require deferral of the second reading to amend the WIF IGA. Budget Impact: There are funds in the current budget for development of the WIF IGA. The funds for the expansion of WIF capacity are part of the Willamette Water Supply Program budget. Staffing and related activities for TVWD to serve as Managing Agency for the WIF Commission will be proposed as supplemental budgets. Staff Contact Information: Mark Knudson, PE; Chief Executive Officer; ; mark.knudson@tvwd.org Clark Balfour, General Counsel; ; clark.balfour@tvwd.org Attachments: Proposed ordinance WIF IGA Management Staff Initials: Chief Executive Officer Customer Service Manager N/A Chief Engineer N/A IT Services Director N/A Chief Financial Officer Human Resources Director N/A General Counsel Water Supply Program Director

141 Page 1 of 2 ORDINANCE NO AN ORDINANCE APPROVING THE WILLAMETTE INTAKE FACILITIES INTERGOVERNMENTAL AGREEMENT TO FORM THE WILLAMETTE INTAKE FACILITIES COMMISSION, AN INTERGOVERNMENTAL ENTITY FORMED UNDER ORS CHAPTER 190 BETWEEN TUALATIN VALLEY WATER DISTRICT AND THE CITIES OF HILLSBORO, SHERWOOD, BEAVERTON, TIGARD AND WILSONVILLE. WHEREAS, in 2000, Tualatin Valley Water District (District) and the City of Wilsonville (Wilsonville) entered into an Agreement Regarding the Water Treatment Plant Design, Construction, Operation and Property Ownership for the Willamette River Water Treatment Plant (WRWTP) located in Wilsonville; and WHEREAS, the WRWTP was constructed by TVWD and Wilsonville, and those parties owned the real property and assets in varying percentages until TVWD sold part of its interest in the WRWTP facility but not the land to the City of Sherwood (Sherwood) so that these three entities now own various interests; and WHEREAS, the District and the City of Hillsboro (Hillsboro) have entered into an agreement to design, construct, own, operate, maintain, repair and replace the Willamette Water Supply System (WWSS) which will consist of raw water transmission, pumps, water treatment plant, finished water pipelines and terminal storage to deliver water to their respective service boundaries, and it is anticipated that the City of Beaverton (Beaverton) will join the District and Hillsboro in the WWSS; and WHEREAS, the District, Wilsonville, Sherwood, Hillsboro, Beaverton and Tigard have agreed that the existing Willamette Intake Facilities (WIF), located at the WRWTP property, should be upgraded and expanded from current capacity of 120 million gallons per day to 150 million gallons per day and that the WIF should be owned, operated and managed for the use and benefit of the WRWTP and the planned WWSS Water Treatment Plant (WWSS WTP) by an intergovernmental entity formed under ORS to ; and WHEREAS, the District, Wilsonville, Sherwood, Hillsboro, Beaverton and Tigard have agreed to execute the Willamette Intake Facilities Intergovernmental Agreement (WIF IGA), effective April 1, 2018, to form the Willamette Intake Facilities Commission (WIF Commission), an intergovernmental entity under the authorities cited above, vested with the powers and authorities as set forth in Exhibit A, attached hereto and incorporated by reference; and WHEREAS, the Board of Commissioners finds that it is in the best interest of District to enter into the WIF IGA and to become a member of the WIF Commission; and WHEREAS, ORS requires the District and the other parties to enact an ordinance approving the WIF IGA and creation of the WIF Commission, and being advised. NOW THEREFORE, IT IS HEREBY ORDAINED BY THE BOARD OF COMMISSIONERS OF THE TUALATIN VALLEY WATER DISTRICT: Section 1. Pursuant to ORS , Tualatin Valley Water District approves the Willamette Intake Facilities Intergovernmental Agreement and joins the Willamette Intake Facilities Commission with the following parties: the cities of Hillsboro, Beaverton, Sherwood, Wilsonville and

142 Tigard. The Willamette Intake Facilities Agreement is attached hereto as Exhibit A and incorporated by reference. Section 2. The effective date of the agreement is on or about April 1, Section 3. The public purpose for which the WIF Commission is created is to use any authority vested in the WIF IGA to further the economy and efficiency of each party for the operation, maintenance, construction, repair and replacement and resource management of the Willamette Intake Facility as set forth in the WIF IGA among the parties or with others. Section 4. To carry out its public purposes, the WIF Commission shall have the following powers, duties and functions in addition to those specified in ORS through : A. To provide operation, maintenance, construction, repair and replacement and water resource management of the Willamette Intake Facility as described in the WIF IGA for water intake and transmission to the WRWTP or the WWSS WTP; B. To issue debt pursuant to ORS (1)(a) and the terms of the WIF IGA; C. To otherwise manage the business affairs of the Willamette Intake Facilities as set forth in the WIF IGA; D. To retain such offers and employees as it deems necessary and to contract for the purchase of property and services; E. To perform the administration and accounting of all payments and receipts related to operation of the Willamette Intake Facility for the account of a party, parties or the WIF Commission; F. To adopt such bylaws, rules, regulations and policies as the parties deem necessary to further the purposes of the WIF IGA; G. To exercise all powers pursuant to the applicable acts, charters, or laws of the individual parties, which are necessary or desirable to economically and efficiently develop and operate the WIF Commission. Section 5. This ordinance has been included in the published notice of the meeting where it was adopted. The published notice did state the time, date and place of the of the meeting and gave a brief description of the ordinance to be considered at the meeting and that copies of the ordinance are available at the office of the District. The presiding officer caused the notice to be published not more than 10 days or less than four days before the meeting in a newspaper of general circulation. Section 6. This ordinance was adopted following a second reading by the affirmative vote of at least a majority of the members of the District Board of Commissioners at its regular meeting on the 21 st day of February 2018, and was signed by the presiding officer and attested to by the secretary. Section 7. This ordinance shall take effect 30 days from the date of its adoption. Richard Burke, President Dick Schmidt, Secretary Page 2 of 2

143 Willamette Intake Facilities Intergovernmental Agreement, 2018 BY AND AMONG TUALATIN VALLEY WATER DISTRICT CITY OF WILSONVILLE CITY OF SHERWOOD CITY OF HILLSBORO CITY OF TIGARD AND CITY OF BEAVERTON Willamette Intake Facilities Intergovernmental Agreement

144 TABLE OF CONTENTS EXHIBIT LIST... 2 RECITALS... 3 AGREEMENT Definitions Commission Board of Commissioners Managing Agency Management, Operations, Finance, and Other Committees Financial Management Intake Facilities Ownership and Easement Water Rights Operations Plan Curtailment Plan and Emergency Response and Management Plan Right of First Offer Leasing Overuse Remedies for Overuse Expansion and Capital Improvements Sale of Water to Non-Party Withdrawal and Sale of Interest Admission of New Municipal Parties Indemnity Default Remedies Default by the Managing Agency Dispute Resolution Dissolution General Provisions Willamette Intake Facilities Intergovernmental Agreement Page 1 of 58

145 EXHIBIT LIST Exhibit No. Title 1 Willamette Intake Facilities Easement Agreement ( Easement ) 2 Willamette Intake Facilities Preliminary Design Drawings and Layout 3 Willamette Intake Facilities Capacity Ownership Allocations 4 Real Property 5 Water Rights Authorized for Use at the Willamette Intake Facilities ( Water Rights ) 6 Willamette Intake Facilities Organizational Structure 7 Willamette Intake Facilities Initial Management Plan 8 Willamette Intake Facilities Budget Calendar 9 Willamette Intake Facilities Interim Financials Procedures 10 Willamette Intake Facilities Lease Formulas and Sample Lease 11 Willamette Intake Facilities Improvements Cost Allocation Summary 12 Willamette Intake Facilities Insurance Requirements and Limits 13 Existing Agreements Willamette Intake Facilities Intergovernmental Agreement Page 2 of 58

146 Willamette Intake Facilities Intergovernmental Agreement This Willamette Intake Facilities Intergovernmental Agreement ( Agreement ) for the ownership, management and operation of the Willamette Intake Facilities ( Intake Facilities ) is entered into between Tualatin Valley Water District ( TVWD ), a domestic water supply district organized under ORS Chapter 264; the City of Wilsonville ( Wilsonville ), a municipal corporation; the City of Sherwood ( Sherwood ), a municipal corporation; the City of Hillsboro ( Hillsboro ) a municipal corporation; the City of Tigard ( Tigard ), a municipal corporation; and the City of Beaverton ( Beaverton ), a municipal corporation; all of which are local governments authorized to own, operate and maintain municipal water supply systems. The cities and TVWD may be referred to herein individually as a Party or jointly as Parties. RECITALS WHEREAS, TVWD is a domestic water supply district under ORS 264, which distributes potable water to its respective water system Users; WHEREAS, Wilsonville operates a municipal water supply utility under ORS 225, which distributes potable water to its respective water system Users; WHEREAS, Sherwood operates a municipal water supply utility under ORS 225, which distributes potable water to its respective water system Users; WHEREAS, Hillsboro operates a municipal water supply utility under ORS 225, which distributes potable water to its respective water system Users; WHEREAS, Tigard operates a municipal water supply utility under ORS 225, which distributes potable water to its respective water system Users; WHEREAS, Beaverton operates a municipal water supply utility under ORS 225, which distributes potable water to its respective water system Users; Willamette Intake Facilities Intergovernmental Agreement Page 3 of 58

147 WHEREAS, TVWD and Wilsonville entered into the Agreement Regarding Water Treatment Plant Design, Construction, Operation and Property Ownership, dated July 6, 2000 ( 2000 Master Agreement ), and the Accord Agreement dated June 19, 2001 ( Accord ), to construct and operate intake facilities, pumps, a water treatment plant, and certain transmission facilities upon jointly owned real property ( Willamette River Water Treatment Plant ) for the purpose of supplying potable water to Wilsonville and providing a future water supply for TVWD; WHEREAS, TVWD and Wilsonville entered into the First Amendment to Agreement Regarding Water Treatment Plant Design, Construction, Operation, and Property Ownership, dated, 2018, which modified the above agreement to reflect a change in direction and the rights and obligations between TVWD and Wilsonville; WHEREAS, TVWD and Wilsonville have also entered into an Operation and Maintenance Contract with Veolia Water North America-West LLC, dated July 1, 2012, as amended, which pertains to the Willamette River Water Treatment Plant and the Intake Facilities; WHEREAS, in April 2002, Wilsonville and TVWD completed construction of the intake and the Willamette River Water Treatment Plant facilities, including the fish screens, intake pipeline, a raw water pump station, raw water transmission line, the treatment plant and related appurtenances including electrical facilities; WHEREAS, TVWD and Sherwood entered into an Agreement on December 27, 2006 ( Sherwood TVWD WRWTP Agreement ) for the purchase and sale of five million gallons per day ( MGD ) of capacity in the Intake Facilities, pump station, treatment plant, and certain transmission facilities for the purpose of supplying potable water to Sherwood; WHEREAS, on October 15, 2008, TVWD Sherwood, Tigard, and Tualatin entered into the First Restated Intergovernmental Cooperative Agreement Continuing the Willamette River Water Willamette Intake Facilities Intergovernmental Agreement Page 4 of 58

148 Coalition ( WRWC Agreement ) to jointly hold a water right permit for future use of Willamette River water and to plan for regional water supply facilities that would meet future needs; WHEREAS, Hillsboro and TVWD entered into the Agreement for Design and Construction of the Willamette Water Supply Program ( WWSP Agreement ) on June 16, 2015 to permit, design, and construct a water supply system including intake and transmission facilities, a water treatment plant, and reservoir facilities ( Willamette Water Supply System ) to provide additional potable water to Hillsboro and TVWD and provide for system redundancy and reliability; WHEREAS, TVWD, Hillsboro, and Wilsonville entered into a Ground Lease for the Raw Water Pipeline, dated, 2018, and an Easement for Raw Water Pipe, dated, 2018, that will allow the Intake Facilities to connect to a raw water pipeline located in and along Wilsonville right-of-way and lands owned or to be acquired by Wilsonville and TVWD; WHEREAS, the Parties hold or may hold certain storage, release and surface water rights on the Willamette River and its tributaries ( Water Rights ) for the purpose of providing water to the Treatment Plant Facilities for ultimate delivery to their respective water system Users; WHEREAS, the Intake Facilities provide a regional benefit and are the foundation of the other water system assets of the Parties. WHEREAS, the Parties except Wilsonville are in the process of acquiring a portion of TVWD s excess capacity ownership interest in the Intake Facilities from TVWD and, with respect to those transfers, Wilsonville has agreed to waive its First Right of Offer pursuant to the Agreement Regarding Water Treatment Plant Design, Construction, Operation, and Property Ownership, dated July 6, 2000 ( 2000 Master Agreement ) the Accord Agreement, dated June 19, Willamette Intake Facilities Intergovernmental Agreement Page 5 of 58

149 2001 ( Accord ), and the First Amendment to Agreement Regarding Water Treatment Plant Design, Construction, Operation, and Property Ownership, dated, 2018; WHEREAS, Wilsonville already owns the Intake Facilities with TVWD, but is participating in expanding the screen to allow for additional 5 MGD capacity, among other rights, pursuant to the City of Wilsonville and Tualatin Valley Water District Willamette Water Supply System Intake Facility Agreement; WHEREAS, the transfer, purchase and sale of a portion of TVWD s excess capacity in the Intake Facilities to the Parties, except Wilsonville, are governed by the Agreement(s) for Transfer, Purchase and Sale of Intake Facilities, dated, TVWD s transfer to Wilsonville is governed by the City of Wilsonville and Tualatin Valley Water District Willamette Water Supply System Intake Facility Agreement. A condition of any transfer by TVWD of existing Intake Facility capacity is the expansion of the Intake Facilities to an anticipated capacity of 150 MGD; WHEREAS, the Parties each own and operate municipal water supply systems that provide essential service to their communities, including protection of public health, emergency fire suppression, and potable water supply to support viable community and economic activities, and the Intake Facilities are the foundation of those other water systems; WHEREAS, the purpose of this Agreement is to set forth the terms for the joint ownership, operation and management of the Intake Facilities in a prudent, economic and efficient manner to provide water to the existing Willamette River Water Treatment Plant ( WRWTP ) and the anticipated Willamette Water Supply System Water Treatment Plant ( WWSS WTP ), to preserve and protect the Parties Water Rights, to support the functioning of the Intake Facilities as the foundation of their water systems, and to support their commitment to watershed planning and management; and Willamette Intake Facilities Intergovernmental Agreement Page 6 of 58

150 WHEREAS, the Parties are authorized under ORS 190 to enter into an agreement for the performance of any or all functions and activities that the Parties, their officers, employees or agents have authority to perform, and to create this intergovernmental entity. Willamette Intake Facilities Intergovernmental Agreement Page 7 of 58

151 NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the Parties agree as follows: AGREEMENT Based on the foregoing Recitals and the mutual promises and obligations as set forth herein, and other good and fair consideration, the sufficiency of which is hereby acknowledged, the Parties agree to the following. 1. Effective Date This Agreement is effective as of the day of,. 2. Definitions As used in this Agreement, the following terms when capitalized shall have the following meanings: 2.1. Agreement means this Willamette Intake Facilities Intergovernmental Agreement Board means the Board of Commissioners of the Willamette Intake Facilities Commission created by this Agreement, consisting of one elected or appointed official from each Party. Each Party will appoint one Board member and each Board member will have one equal vote Capacity means the instantaneous ability of various components of the Intake Facilities to deliver available water that does not exceed a Party s allocation, measured in million gallons per day, gallons per minute, cubic feet per second or other comparable measurement as set forth in the Operations Plan and consistent with generally accepted engineering and prudent utility operating practices Capacity Expansion means the expansion of the Intake Facilities through a capital improvement project. Willamette Intake Facilities Intergovernmental Agreement Page 8 of 58

152 2.5. Commission means the Willamette River Intake Facilities Commission, an ORS 190 entity formed under this Agreement whose Parties are TVWD, Wilsonville, Sherwood, Hillsboro, Tigard, and Beaverton Curtailment Plan means a plan developed and approved by the Board for curtailment of water service in accordance with OAR Chapter 690 Division 86 rules Demand means the amount of water used or projected to be used by a Party and imposed on the Intake Facilities to deliver water to be treated at a Water Treatment Plant where the Party owns capacity. The instantaneous measurement of Demand shall be defined in the Operations Plan as million gallons per day, gallons per minute, cubic feet per second, or other agreed measurement for the Intake Facilities Easement means the Intake Facilities Easement, attached as Exhibit Emergency Response Plan means a plan that outlines emergency procedures that are recommended for implementation by the Federal Emergency Management Agency and are consistent with the National Incident Management System in order to respond quickly and appropriately to an emergency event Effective Date means the date specified in Section Facilities Modification means a capital improvement to meet operational changes or upgrades in response to requirements of regulatory agencies, but that does not result in a Capacity Expansion Finance Committee means the committee with a representative appointed by each Party to act as provided in Section Fiscal Year means the time period July 1 through June 30. Willamette Intake Facilities Intergovernmental Agreement Page 9 of 58

153 2.14. Intake Facilities means existing, expanded, or upgraded Intake Facilities - used to withdraw and transmit water to the Parties at the agreed System Separation Point between the Willamette River Water Treatment Plant System and the Willamette Water Supply System Water Treatment Plant. The Intake Facilities include the fish screens, intake pipe, caisson, pump station building, and other jointly owned equipment leading up to the System Separation Point described in Exhibit 2, and the Intake Facilities Easement described in Exhibit Lease means the lease of Capacity in the Intake Facilities according to the terms and conditions of Section Management Committee means the committee with a representative appointed by each Party to act as provided in Section Managing Agency means the Party designated under Section 5 to manage the business affairs of the Commission and act in accordance with Section 5 and other provisions of this Agreement Master Plan means a plan that analyzes the performance, documents recommended upgrades, estimates water demand projections from the Parties, and updates the capital improvement plan of the Intake Facilities Member means a person appointed by a Party to serve on the Board MGD is an acronym for million gallons per day Municipal Water Provider means a city or special district, as defined by ORS , that supplies drinking water to the public Non-Peak Season means the period from November 1 st through April 30 th of any given year. Willamette Intake Facilities Intergovernmental Agreement Page 10 of 58

154 2.23. Operations Committee means the committee with a representative appointed by each Party to act as provided in Section Operations Plan means the plan that describes the operational protocols, communications, and coordination for the Intake Facilities with the Water Treatment Plants Ownership means the Capacity interest of a Party in the Intake Facilities, established following a financial investment in the Intake Facilities. The anticipated Capacity of each Party is set forth in Exhibit Party or Parties means the Municipal Water Providers that have Capacity ownership interest in the Intake Facilities and that comprise the Commission Peak Season means the period from May 1 st through October 31 st of any given year Point of Diversion means the geographic location from which water is diverted from the Willamette River using the Intake Facilities and put to beneficial use through the Water Treatment Plants and associated water systems Real Property means the real property upon which the Intake Facilities are located. The Real Property is described in Exhibit 4 and is owned by TVWD and Wilsonville Supermajority means an affirmative vote from all except one of the Members of the Board eligible to vote System Separation Point means that point designated on Exhibit 2 where the Intake Facilities terminate and the water from the caisson of the Intake Facilities is separated by the pumps into untreated water pipes conveying water to either the Willamette Intake Facilities Intergovernmental Agreement Page 11 of 58

155 WRWTP or WWSS WTP Users means any water system users or customers of a Party s water system including but not limited to residential, commercial and industrial uses as well as other units of local government with whom the Party has agreed to sell water Water Rights means those surface water registrations, permits (including storage and secondary), or certificates held by a Party, the WRWC, or the Commission as registered with the State of Oregon Water Resources Department, which allow for diversion of water from the Willamette River at the existing Intake Facilities Point of Diversion to deliver water to the Party s respective Water Treatment Plant. The Water Rights are more fully described in Exhibit Water Treatment Plant refers to either the WRWTP or the WWSS WTP Willamette River Water Coalition ( WRWC ) means the ORS 190 entity currently consisting of TVWD and Sherwood, Tigard, and Tualatin Willamette River Water Treatment Plant ( WRWTP ) means the Water Treatment Plant located near the Intake Facilities currently serving potable water to Wilsonville, Sherwood, and other potential Parties Willamette Water Supply System ( WWSS ) means the water supply system infrastructure facilities including the raw water pipeline, water treatment plant, finished water pipeline(s), finished water storage, and related facilities that serve potable water to TVWD, Hillsboro, and other potential Parties Willamette Water Supply System Water Treatment Plant ( WWSS WTP ) means the Water Treatment Plant to be located in Washington County outside of Wilsonville to be designed, constructed, and serve potable water to TVWD, Willamette Intake Facilities Intergovernmental Agreement Page 12 of 58

156 Hillsboro, and other potential Parties. 3. Commission There is hereby created, pursuant to ORS 190, the Willamette Intake Facilities Commission ( Commission ) governed by the Board of Commissioners according to this Agreement and the laws of Oregon. The Commission is created under this Agreement to own and manage the Intake Facilities in order to enable the Parties to this Agreement to draw water through the Intake Facilities to the System Separation Point and convey water to each Water Treatment Plant. The Board is served by appointed Management and Operations Committees and the affairs of the Board are administered by an appointed Managing Agency with an organization structure illustrated in Exhibit Board of Commissioners 4.1. Appointment The Commission shall be governed by a six-member Board consisting of one person and one alternate person appointed by each Party pursuant to the laws and regulations of the Party s governing body. A Member serves at the pleasure of the Member s governing body. The name of the Board is the Willamette Intake Facilities Board ( Board ) General Powers and Duties The Board shall manage the business and affairs of the Commission for the mutual benefit of all of the Parties. The Board shall adopt such bylaws, rules, regulations and policies as it deems necessary in furtherance of the purposes of this Agreement. Subject to the approval of expenditures by the Parties, as set forth in Section 7, the Board shall have the power to hire employees as it deems necessary and to contract for the purchase of property and services. The Board shall perform such further duties as may be required by this Agreement and shall have all powers necessary and incidental to the execution of its specific duties. Except for the provision of Willamette Intake Facilities Intergovernmental Agreement Page 13 of 58

157 liability of debt obligations as provided for under ORS , the Board may perform its activities in any manner permitted under ORS to Duration Subject to the dissolution provisions in Section 26, this Agreement is perpetual Meetings; Manner of Acting Board meetings shall be conducted in accordance with the provisions of the Oregon Public Meeting Law, ORS to The Board shall hold meetings as needed, generally on a quarterly basis, but in no event less than twice a year. Special meetings may be called by the Chair or by any two Members. The Board shall adopt rules governing the conduct of its proceedings Quorum and Voting If a unanimous vote of all Members is required, then all Members must be present to constitute a quorum. In all other cases, five of six Members of the Board shall constitute a quorum for the conduct of business Except where a unanimous or Supermajority vote is required, an affirmative vote of five Members is required to decide any issue before the Board If the Member and the alternate attend the same meeting, the Member shall be the voting representative for the Party. The Member shall inform the Chair in advance of any meeting if he or she cannot attend and whether the alternate member will attend and will be authorized to vote Officers The Board shall annually elect from its Members a chair and a vice chair, who shall be officers of the Board. The elections shall occur at the first meeting of the Board in each calendar year, unless otherwise agreed. The chair shall serve as the presiding officer. In the absence of the chair, the vice chair shall serve as presiding officer. Officers shall serve at the pleasure of the Board or until a successor is Willamette Intake Facilities Intergovernmental Agreement Page 14 of 58

158 appointed Powers and Duties The Board shall, among other things: Appoint a Managing Agency, as provided in Section 5, including approval and entry into any agreement(s) with the Managing Agency as described in Section Approve an operations and management contract(s) as needed Annually adopt a budget, as described in Section Annually adopt a work plan in association with the budget Annually approve a five year capital improvement plan that includes the current fiscal year Adopt contracting rules and serve as the local contract review board under ORS 279A Approve and periodically update a Master Plan and Operations Plan for the Intake Facilities Approve the addition of a new Party, as provided in Section 20, subject to unanimous approval of the Board Approve modifications or amendments to the Exhibits to this Agreement Approve and periodically update an emergency response and management plan, and related policies and practices, to govern the operation of the Assets in an emergency Approve and periodically update a Curtailment Plan based on a recommendation from the Management Committee Consider for approval any Lease that has a term less than one year or longer than five years, as provided in Section Approve and periodically update overuse plans developed under Section 15. Willamette Intake Facilities Intergovernmental Agreement Page 15 of 58

159 Cause an annual audit to be conducted Obtain appropriate insurance and fidelity coverages Oversee the management and operation of the Managing Agency Approve contracts; acquire real property by negotiation, sale or condemnation; and dispose of surplus personal property Take other actions necessary and proper to manage, operate and maintain the Intake Facilities. 5. Managing Agency 5.1. Initial Appointment of Managing Agency TVWD is appointed the Managing Agency for an initial term beginning on the Effective Date through June 30, 2032 ( Initial Term ) with formal performance review in 2029 by the Board Subsequent Terms Once the Initial Term expires or is terminated, the Board may continue with the initial Managing Agency or appoint a successor Managing Agency to manage the business affairs of the Commission. The Board may elect to enter into a written Managing Agency agreement between the designated Managing Agency and the Board. The designated Managing Agency s subsequent term will be a six year term, effective on July 1, 2032, or other date as agreed to by the Parties. At the end of the fourth year of the term, the full Board shall either re-appoint the Managing Agency for an additional six year term to commence at the end of the current term or direct the Management Committee to obtain proposals for the selection of a Managing Agency. If the Board elects to obtain proposals rather than reappoint the Managing Agency, the Managing Agency may submit a proposal to continue on as Managing Agency. A proposal process will be required for selection of a Managing Agency at a minimum every twelve years. If the Board initiates a proposal process Willamette Intake Facilities Intergovernmental Agreement Page 16 of 58

160 for the selection of the Managing Agency, at the end of the fifth year of the term, the Management Committee shall submit to the Board a recommendation for a Managing Agency. A Party who submits a proposal to be Managing Agency cannot participate in the selection process. Upon designation of a new Managing Agency, the current and new Managing Agency will be required to create a one year transition plan unless a different period is approved by the Board. The components of the transition plan shall be reviewed and approved by the Management Committee prior to implementation Contracted Services The Board may elect to contract the management of the business affairs of the Commission to a non-party. In such case, the Board will direct the Management Committee to obtain proposals and provide a recommendation for the award of a contract by the Board. The Board will designate a Party to manage the contract and will adopt an annual work plan. Upon Board approval of the contract, the current Managing Agency will be required to create a one year transition plan unless a different period is approved by the Board. The components of the transition plan shall be reviewed and approved by the Management Committee prior to implementation. The Board may terminate the contract at its sole discretion and appoint a new Managing Agency Annual Review The Management Committee will conduct an annual performance review of the Managing Agency and submit a report to the Board Termination or Resignation The Managing Agency may be terminated at any time at the Board s discretion, or may withdraw at its own discretion. The Board will provide a reasonable notice to Willamette Intake Facilities Intergovernmental Agreement Page 17 of 58

161 the Managing Agency and Parties if the termination is for convenience and not due to a default. The Managing Agency will provide a notice to the Board if withdrawal is desired. A notice to terminate may specify an effective date for termination or withdrawal. A transition plan with a reasonable period for transfer of duties to the new Managing Agency will be developed by the Board. Termination related to default is covered in Section Powers and Duties of Managing Agency TVWD s initial management of the Intake Facilities and Capacity Expansion projects are described in Exhibit 7 and those terms are only applicable during TVWD s Initial Term. With respect to all other roles and responsibilities of the Managing Agency, the Board may delegate powers to the Managing Agency to provide the management functions required to administer the Commission. The Managing Agency is responsible for administering the business affairs of the Commission. This Section does not prevent the Board, upon a finding that it is in the best interest of the Commission, from modifying the duties of the Managing Agency. The Managing Agency shall act for the mutual benefit of all Parties at all times in the performance of all Managing Agency duties. The Managing Agency duties shall include but are not necessarily limited to the following: Prepare an annual work plan in conjunction with the annual budget Perform such duties as established in an annual work plan and any other duties as directed by the Board Provide administration of the Board meetings and required public meeting notices and duties. Willamette Intake Facilities Intergovernmental Agreement Page 18 of 58

162 Maintain records consistent with public records laws Provide administration of the infrastructure operations and maintenance of the Intake Facilities and associated contract approvals Perform financial planning and management including payment of invoices, accounting, reporting, and budgeting in accordance with Oregon law Develop and coordinate capital improvements plans, including the timing of any improvements or expansions as relate to the Intake Facilities. Each Party will participate in planning projects, such as a Master Plan or facilities plan, and will provide good-faith estimates for future Demand Provide capital project management, unless otherwise directed by the Board Provide administration and staffing for the Board and committees such as the Management Committee, Operations Committee, and Finance Committee Prepare an Operations Plan in coordination with the Parties. The Operations Plan must be approved by the Operations Committee prior to submitting it to the Board for adoption Coordinate with WRWTP and WWSS to support and facilitate the orderly and effective operations, maintenance and construction activities of the Intake Facilities, WRWTP and WWSS Take prompt action, as necessary, in response to a Curtailment Plan or an Emergency Response Plan and report to the Parties and the Board as soon as reasonably possible. In the case of an emergency, an after-action report Willamette Intake Facilities Intergovernmental Agreement Page 19 of 58

163 including the nature of the emergency, the effect(s) on the Intake Facilities, and the steps taken by the Managing Agency in response will be provided to the Board Procure and manage appropriate insurance coverages and fidelity coverages, in accordance with the insurance requirements set forth in Section 27.3, or as the Board may otherwise direct Approve and execute contracts, subject to the contracting rules and direction of the Board Other duties as may be assigned by the Board. 6. Management, Operations, Finance, and Other Committees 6.1. Management Committee Each Party shall appoint its Chief Executive Officer, City Manager, or its designee to serve on the Management Committee. The Managing Agency shall meet with the Management Committee to receive recommendations on policies, planning, operations, capital projects, contract awards, etc., to be forwarded to the Board. The Management Committee members will also serve as the liaison to each of their respective governing bodies and shall be charged with authority to act on behalf of the Party s governing body, except as otherwise provided herein Operations Committee Each Party shall appoint one person technically knowledgeable in water system operations or engineering to the Operations Committee. A Party may allow other attendees, but in no event will a Party have more than one vote in making a recommendation to the Management Committee. The Managing Agency will advise and consult with the Operations Committee on matters including but not Willamette Intake Facilities Intergovernmental Agreement Page 20 of 58

164 limited to Intake Facilities operations, capital improvements and planning, and contract management. The Operations Committee shall, as required by this Agreement or requested by the Management Committee, report on or provide recommendations to the Management Committee on any such matter Finance Committee Each Party shall appoint one person, knowledgeable in municipal finance laws and practices, to the Finance Committee. A Party may allow other attendees, but in no event will a Party have more than one vote in making a recommendation to the Management Committee. The Finance Committee shall provide recommendations to the Management Committee on the proposed annual budget, capital improvement plan including resource availability and timing, and other financial policies. The Finance Committee will also provide comment and recommendations on the financial procedures to be developed and implemented by the Managing Agency Other Committees Other Committees may be formed as needed to support and provide guidance to the Commission. 7. Financial Management 7.1. Budget Process and Calendar The Board shall adopt a budget for its operations and capital improvements for each Fiscal Year. The Managing Agency shall annually prepare a budget for administration, operations, and capital improvements in coordination with the appropriate committees representing the Parties as described in this Section. The budget review process shall follow the schedule described in Exhibit 8 unless a Willamette Intake Facilities Intergovernmental Agreement Page 21 of 58

165 modified schedule is approved by the Board Operations and Finance Committees Budget Review An initial draft budget shall be prepared and distributed by the Managing Agency to the Operations and Finance Committees. The initial draft budget shall include estimates for full-time equivalents, associated benefits, materials and services, a listing of contracts in effect and contemplated for future periods, capital outlay, and any other necessary expenditures. The initial draft budget shall also include supporting detail and assumptions for the Committee s consideration. Joint meeting(s) of the Operations and Finance Committees will be held as needed to refine the initial draft budget. The Operations and Finance Committees will review the initial draft budget, and will provide its recommendation, after any requested revisions are incorporated by the Managing Agency, to the Management Committee. The Managing Agency will incorporate such revisions and prepare a revised draft budget for consideration by the Management Committee Management Committee Budget Review The revised draft budget shall be distributed to the Management Committee as described in Exhibit 8, but not later than March 15 th of each year. The Management Committee will review the revised draft budget, and will either provide a recommendation to the Board for adoption or provide requested revision(s) to the Managing Agency. Following Management Committee review and revisions, the Managing Agency shall prepare a proposed budget and distribute it to the Board Budget Adoption The Board will consider the proposed budget consistent with the schedule presented in Exhibit 8. Furthermore, the Board will strive to adopt the budget by resolution in April of each year to enable the Parties to adequately reflect necessary commitments in their own respective budgets, but in no case will the Board adopt Willamette Intake Facilities Intergovernmental Agreement Page 22 of 58

166 the annual budget later than June 1 st of each year. The adopted budget shall include estimated subtotals for the categories of personnel services, materials and services, capital outlay, and all other appropriation categories used in the adopted budget. The adopted budget shall also include a narrative describing the supporting detail and assumptions summarized for the Board s consideration, including personnel counts stated as full-time equivalents. Each Party s proportionate share of expenses of operations and maintenance of the Intake Facilities, including reserves and replacements, debt services, payments to the Managing Agency, and all other expenses as may be incurred by the Commission, shall be estimated by the Managing Agency and set forth in the Commission s adopted budget Capital Improvement Plan Budget The Managing Agency shall maintain capital improvement plan budget projections for at least the subsequent four Fiscal Years following the fiscal year budgeted, which shall be updated annually and submitted with the initial draft budget and the proposed budget. The Operations and Finance Committees will review the proposed capital improvement plan, and will provide a recommendation to the Management Committee for review or provide requested revision(s) to the Managing Agency for incorporation. The Management Committee will review the proposed capital improvement plan, as may have been revised by the two committees, and will provide a recommendation to the Board for adoption or provide requested revision(s) to the Managing Agency for incorporation. The Managing Agency will include the capital improvement plan budget, as reviewed and revised by the Management Committee, in the proposed budget and submit it to the Board. The Board will consider the capital improvement plan for adoption on an annual basis on the same timeline as the annual budget. The capital outlay category includes routine purchases as well as major improvements or expansions Willamette Intake Facilities Intergovernmental Agreement Page 23 of 58

167 as may be outlined under the provisions of Section Accounting The Managing Agency shall comply with government accounting standards, maintain independent budget and accounting control procedures, and provide budget financial status reports at least quarterly to the Board and to each of the Parties not later than 30 days after the end of each quarter. The report shall show expenditures and receipts consistent with the requirements of the financial procedures described in Section 7.9. The Managing Agency shall maintain all fiscal records relating to the Intake Facilities and associated capital improvement projects in accordance with generally accepted accounting principles. In addition, the Managing Agency shall maintain any other records pertinent to the Intake Facilities and associated capital improvement projects in such a manner as to clearly document the Managing Agency's performance hereunder. All such fiscal records, books, documents, papers, plans, and writings shall be retained by the Managing Agency and kept accessible as required by law. The Managing Agency agrees that the other Parties and their authorized representatives shall have access to all books, documents, papers and records of the Managing Agency which are directly related to the Intake Facilities and associated capital improvement projects for the purpose of making any audit, examination, copies, excerpts and transcripts Audit The Board shall cause an independent audit of the financial affairs of the Commission to be performed by a certified public accountant licensed and certified to do municipal auditing in the State of Oregon. The audit shall be performed in accordance with the provisions of the Oregon Municipal Audit Law, ORS Section The audit shall be completed annually within six months following the end of each Fiscal Year. The Board shall review, accept the annual Willamette Intake Facilities Intergovernmental Agreement Page 24 of 58

168 audit, and direct the Managing Agency to complete correction actions as needed. A copy of the annual audit shall be provided to each Party upon acceptance by the Board Issuance of Debt When authorized by a unanimous vote of the Board and an affirmative vote by the governing body of each Party, the Board may issue debt under ORS 287A, as allowed under ORS , as the Board deems necessary to finance capital improvements. Upon receipt of an affirmative vote of each of the governing bodies, the Board shall approve the order or resolution authorizing the issuance of debt, which shall specify the joint and severable liabilities and obligations of the Parties as set forth in ORS (3) Financial Procedures Interim financial procedures are included as Exhibit 9, and will be used until the long-term financial procedures are developed and approved by the Board. The Managing Agency shall propose financial procedures consistent with the requirements of this Section. The Finance Committee will review the proposed financial procedures, and will provide a recommendation to the Management Committee for review or provide requested revision(s) to the Managing Agency to incorporate and forward to the Management Committee. The Management Committee will review the proposed financial procedures, and will provide a recommendation to the Board for adoption or provide requested revision(s) to the Managing Agency to incorporate and forward to the Board. The Board will consider the recommended financial procedures for adoption or send back to the Management Committee for modification. The financial procedures will be reviewed and updated on at least a ten-year basis or as requested by the Finance Committee, Managing Agency, or the Board. The Board approved long-term Willamette Intake Facilities Intergovernmental Agreement Page 25 of 58

169 financial procedures will be included as an amended Exhibit 9 to this Agreement subsequent to the effective date of this Agreement. 8. Intake Facilities Ownership and Easement 8.1. Capacity Ownership The Parties each own various shares of Capacity in the Intake Facilities. The ownership of each Party is a percentage share of the Intake Facilities that is equal to the Party s Capacity in MGD compared to the total Capacity of the Intake Facilities. The Parties respective shares of the anticipated design Capacity of the Intake Facilities are set forth in Exhibit 3. Upon completion of construction, the Board shall determine ownership of Capacity based on actual Capacity achieved of the Intake Facilities to the System Separation Point. If the actual Capacity achieved is more or less than the design Capacity anticipated in Exhibit 3, the Exhibit will be revised to reflect the ownership based on the actual Capacity achieved. The Capacity shares shall be proportionately increased or reduced. If the actual Capacity achieved is less than the design Capacity anticipated, in no event will the Capacities of TVWD, Wilsonville and Sherwood be less than 56.5 MGD, 20 MGD and 5 MGD, respectively Easement The Intake Facilities have been granted an Easement described in Exhibit 1 and are located on the Real Property described in Exhibit Water Rights 9.1. Existing Water Rights A Party shall continue to hold its Water Rights in its individual name, except that TVWD, Sherwood, Tigard and Tualatin jointly hold their Water Right through the WRWC. Exhibit 5 identifies the Water Rights held by each Party and the WRWC for use at the Intake Facilities Point of Diversion and as described in this Section. Willamette Intake Facilities Intergovernmental Agreement Page 26 of 58

170 9.2. Restriction on Use If surface water withdrawal rights are partially or fully restricted and unavailable, then each Party will be subjected to the restrictions and conditions applicable to its own Water Rights. The available Water Rights will be used for the benefit of the Party(ies) that own(s) the Water Rights. To the extent that the non-restricted or partially restricted Water Rights are greater than that required by the Party owning the Water Rights, then the unused portion of the Water Rights may be leased to the other Parties, as set forth in the leasing provisions. In times of emergency or curtailment, the Board may allow Parties to use the Water Rights of other Parties without a leasing requirement, subject to the agreement of those Parties. Those Water Rights held jointly through WRWC shall be allocated for use by the WRWC Parties as described in the WRWC agreement Supplemental Water Rights A Party or the Commission may obtain additional Water Rights from the Oregon Water Resources Department or a federal agency that initiates a municipal contracting program in the United States Army Corps of Engineers storage facilities in the Willamette Basin ( Willamette Basin Project ) as the Demand and need is identified. The Board will establish Capacity ownerships of any jointly held Water Right by the Commission at the time of application. Exhibit 5 identifies the Water Rights authorized for use at the Intake Facilities Point of Diversion held by individual Parties and those jointly held by the WRWC or by the Commission. Exhibit 5 will be updated by the Board as additional Water Right transactions occur Obligations of Each Party Each Party is responsible for obtaining its own Water Rights with a point of diversion at the Intake Facilities sufficient to meet its Capacity. Willamette Intake Facilities Intergovernmental Agreement Page 27 of 58

171 9.5. Perfection and Certification A Party s certification or perfection of its individual Water Right through the Intake Facilities cannot exceed the Party s owned Intake Facilities Capacity unless the Board approves otherwise and such approval is not to the detriment to the other Parties Water Rights. 10. Use of the Intake Facilities by the Parties Each Party shall use the Intake Facilities in a manner consistent with prudent water utility operating practices and in a manner that minimizes the impact of use on the other Parties. The Managing Agency shall manage the Intake Facilities for the mutual benefit of all Parties. Each Party shall obtain sufficient Capacity in the Intake Facilities to serve the Demand imposed on the Intake Facilities by the Party. 11. Operations Plan Prior to the date the Willamette Water Supply System commences delivery of potable water to its respective Users, an Operations Plan shall be developed by the Operations Committee with support from the Managing Agency, and submitted to the Management Committee. The Management Committee will review the proposed Operations Plan, will work with the Managing Agency on modifications, and will provide a recommendation to the Board for adoption or will send back to the Operations Committee for modification. The Operations Plan for the Intake Facilities will include, but is not limited to, agreed protocols and a methodology to provide for the equitable, effective and efficient operation of the Intake Facilities in accordance with generally accepted utility practices regarding the operation, management, capital improvements, and expansion of all aspects of the Intake Facilities. The Operations Plan will provide that the Parties will use best efforts and good faith in the operation of the Intake Facilities for the mutual benefit of all Parties. The Operations Plan will be updated as needed. The agency responsible for operating the Intake Facilities shall follow the Board- Willamette Intake Facilities Intergovernmental Agreement Page 28 of 58

172 adopted Operations Plan. 12. Curtailment Plan and Emergency Response and Management Plan Curtailment Plan The Board shall adopt a Curtailment Plan that establishes policies and procedures for when and how reductions in Demand shall be made. The Managing Agency shall develop a proposed Curtailment Plan for review by the Operations Committee. The Operations Committee will review the proposed Curtailment Plan, and will provide any requested revision(s) to the Managing Agency before presentation to the Management Committee. The Management Committee will review the proposed Curtailment Plan, and will either provide a recommendation to the Board for adoption or will send back to the Operations Committee for further review and modification. The Management Committee will provide a recommendation to the Board for its consideration and adoption. When reductions in Demand become necessary, the reduction shall be in accordance with the Curtailment Plan. Any Curtailment Plan must treat all Parties fairly and equitably Emergency Response Plan The Managing Agency shall prepare an Emergency Response Plan to be reviewed by the Operations Committee and the Management Committee. Procedures and protocols will be included in the proposed Emergency Response Plan. The Operations Committee and Management Committee will review the proposed Emergency Response Plan, and will either provide a recommendation to the Board for adoption or will provide requested revision(s) to the Managing Agency. 13. Right of First Offer Wilsonville and TVWD entered into the 2000 Master Agreement, Accord, First Amendment and the Willamette Intake Facilities Agreement regarding the construction, joint ownership, and continuing operations of the WRWTP, which all remain and will remain in full force and Willamette Intake Facilities Intergovernmental Agreement Page 29 of 58

173 effect, except as otherwise amended, in writing, by TVWD and Wilsonville. The Accord Agreement, dated June 19, 2001, expressly provides a Right of First Offer be made between Wilsonville and TVWD with respect to any sale, transfer, exchange, grant of option to purchase, lease, or other disposal of their respective interests in the Property, or any part of, or interest in, or ownership interest in the Supply Facilities (which include the Intake Facilities). Wilsonville has been offered and declined the first right to purchase the Intake Facility capacity held by TVWD and consented to sale, purchase and transfer of 62.3 MGD of existing and expanded capacity between TVWD and the other Parties to this Agreement and waived further application of the Accord Agreement thereto. In accordance with the Accord Agreement, the reciprocal Right of First Offer with respect to Intake Facilities remains in full force and effect with respect to 56.5 MGD of TVWD s retained interest in the Intake Facilities and Wilsonville s 25.0 MGD retained interest in the Intake Facilities, notwithstanding anything to be construed to the contrary in this Agreement. Additional terms with respect to the Right of First Offer continue to apply and are detailed in the Accord Agreement. If TVWD or Wilsonville declines to lease or purchase all or a portion of the amount offered, then the declined amount may be offered to the Parties for lease or for purchase, as provided in Sections 14 and 19. Notwithstanding the terms of the Right of First Offer, Wilsonville and TVWD do hereby agree to waive their Right of First Offer for leases of five years or shorter duration offered by Wilsonville or TVWD to the other Parties ( Short Term Waiver ). A lease to which this Short Term Waiver applies may be renewed for one additional term and the Short Term Waiver is applicable for that one time renewal. 14. Leasing Leasing The Parties recognize that options for leasing Capacity in the Intake Facilities or Water Rights are important to maintain the cost effective and efficient use of the Intake Facilities and associated infrastructure. Only Parties to this Agreement are Willamette Intake Facilities Intergovernmental Agreement Page 30 of 58

174 eligible to engage in leasing. Leasing options will include firm, interruptible, and surplus water pool. A Party will not be forced to lease its Capacity in the Intake Facilities or Water Rights to other Parties. Each Party retains sole discretion as to how much, if any, Capacity of the Intake Facilities or Water Rights to make available for leasing. Prior to expanding or adding new infrastructure to the Intake Facilities above 150 MGD, the Parties will determine if leasing options are a reasonable approach as a method to defer capital expansion. The following provisions regarding Leasing are subject to the Right of First Offer, including the Short Term Waiver between TVWD and Wilsonville, as set forth in Section Leasing Procedures The Managing Agency will coordinate and manage the annual leasing process, including associated agreements and approval requirements, on a schedule that accommodates the Commission and the Parties budget processes. The Managing Agency will request available Capacity or Water Rights for leasing options from all Parties who are interested in leasing on an annual Fiscal Year basis prior to the Peak Season. Each interested Party will estimate the amount of Capacity, duration, and type of Lease (interruptible or firm) or Water Rights it wishes to make available to lease to, or the amount of Capacity, duration, and type of Lease (interruptible or firm) it seeks to lease from, the other Parties. The Managing Agency will develop forms and protocols for managing the leasing process including the leasing requests and annual surplus Capacity designated by each Party. A rate methodology for each of the leasing options will be developed by the Managing Agency, reviewed and recommended by the Management Committee and the Finance Committee, and adopted by the Board. A sample Lease form and methodology are attached in Exhibit 10, which may be modified and/or updated by the Board. In those years when Water Rights are limited and if requested by the Parties, the Board may adopt Willamette Intake Facilities Intergovernmental Agreement Page 31 of 58

175 an equitable methodology for leasing of the Water Rights Firm and Interruptible Lease Terms The length of time for firm and interruptible leases will be a minimum of one year and a maximum of five years, unless otherwise approved by the Board and subject to the Right of First Offer provisions. The Capacity acquired from a firm Lease will be considered transferred Capacity from the lessor to the lessee for the quantity and the duration of the Lease agreement for use and overuse purposes. The Capacity acquired from an interruptible Lease will be considered the lessee s Capacity for use and overuse purposes until the lessor calls back the Capacity from the lessee pursuant to the terms of the Lease. The Managing Agency will develop recommended protocols and the terms to be approved by the Board for firm and interruptible Leases, the latter of which will include the terms under which a lessor may call back the interruptible leased Capacity, such as when curtailment or loss of Capacity occurs Surplus Capacity Pool Terms When excess Capacity is made available for leasing that is not dedicated to a firm or interruptible Lease, that excess Capacity shall be included in the Surplus Capacity Pool to be made available for a period not to exceed one year from the date of placement in the Surplus for lease for less than one year by the Parties in coordination with the Managing Agency. The premium short term lease rate is included in Exhibit 10, and may be amended by the Board. The Managing Agency will develop for approval by the Board the terms, costs, and protocols for the management and use of the Surplus Capacity Pool, taking into account the best interests of the Parties while maintaining the integrity of the system Lease Approval A Lease that is within the terms of this Section will be reviewed and approved by Willamette Intake Facilities Intergovernmental Agreement Page 32 of 58

176 the Management Committee and administered by the Managing Agency. Status reports regarding the Lease agreements will be provided to the Board by the Managing Agency. A Lease that is not consistent with the terms of this Section must be approved by the Board Lease Distribution and Payments Lease requests and associated Lease revenues will be divided among the lessors based on the percent of Capacity or Water Rights leased, if more than one lessor and one lessee are involved unless otherwise approved by the Board. A Lease approved between two Parties may provide for payment made directly from the lessee to the lessor. When Lease requests exceed the amount of Capacity or Water Rights made available, available Lease Capacity or Water Rights will be divided amongst the lessees based on the percent of Capacity or Water Rights requested unless otherwise approved by the Board. 15. Overuse Notification A Party will manage its Demand on the Intake Facilities within the Party s respective ownership and Capacity share of the Intake Facilities as may be augmented by firm, interruptible or surplus Capacity pool Lease sources. Overuse terms are included in the Agreement in order to discourage use that may result in adverse impacts to the operational integrity of the Intake Facilities and to promote prudent planning of needed expansions. The Managing Agency shall notify a Party when the Party s instantaneous Demand has exceeded its Capacity ownership as augmented by any leased Capacity, including any short term lease from the Surplus Capacity Pool of the Intake Facilities. A Party should notify the Managing Agency if the Party exceeds or anticipates exceeding its Capacity share as augmented by any leased Capacity and short term lease from the Surplus Capacity Willamette Intake Facilities Intergovernmental Agreement Page 33 of 58

177 Pool. A Party will be required to take appropriate corrective action to decrease the Party s Demand on the Intake Facilities to be within its Capacity ownership as augmented by any leased Capacity and the surplus Capacity pool. A Party shall be deemed to have overused the Intake Facilities if the Party s Demand on the Intake Facilities exceeds the Party s Capacity as described in Sections 8 and 10. Overuse is subject to remedies described in Section Overuse Terms If a Party has been notified by the Managing Agency that their instantaneous Demand on the Intake Facilities has exceeded their ownership Capacity as augmented by any leased Capacity and the surplus Capacity pool, and corrective action was not taken to decrease the Demand within their ownership Capacity as augmented by any leased Capacity and the surplus Capacity pool, then the following Overuse Terms shall apply. A Party shall be deemed to have overused the Intake Facilities if the Party s Demand on the Intake Facilities exceeds the Party s Capacity as augmented by any leased Capacity and the surplus Capacity pool by 5% continuously over a 12 hour period for: i) three consecutive days in two consecutive years or ii) three consecutive days in any three years out of a five year period. Overuse also includes a Party s use exceeding its Water Right ownership regardless of the extent of overuse during times of regulation or curtailment per Section 12, unless otherwise approved by the Board. If overuse occurs, then the Party shall be subject to the remedies for overuse terms set forth in Section Remedies for Overuse Remedies Considered by the Board To the extent that a Party overuses the Capacity or Water Rights of the Intake Facilities as defined in Section 15 of this Agreement, the Party shall compensate the other Parties as set forth in Section When overuse occurs, the Board may Willamette Intake Facilities Intergovernmental Agreement Page 34 of 58

178 require the Party to lease Capacity or Water Rights in the Intake Facilities, reduce Demand on the Intake Facilities, or purchase Capacity in the Intake Facilities, if made available by another Party such that the overuse will cease to occur. Compensation for overuse is described in Section The Party that overused the Intake Facilities shall deliver to the Management Committee and the Board a plan to avoid overuse in the future. The plan must include a proposal for a Lease agreement, a Capacity purchase agreement, and/or other measures to eliminate overuse of the Intake Facilities. Nothing herein shall compel a Party to lease or sell Capacity or Water Rights to an overusing Party. The Board shall approve a plan to eliminate overuse by the Party, and the Managing Agency shall monitor the implementation of the plan and report back to the Board. Penalties for overuse may only be waived by the Board. A request for a waiver may be given to the Managing Agency, along with justification for the waiver, to be presented to the Board Compensation To the extent that a Party overuses the Capacity or Water Rights of the Intake Facilities as defined in Section 15 of this Agreement, the Party shall compensate the other Parties. Unless modified by the Board, compensation for overuse shall be five times the firm Lease rate for Capacity, which would have been in effect in the last period described above in which the overuse occurred for the entire period of the overuse (i.e. two consecutive or three out of five years). The amount of Capacity overused for the determination of retroactive compensation shall be equal to the difference between the Party s Capacity as augmented by any leased Capacity or surplus Capacity pool and the Demand imposed by the Party during the overuse period. The compensation for overuse shall be distributed to the other Parties by their ownership Capacity percentage. 17. Expansion and Capital Improvements Willamette Intake Facilities Intergovernmental Agreement Page 35 of 58

179 17.1. Current Expansion As described in the Recitals, the Parties have or will enter into separate agreements to design and construct upgrades for a Capacity Expansion of the Intake Facilities to achieve a design Capacity of 150 MGD. The preliminary concept and layout for the Intake Facilities improvements are shown in Exhibit 2. The preliminary cost allocations for the Intake Facilities improvements are described in Exhibit 11. The process set forth in Sections 17.2 and 17.3 shall not apply to this current Capacity Expansion Future Expansion or Improvement Capacity Expansion of the Intake Facilities refers to any capital improvement project not part of Section 17.1 that results in increased Intake Facilities Capacity. Capacity Expansion or Facilities Modification of the Intake Facilities, to the extent possible, shall be planned for through a Master Plan to be updated not less than every five years. The Managing Agency will lead and facilitate the development of the Master Plan, which will be reviewed and recommended for adoption by the Operations and Finance Committees to the Board. The Managing Agency will conduct the planning and implementation of the Intake Facilities Capacity Expansion, including provision for minimum operational impacts and cost impacts, to the other Parties using the Intake Facilities. A Party will notify the Managing Agency of any proposed Capacity Expansion outside the planned Capacity Expansions including the proposed Capacity and schedule Determination of Future Expansion The Managing Agency will provide notice to the Parties of any proposed Capacity Expansions to determine participation. Parties shall have 120 days from the date they receive notice, with an option for an additional 60 days if requested, in which to respond to the Managing Agency whether they wish to participate in the Willamette Intake Facilities Intergovernmental Agreement Page 36 of 58

180 proposed Capacity Expansion and any proposed conditions for participation. Once participation in the proposed Capacity Expansion is fixed and the scope, budget, and schedule are established, then the non-participating Parties shall have no further opportunity to participate unless all participating Parties approve. Participating Parties will include their proportionate share of the estimated costs in their respective annual budgets. In the case of any proposed Capacity Expansion, a Supermajority of the Board must agree to the proposed Capacity Expansion. If the Board agrees to allow the Capacity Expansion, each Party will have the option to participate in the Capacity Expansion. If not all Parties agree to participate in the Capacity Expansion, then only those Parties electing to participate in the Capacity Expansion will be responsible for all costs related to the Capacity Expansion. The Managing Agency will strive to resolve objections to proposed Expansion prior to a final decision being made with respect to the Capacity Expansion. 18. Sale of Water to Non-Party The Parties agree that sale of water to a non-party shall occur only through the associated Water Treatment Plant agreements. Parties that require Capacity for such sales shall lease Capacity from other Parties to this Agreement pursuant to Section 14 or purchase Capacity from other Parties pursuant to Section Withdrawal and Sale of Interest Notification Subject to the notification requirements of the Right of First Offer described in Section 13, one or more Parties ( Selling Parties ) may sell all or a portion of their ownership Capacity in the Intake Facilities by providing written notice to the Managing Agency and the other Parties. Within 60 days of receipt of the notice, each Party with an interest in acquiring additional Capacity in the Intake Facilities shall respond in writing to the Managing Agency and the Selling Party indicating Willamette Intake Facilities Intergovernmental Agreement Page 37 of 58

181 whether it wishes to purchase all or a portion of the interest in the Intake Facilities, the offer price, and the proposed terms and conditions of the purchase and sale ( Purchase Nomination ) Purchase Nomination Recommendation The Managing Agency will review each Purchase Nomination and make a preliminary determination as to whether all Parties submitting a Purchase Nomination ( Purchasing Parties ) and Selling Parties can be accommodated in full. If the Managing Agency is a purchaser or seller, then the Management Committee will perform the tasks outlined in this Section. If all Purchasing and Selling Parties can be accommodated in full, the Managing Agency shall notify the Selling Parties and Purchasing Parties of how the reallocation of ownership will be calculated. If all Purchasing and Selling Parties cannot be satisfied in full, then the Managing Agency will confer with the Purchasing and Selling Parties individually or collectively and make a recommendation as to how the total interest designated for sale should be allocated among the Purchasing and Selling Parties. The Managing Agency shall allocate proportionately in order to achieve an equitable and fair solution for the Purchasing and Selling Parties. The Managing Agency will make the recommendation to the Management Committee with respect to the proposed allocation within 30 days after receipt of Purchase Nominations Purchase Negotiations Within 30 days after the Managing Agency makes the recommendation and provides written notice of the proposed allocation (as approved by the Management Committee), the Managing Agency will convene a meeting of the Selling Party and the Purchasing Party to reach final agreement on the allocation of Capacity, the purchase price to be paid and other terms of sale. The Purchasing Party and Selling Party will each designate a representative for negotiations. As a result of the Willamette Intake Facilities Intergovernmental Agreement Page 38 of 58

182 negotiations, one price will be set that will apply to all Selling and Purchasing Parties Purchase Term Sheet All Purchasing Parties and Selling Parties, with the Managing Agency as the facilitator, will have 60 days to negotiate a fair and equitable transaction through a process so that all Purchasing and Selling Parties are privy to all discussions of price and terms resulting in a mutually agreed final reallocation of Intake Facilities ownership and the terms of purchase and sale. The final terms will be reduced to a term sheet for tentative approval by the designated representatives of the Purchasing and Selling Parties. If the Managing Agency is a Purchasing Party or a Selling Party, the Management Committee will assume the facilitator role throughout the purchase and sale process Acceptance or Rejection Within 45 days of approval of a term sheet, each Purchasing and Selling Party will conduct such internal review as it deems necessary and provide written notice of intent to proceed with or decline the transaction to the other Parties and the Managing Agency. If any Purchasing or Selling Party declines, then the Managing Agency will convene the remaining Purchasing and Selling Parties who will then determine how to reallocate the Capacity and adjust their respective purchase price or terms. If there is excess Capacity available, the Managing Agency may also offer the excess Capacity to those Parties who had earlier declined to be a Purchasing Party. Those declining Parties shall have 15 days from notice by the Managing Agency to accept or decline the term sheet as is and without opportunity to vary its terms unless the Purchasing Party and Selling Party mutually agree Purchase and Sale Agreement Once the terms of purchase and sale are determined, the Managing Agency shall Willamette Intake Facilities Intergovernmental Agreement Page 39 of 58

183 notify all Parties of the pending transaction. Purchasing and Selling Parties will prepare the necessary documents for final approval by the governing bodies of the Selling and Purchasing Parties and the transaction will close within 30 days after approval, unless a longer period is agreed to by the Selling and Purchasing Parties. Upon closing of the transaction the Managing Agency will undertake to gather or prepare amended Exhibits and other documents necessary to memorialize the transaction and will enter the revised Capacity allocation and resulting equity interest on the books and records of the Commission. Board approval of the transaction is not required, but the Board will approve the amended Exhibits that reflect the revised Capacity allocations Commission s Purchase Rights If all or a portion of the offered Capacity remains unsold after the exhaustion of the procedure in Sections 19.1 through 19.6 above, the Board will have the right to consider whether to purchase a Selling Party s interest on terms and conditions agreed upon by the Board and the Selling Party. If so acquired, the Commission will hold the Capacity in trust for the benefit of all of the Parties Sale to Municipal Non-Party If all or a portion of the offered Capacity remains unsold after the exhaustion of the procedure in Sections 19.1 through 19.7, then the Selling Parties may seek and obtain offer(s) from a non-party so long as the non-party is a Municipal Water Provider and becomes a Party to the Commission and this Agreement. Such offers will be reviewed in accordance with Section Party Status If the interests of the Selling Party remain unsold, then the Selling Party will continue as a Party. Upon sale of all ownership interests, the Selling Party will cease Willamette Intake Facilities Intergovernmental Agreement Page 40 of 58

184 to be a Party Water Rights The process described in this Section does not govern the sale or purchase of Water Rights Schedule Participating Parties in any proposed transaction may adjust the schedule provided in this Section as mutually agreed. 20. Admission of New Municipal Parties Eligibility Only a Municipal Water Provider is eligible to apply to become a Party and must make a written request to become a Party ( Applicant ) Applicant Request The Applicant s written request shall state the proposed date of joinder, Demand and Capacity sought to be purchased, identify the quantity and status of Water Rights the Applicant would provide, identify the existing Capacity necessary to serve the Applicant, identify any improvement(s) that would need to be built or expanded to accommodate the Applicant, and other supply sources available to Applicant Consideration by Managing Agency and Board The Applicant shall deliver its request to the Managing Agency who shall then distribute it to the Board and the Management Committee. Each Party s representative of the Management Committee will be responsible for presenting the application to their respective governing bodies for a recommendation to approve or deny. Once the Management Committee reports back the results from each of the Party s respective governing bodies, at the next regularly scheduled Board Willamette Intake Facilities Intergovernmental Agreement Page 41 of 58

185 meeting, the Board will consider the request. A decision to consider an application for admission will require a unanimous affirmative vote of the Board. If the Board determines that the application will not be considered, the Managing Agency will inform the Applicant the request is denied and the matter will be deemed concluded Provision of Additional Information If the Board unanimously votes to consider the admission, the Board, through the Managing Agency, shall request that Applicant provide all information as the Board deems necessary, in its sole discretion, to adequately consider the matter. This may include a request for oral presentation by Applicant s staff and/or elected officials Term Sheet Based on the information submitted, the Board shall determine if there is unanimous interest to continue to consider the request. If so, then the Managing Agency shall deliver a term sheet to the Applicant defining the terms and conditions for joinder, including but not limited to the date of joinder, the method of payment for existing Capacity and Applicant s obligations for construction of new Intake Facilities or expansion of existing Intake Facilities Applicant Review of Term Sheet and Negotiation The Applicant shall have 30 days from the receipt of the term sheet to accept or decline the term sheet, or propose modified terms. If the term sheet is acceptable to the Applicant and the Board, or if the Applicant and the Board negotiate and reach agreement within 30 days on the proposed modified terms, the Managing Agency shall cause a joinder agreement to be prepared for approval by the Applicant and the Board. If declined, the matter will be deemed terminated without any further action Sale or Transfer to Applicant Willamette Intake Facilities Intergovernmental Agreement Page 42 of 58

186 In accordance with Section 19, if an existing Party wishes to sell or transfer Capacity ownership to an Applicant, the Party seeking to sell shall give notice to the Managing Agency as provided in Section 19, Sale of Interest. The Party shall also include a written statement of its intent to sell. Thereafter, the evaluation of the Applicant and terms and conditions of joinder shall follow the process of Applicant request under this Section concurrent with the Sale of Interest provisions of Section 19 for the Selling Party and remaining Parties. 21. Indemnity Indemnification of Board, Officers and Employees Except as may otherwise be provided by contractual agreement between the Commission or Board and any agent of the Commission, including but not limited to the Managing Agency, the Commission shall defend and indemnify any Board member, officer, committee member, employee or agent of the Commission who was or is a party, or is threatened to be a party, to any threatened or actual action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by the collective Parties under this Agreement), by reason of the fact that such person is or was a Board member, officer, committee member, employee, or agent of the Commission, against all reasonable expenses, attorney fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by said person in connection with such suit, action or proceeding if such person acted in good faith and such person reasonably believed his or her conduct to be lawful. The termination of any action, suit, or proceeding by judgment, order, settlement, or conviction, or with a plea of nolo contendere or its equivalent shall not in and of itself create a presumption that the person did not act in good faith or did not reasonably believe his or her conduct to be lawful. Payment under this clause may be made during the pendency of such claim, action suit or proceeding Willamette Intake Facilities Intergovernmental Agreement Page 43 of 58

187 as and when incurred, subject to the right of the Commission to recover such payment from such person, should it be proven at a later time that such person had no right to such payments. Any person who is ultimately held liable for his/her good faith and reasonably believed to be lawful actions on behalf of the Commission as a Board Member, officer, committee member, employee, or agent of the Commission shall be fully covered by this indemnity. Any person who is ultimately held liable but is determined by the Board to have acted in bad faith or without reasonably believing his or her conduct to be lawful shall not be indemnified by the Commission but may have a right of contribution over and against any other Board Members, officers, committee member, employees, agent of the Commission, or Parties who, in bad faith or without reasonably believing his or her conduct to be lawful, participated in the action that created said liability. As used herein, person refers to an individual or an entity. 22. Default Generally A Party is deemed in Default of this Agreement if the Party violates any provision of this Agreement or fails to perform an obligation required to be performed or otherwise breaches this Agreement. An Event of Default shall be deemed to have occurred if the Defaulting Party fails to cure the Default within the cure period designated in this Section Notice of Default and Cure A written notice of Default ( Notice of Default ) shall be delivered to the Party in Default ( Defaulting Party ) by the Managing Agency, acting at the direction of the Board. The Notice must specify the nature of the Default and provide a specified period to cure the Default or otherwise reasonably commence to cure the Default in a diligent manner. A reasonable cure period ( Cure Period ) shall be Willamette Intake Facilities Intergovernmental Agreement Page 44 of 58

188 deemed to be 30 days unless another time for cure is set by the Board and contained in the Notice of Default. The Notice of Default may also include a requirement to engage in the Dispute Resolution process. A copy of the Notice of Default shall be delivered to all other Parties. Specific provisions relating to Default by the Managing Agency are found in Section Response by Defaulting Party Nonpayment Default The alleged Defaulting Party shall either: (1) make payment in full by the date set in the Default notice; (2) submit a plan for repayment that the Board must approve; or (3) request Dispute Resolution. The Cure Period for nonpayment is a 30 day period, but the Board may, in its sole discretion, approve a payment plan in extraordinary circumstances Other Defaults The Defaulting Party must: (1) cure the Default by the Cure Period set forth in the Notice of Default; (2) state why the Default cannot be cured within the Cure Period, what efforts the Defaulting Party has made to Cure the Default and provide a reasonable plan to cure the Default; or (3) request Dispute Resolution. The Board must approve the plan for cure and if not approved, an Event of Default will be declared. If Dispute Resolution is requested by the Defaulting Party of the Board, then that process will be followed Failure to Cure Failure to cure the Default within the allowed Cure Period will result in the Declaration of an Event of Default, and a Final Notice to Cure will be delivered to the Defaulting Party by the Managing Agency. The Final Notice to Cure will contain one final allowed Cure Period. Failure to cure Willamette Intake Facilities Intergovernmental Agreement Page 45 of 58

189 the Event of Default within Final Notice of Default Cure Period will result in a Declaration of Default and the Remedies for Default will apply. 23. Remedies Determination of Remedy Upon Declaration of an Event of Default, the Board will determine an appropriate remedy. The Defaulting Party will not have voting privileges regarding the appropriate remedy and a Supermajority vote of the remaining Board Members shall be required to determine the remedy. The imposition and scope of remedies by the Board is subject to Dispute Resolution. In making a determination of remedy for the Default, the remaining Board Members shall consider: The nature of and severity of the Event of Default and resulting impact on the other Parties; Whether the factors leading to the Event of Default were beyond the reasonable control of the Defaulting Party; The Defaulting Party s history of performance and satisfaction of obligations and duties under this Agreement; The Defaulting Party s responsiveness and cooperation to cure the Event of Default, including consideration of how proactive the Defaulting Party was in revealing the Default Other factors that the Board deems relevant Potential Remedies for Consideration by the Board The Board may consider all remedies available at law, or in equity, for breach of this Agreement as provided in this Section and Section 24. The purpose of the remedy is to make all non-defaulting Parties whole and to bring the Defaulting Willamette Intake Facilities Intergovernmental Agreement Page 46 of 58

190 Party into compliance, if possible. The remedies, until the Event of Default is cured, may include, but not be limited to, the following: Loss of Voting Privileges The loss of voting privileges such that a Supermajority of the remaining Members of the Board may conduct business without the Defaulting Party until the Defaulting Party fully cures the Event of Default Money Damages The Board may recover money damages for additional costs of service, costs of capital and other actual costs incurred by the other Parties resulting from the Default, plus interest at the statutory judgement rate of interest from the date of Default Termination of Service The Board may elect: (1) to terminate water deliveries to the Defaulting Party until the Event of Default is cured, if the Defaulting Party has other sources of water sufficient to meet Non-peak Season average daily demands, or (2) reduce water deliveries so that the Intake Facilities provides only enough water to meet Non-peak Season average daily demands when combined with the Defaulting Party s other sources Expulsion In cases of repeated Defaults by the Defaulting Party, the Board may expel the Defaulting Party from the Commission and require the Defaulting Party to sell their Capacity ownership in the Intake Facilities. The removed Defaulting Party may ask to be a wholesale finished water supply purchaser from either Water Treatment Plant Litigation Subject to Section 22 and 23, if the Event of Default is not cured or the Willamette Intake Facilities Intergovernmental Agreement Page 47 of 58

191 Board imposed Remedies are not complied with and the Dispute Resolution process has been waived or unsuccessful, any Party may file a lawsuit and seek available remedies under Oregon law Suspension of Legal Remedies Imposed by the Board A Default may be addressed using the Dispute Resolution process described in Section 25. If Dispute Resolution has been requested, then the Remedy provisions of Section 23 will be suspended until the Dispute Resolution process is exhausted. Notwithstanding the foregoing, if the Default is of a nature that it poses a health risk to any user of the Intake Facilities or could cause damage to the Intake Facilities. Water Treatment Plants, or the Real Property, then the Board or any aggrieved Party may seek immediate equitable relief without waiting for initiation or completion of any Dispute Resolution. 24. Default by the Managing Agency Generally This Agreement obligates the Managing Agency to manage the business affairs of the Commission for the mutual benefit of all Parties to consistently deliver water from the Intake Facilities to their respective Water Treatment Plants. If the Managing Agency is also a Party and is alleged to be a Defaulting Party, a Supermajority of the remaining Board Members shall designate another Party to act as the facilitator for the Default. Based on the nature of the Default, the Board may also remove the Managing Agency from some or all Managing Agency duties pending Dispute Resolution, mediation, arbitration, or litigation, as the case may be. The following provisions shall apply to a Default by the Managing Agency, unless other Default provisions are contained in a separate Managing Agency contract, with the Managing Agency and are stated to control and supersede over these provisions. Willamette Intake Facilities Intergovernmental Agreement Page 48 of 58

192 24.2. Notice of Default and Cure A written Notice of Default shall be delivered to the Managing Agency by the Board following a Supermajority vote of the remaining Members of the Board. The Managing Agency serves at the will of the Board. Therefore, the Notice may include a Notice of Termination of the Managing Agency, which termination may be immediate for acts or omissions such as gross negligence, malfeasance or dishonesty in financial practices, or at the end of a specified period of time set by the Board in the Notice. The Board must consider and provide a plan of transition if the Notice includes termination. If a Notice of Default with an opportunity to cure the Default is given, the Notice must specify the nature of the Default and provide a specified period in which to cure the Default or otherwise reasonably commence to cure the Default in a diligent manner. A reasonable cure period ( Cure Period ) shall be deemed to be 30 days unless another time for cure is set by the Board and contained in the Notice of Default. The Notice of Default may also include a requirement by the Board for the Managing Agency to engage in the Dispute Resolution process. A copy of the Notice of Default shall be delivered to all Parties. If the Managing Agency is a Party and the Board does not elect to terminate the Managing Agency, the Board may vote to temporarily remove the Managing Agency from some or all of its duties pending a cure of the Default Event of Default The Managing Agency shall be deemed in Default of this Agreement if it fails to perform any obligation required to be performed by the Managing Agency under this Agreement or through a separate Managing Agency contract. An Event of Default shall be deemed to have occurred if the Managing Agency fails to cure the Default within the Cure Period designated in this Section 24.2, if any Cure Period Willamette Intake Facilities Intergovernmental Agreement Page 49 of 58

193 is allowed. If no Cure Period is given, then the Default shall be deemed to be an immediate Event of Default Remedies If the Managing Agency commits an Event of Default, the Commission may seek any remedy available to it, at law or in equity. Such remedies include but are not limited to money damages, including restitution; specific performance; injunctive relief; and termination of the Managing Agency s contract. The Board, at its sole discretion, may enter into the Dispute Resolution process described in Section 25 if requested by the Managing Agency. 25. Dispute Resolution This Agreement obligates the Parties to cooperate in the ownership and operation of the Intake Facilities for the mutual benefit of all Parties to consistently deliver water to their respective Water Treatment Plants. The Intake Facilities are the foundation of the other water system assets and Water Treatment Plants of the Parties. To that end, the Parties agree that each Party should bring forward issues regarding past performance or anticipated performance of obligations and duties at the earliest reasonable opportunity so that all Parties can proactively work toward solutions in an attempt to avoid a formal declaration of default. This Dispute Resolution process is provided to encourage informal resolution through negotiation among the Parties staff, executives or elected officials before resorting to a formal process using mediation, arbitration, or litigation Notice of Dispute Except in the case of a Default, any dispute shall be submitted in writing to the Management Committee. The Management Committee has 30 days from the date of notice to meet with the affected Parties to resolve the dispute. If the Management Committee does not resolve the dispute within the 30 day period, it shall be referred to mediation. In the case of a Default, either the Defaulting Party or the Board may Willamette Intake Facilities Intergovernmental Agreement Page 50 of 58

194 demand Dispute Resolution at any time during the Default process or within 10 days following imposition of any of the Remedies by the Board or the court, as set forth above. If Dispute Resolution is not requested during that time period, it shall be deemed waived and any aggrieved Party may proceed to litigation Mediation A Party desiring mediation shall provide the other Parties with a written notice ( Request to Mediate ), which shall set forth the nature of the dispute. The Parties will thereafter cooperate in good faith to select the mediator within 14 days of either Party requesting mediation, and may adopt any procedural format that seems appropriate for the particular dispute. Mediation should be scheduled within 14 days of selection of the mediator, or as soon as possible, based on availability. In the event the Parties cannot agree on a mediator, the Parties will ask the Presiding Judge of Clackamas County Circuit Court to appoint a mediator. The mediator will then set the ground rules for the mediation. The Parties will share the mediation costs as agreed upon with the mediator. If a written settlement agreement is not reached by the Parties within 60 days from the date of the Request to Mediate, or such longer time frame as may be agreed upon, in writing, by the Parties, then the Parties may commence litigation. If the mediation fails the Parties may agree to binding arbitration. If all Parties do not agree to arbitrate, then any Party may seek legal relief through the Circuit Court of Clackamas County, or U.S. District Court if jurisdiction is available Arbitration If the Parties agree to enter into binding arbitration, selection of the arbitrator, time frame for arbitration, and ground rules for arbitration will be agreed upon at that time. Any arbitrator or arbitrators selected must have a minimum of 10 years of municipal law experience, unless the Parties mutually agree, in writing, otherwise. Willamette Intake Facilities Intergovernmental Agreement Page 51 of 58

195 25.4. Injunctive Relief and Specific Performance A Party may seek and obtain immediate equitable relief before or during the Dispute Resolution process and as described in Section Attorney Fees Each Party shall bear its own legal fees and expert witness fees and all other costs in any Dispute Resolution process, including litigation. 26. Dissolution The Parties may desire to dissolve the Commission. Dissolution of the Commission shall require an affirmative vote of each Party s governing body. Dissolution shall occur no later than five years from the date of the last affirmative vote to dissolve and no sooner than two years, unless the governing body of each Party agrees to a different deadline. If the Commission is not dissolved then any Party(ies) seeking dissolution may elect to terminate and withdraw as described in Section 19. If the Commission is dissolved, the Easement for the Intake Facilities in Exhibit 1 will be automatically terminated Plan of Dissolution The Managing Agency will develop a dissolution plan to wind up business affairs, to be reviewed and approved by the Management Committee before it is presented to each Party s respective governing body. The dissolution plan must provide for among other things: (1) the continued operation of the Intake Facilities while the dissolution plan is implemented; (2) an accounting of assets and liabilities; (3) provisions for the payment of debts and obligations, including assumption of future payment for ongoing debts and obligations along with appropriate indemnity provisions as the Parties mutually agree; (4) the creation of a reserve account for known, unforeseen, and contingent liabilities; (5) a plan for liquidation of the assets; and (6) a mechanism for distribution of asset proceeds and excess funds among the Parties in accordance with their ownership interest, following payment Willamette Intake Facilities Intergovernmental Agreement Page 52 of 58

196 of all liabilities and obligations related to the Intake Facilities Transfer of Capacity Ownership The dissolution plan may provide for transfers of Capacity ownership, for cash or other consideration, from a Party that seeks complete divestiture of ownership to a Party who plans to remain and withdraw water from the Willamette River at the Intake Facilities. The dissolution plan must provide for appropriate documents to vest proportionate ownership as tenants in common for owners that remain in joint ownership of the Intake Facilities Disputes Any dispute regarding dissolution, the dissolution plan, division of Capacity or transfer of Capacity shall be first subject to the Dispute Resolution process of Section 25 and, if not resolved in Dispute Resolution or mediation, then as determined by the Circuit Court of Clackamas County under ORS (2). 27. General Provisions Warranties and Representations Each Party hereto warrants and represents that it has the legal authority to enter into this Agreement Ordinance of the Governing Body Each Party to this Agreement hereby represents that it has undertaken or will undertake the necessary public procedures to approve an ordinance in accordance with ORS The ordinance shall authorize the Party s representatives to the Board of the Commission to modify the Exhibits to this Agreement as provided in Section The Parties further agree that they shall file with the Secretary of State, within 30 days after the Effective Date, the filings described in ORS (2). Willamette Intake Facilities Intergovernmental Agreement Page 53 of 58

197 27.3. Insurance Requirements The insurance requirements and limits necessary for the operations of the Intake Facilities are described in Exhibit 12 and shall be purchased and maintained at all times. The requirements will be reviewed by the Board annually, and modified when necessary per recommendations from the Managing Agency Other Agreements Each Party warrants that entry into this Agreement will not constitute a default under any other agreement or covenant the Party may be bound to Interpretation Unless a clear contrary intention appears: (a) reference to any person includes such person s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and reference to a person in a particular capacity excludes such person in any other capacity; (b) reference to any gender includes each other gender; (c) reference to any agreement (including this Agreement), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof; (d) reference to any Section, Schedule or Exhibit means such Section, Schedule or Exhibit to this Agreement, and references in any Section, Schedule, Exhibit or definition to any clause means such clause of such Section, Schedule, Exhibit or definition; (e) hereunder, hereof, hereto, herein, and words of similar import are references to this Agreement as a whole and not to any particular Section or other provision hereof; (f) relative to the determination of any period of time, from means from and including, to means to but excluding, and through means through and including ; (g) including (and with correlative meaning include ) Willamette Intake Facilities Intergovernmental Agreement Page 54 of 58

198 means including without limiting the generality of any description preceding such term; (h) reference to any law (including statutes and ordinances) means such law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder; and reference to a singular number or person may include the plural number or person, and the plural number or person the singular Exhibits The Parties agree that the Exhibits to this Agreement may be modified or amended by the Commission without other modification or amendment to this Agreement and without approval by the governing body of each Party. Upon execution of this Agreement, the Parties have agreed to include Exhibits 1 through 13, attached hereto and incorporated by reference. The purpose and intent of specific exhibits are set forth in other parts of this Agreement. Exhibits consisting of other agreements or contracts among other Parties to this Agreement, or with outside parties, may only be modified by consent of all of those named Parties/parties to those other agreements or contracts and not by the Commission without the consent of those other Parties/parties Existing Agreements Existing Agreements between some or all of the Parties that affect or are affected by the Intake Facilities that are the subject of this Agreement are identified in Exhibit 13. These related agreements are not superseded or modified by this Agreement. Nothing in this Agreement shall be construed to require any alteration or modification of any other Existing Agreement. Specifically, the duration of this Agreement does not alter or extend the term of the Ground Lease. Willamette Intake Facilities Intergovernmental Agreement Page 55 of 58

199 27.8. Periodic Review Exhibits shall be reviewed at least annually by the Board. Exhibits must be updated by resolution of the Board when ownership percentages change, new or expanded Capacity is placed in service, a new Party joins, an existing Party withdraws, or one or more Party(ies) purchases or sells an interest in the Intake Facilities Severability Should any provision of this Agreement be rendered invalid by a court of competent jurisdiction or arbitrator with authority to render a provision invalid, it is agreed that every other part of the Agreement shall remain in full force and effect No Joint and Several Liability Each Party to this Agreement assumes its own rights and obligations and does not assume the rights and obligations of any other Party Counterparts This Agreement may be signed in one or more counterparts, and each counterpart shall be deemed to be an original instrument Amendments and Modifications Except as provided in Section 27.6 for Exhibits, any modification or amendment to this Agreement requires unanimous approval of the Board and an affirmative vote of the governing bodies of all Parties. The amended Agreement must be signed by all Parties upon approval Judicial Review and Attorney Fees This Agreement and its construction shall be governed by and construed in accordance with the laws of the State of Oregon without regard to principles of conflicts of law. Any claim, action, suit or proceeding between the Parties that arises from or relates to this Agreement shall be brought and conducted solely and Willamette Intake Facilities Intergovernmental Agreement Page 56 of 58

200 exclusively within the Circuit Court of Clackamas County for the State of Oregon. In any such claim, action, suit, or proceeding, the Parties shall bear their own fees and costs including attorney fees Third Parties Except as expressly provided otherwise in this Agreement, the provisions of this Agreement are for the exclusive benefit of the Parties hereto and not for the benefit of any other persons, as third-party beneficiaries or otherwise, and this Agreement shall not be deemed to have conferred any rights, express or implied, upon any person not a Party to this Agreement Non-Waiver Failure of any Party at any time to require performance of any provision of this Agreement shall not limit the Party s right to enforce the provision, nor shall any waiver of any breach of any provision be a waiver of any succeeding breach of the provision or a waiver of the provision itself or any other provisions Time of the Essence Time is of the essence of each and every term, covenant, and condition set forth in this Agreement Further Assurances Each Party agrees that it will reasonably consider cooperation in the execution of other documents and/or performance of other action as may be reasonably requested by another Party to more effectively consummate or achieve the purposes or subject matter of this Agreement Signing Authority Each person signing this Agreement on behalf of a Party hereby warrants actual authority to bind their respective Party. Willamette Intake Facilities Intergovernmental Agreement Page 57 of 58

201 TUALATIN VALLEY WATER DISTRICT By: Richard Burke, President CITY OF WILSONVILLE By: Tim Knapp, Mayor APPROVED AS TO FORM By: Clark Balfour, District Counsel APPROVED AS TO FORM By: Barbara Jacobson, City Attorney CITY OF SHERWOOD CITY OF HILLSBORO By: Lee Weislogel, Mayor By: Michael Brown, City Manager APPROVED AS TO FORM By: Josh Soper, City Attorney APPROVED AS TO FORM By: Christopher Crean, City Attorney CITY OF TIGARD CITY OF BEAVERTON By: John Cook, Mayor By: Dennis Doyle, Mayor APPROVED AS TO FORM By: Shelby Rihala, City Attorney APPROVED AS TO FORM By: Peter Livingston, City Attorney Willamette Intake Facilities Intergovernmental Agreement Page 58 of 58

202 Exhibit 1 - Willamette Intake Facilities Easement After recording, return to: City of Wilsonville Attn: Legal Department SW Town Center Loop East Wilsonville OR INTAKE FACILITIES EASEMENT KNOW ALL BY THESE PRESENTS, that the City of Wilsonville, a duly chartered home rule municipal government of the State of Oregon ( Grantor Wilsonville ), and Tualatin Valley Water District, a duly organized water supply district under Oregon Revised Statutes (ORS) Chapter 264 ( Grantor TVWD ) (hereinafter collectively referred to as Grantor ), as the legal owners of that certain real property described below ( Property ), for the consideration hereinafter stated, do hereby grant and convey unto the Willamette River Intake Facilities Commission, an ORS Chapter 190 entity of the State of Oregon (hereinafter referred to as Grantee ), a permanent Intake Facilities Easement ( Easement ), effective the day of 2018 ( Effective Date ), in, under, across, and along the full width and length of that certain land owned by Grantor ( Easement Area ) and legally described and depicted as follows: See Exhibit A, Easement legal description, and Exhibit B, drawing of Easement Area showing Intake Facilities, attached hereto and incorporated by reference as if fully set forth herein. The true and actual consideration paid for this Easement, stated in terms of dollars, is Zero Dollars, but consists of value given or promised, which is agreed by Grantor and Grantee to be whole and adequate consideration. TO HAVE AND TO HOLD the above-described Easement unto said Grantee for the benefit of the Grantee, in accordance with the conditions and covenants as follows: 1. Scope of Easement. Pursuant to the terms of the Willamette Intake Facilities Intergovernmental Agreement, dated, 2018 (the IGA ), this Easement grants to Grantee the right, privilege, and authority to access, construct, inspect, operate, maintain, repair, replace, and remove the Intake Facilities. Grantor, upon request of Grantee, will authorize reasonable temporary work areas outside of the permanent easement area for a reasonable time period required for Grantee to perform construction, maintenance, repair, or replacement of the Intake Facilities. As used herein, Intake Facilities means the existing or upgraded Intake Facilities used to withdraw and transmit water from the authorized diversion point in the Willamette River to the agreed System Separation Point between the Willamette River Water Treatment Plant and the Willamette Water Supply System Water Treatment Plant. The System Separation Point means that point shown where the Intake Facilities terminate and water from the caisson of the Intake Facilities is separated by pumps into untreated water pipes conveying water to the two above-referenced Plants. There will be items beyond the System Separation Point that are separately owned and are Intake Facilities Easement Page 1 -

203 Exhibit 1 - Willamette Intake Facilities Easement not assets of Grantee but rather are some assets owned by Grantor and some assets owned by only certain of the Grantees, as depicted on Exhibit B. The Intake Facilities and the System Separation Point, as noted on Exhibit B are all Permanent Assets and can remain with the Easement Area. All of those assets are permitted and will remain within the Easement Area. Except those buildings or structures depicted on Exhibit B, and for existing structures or improvements already located within the Easement Area, including but not limited to the pedestrian bridge, no buildings or structures shall be constructed within the Easement Area that would materially impede access to Grantee s Intake Facilities. Grantor shall, however, continue to have full access to the Easement Area and use of the same as long as the use does not unreasonably interfere with the uses granted to Grantee herein. Any expansion of the Intake Facilities beyond those shown on Exhibit B will require written approval of Grantor and an amendment to this Easement. Attached hereto as Exhibit C is a copy of Pipeline Easement No EA from the Division of State Lands (DSL) to Grantor City of Wilsonville for that area at or below the ordinary low water mark which allows for the current in-water facilities. As part of this Easement, Grantor Wilsonville allows Grantee to exercise Wilsonville s rights under this DSL Easement, provided Grantee complies with all provisions. Grantor and Grantee understand the DSL Easement may need to be amended, with such amendment subject to DSL approval, in order to accommodate the new Intake Facilities. Grantor Wilsonville will use good faith efforts to work with DSL to obtain any such amendment, if needed. 2. Definitions. Capitalized terms not defined herein are as defined in the IGA. 3. Security. Grantee acknowledges and agrees that the Easement Area is currently and must remain a secure area and that access to the Easement Area must be closely monitored by Grantor Wilsonville. Therefore, except in the case of an emergency, Grantee shall give Grantor Wilsonville at least a 24-hour notice (may be by or telephone) that Grantee will be coming to the Easement Area. In all cases, Grantee must sign in at the Willamette River Water Treatment Plant administration building before entering the Easement Area. While on site, Grantee must follow the Willamette River Water Treatment Plant security protocol. The administration building is staffed 24 hours a day, seven days a week. If this staffing protocol should ever change, Grantee will be given another means of immediate access (after required notice) before any change is made. Grantee shall give as much notice as reasonably possible in the case of an emergency. If Grantee wishes to come on to the Easement Area for routine operations, maintenance, or inspection and has not given at least 24 hours advance notice, Grantee may contact Grantor Wilsonville and ask permission to come onto the Easement Area with shorter notice. Grantor Wilsonville may deny any shorter request that would interfere or conflict with already planned operations of the Willamette River Water Treatment Plant. 4. AS IS CONDITION. Except for warranty of title, Grantor makes no other representations or warranties with regard to the condition or suitability of the Easement Area for Grantee s intended use. This disclaimer of any and all warranties, excepting warranty of title, includes, but is not limited to, the environmental condition of the Easement Area and adjacent lands. It is Grantee s sole responsibility to conduct environmental due diligence and remediation for the Easement Area and any required archeological studies, if applicable, prior to construction. If any environmental hazards are discovered within the Easement Area, Grantee will be solely responsible for clean-up and remediation unless Grantee can prove that a Hazardous Substance release was caused by Grantor after the Effective Date of this Easement. Grantor will not be responsible to Grantee for the clean-up or remediation of any pre-existing environmental hazards, releases, or contamination. Grantee shall also be responsible for any exacerbation by Grantee of Intake Facilities Easement Page 2 -

204 Exhibit 1 - Willamette Intake Facilities Easement any Hazardous Substance release that was caused by either Grantor after the Effective Date, but only to the extent of the exacerbation as long as Grantee had not been made aware of the condition caused by Grantor after the Effective Date and prior to the action that caused the exacerbation. Grantor s limited post-effective Date responsibility for any Hazardous Substance condition within the Easement Area will apply only to the Grantor who actually caused the Hazardous Substance release after the Effective Date, and not to the other member of the collective Grantor(s). As used herein, Hazardous Substances include, but are not necessarily limited to, any substance, material, or product defined or designated as hazardous, toxic, radioactive, or dangerous, regulated wastes or substances, or any other similar term in or under any Environmental Laws as now apply or may apply in the future. 5. Damage and Restoration. Grantee, upon the initial expansion and construction of the Intake Facilities, and upon each and every occasion that the same be occupied for inspection, repair, replacement, addition to, or removal, shall restore the Easement Area and any improvements disturbed by Grantee, including but not limited to the pedestrian ramp, if any, to the same or better condition and repair, unless Grantor mutually agrees to some other proposed condition. Grantee shall be responsible to follow all City of Wilsonville public works and permitting standards during construction and shall be liable for all repair and restoration of any damage caused by Grantee s use of or operations within the Easement Area. Grantee shall also be liable to reimburse Grantor for any damage to Grantor s adjoining property caused by Grantee s construction or operations. Grantee shall have no obligation, however, to restore any building or structure placed within the Easement Area in violation of Paragraph Relocation. Grantor, or any one of them, may request relocation of the Easement Area and Intake Facilities impacted thereby, provided that such request for relocation is subject to written approval by Grantee, which approval shall not be unreasonably withheld or delayed. If requested by one Grantor, the other Grantor must also approve the requested relocation, in writing. If approved, the cost of relocation shall be at the requesting Grantor s sole expense. 7. Duration of Easement. This Easement begins on the Effective Date and will remain in place for as long as the Intake Facilities are used to transmit water to Grantee s water treatment plants for public consumption. Nothing contained herein, however, including duration, shall be construed in any way to alter or extend the term of the Ground Lease (wherein Grantor Wilsonville is the lessor) for the water pipeline currently used to convey water from the Intake Facilities to the Willamette Water Supply System Water Treatment Plant. If the Ground Lease is terminated, it will be incumbent upon Grantee to find another route to move the water from the Intake Facilities to its destination. 8. Abandonment. If the Intake Facilities are not used for a period of two years by Grantee, this Easement shall be deemed abandoned unless such lack of use is due to damage, destruction, reconstruction, or another event that temporarily prevents use by Grantee, and Grantee has made Grantor aware of the interruption in use and is exercising good faith to restore use. Notwithstanding the foregoing, if the Easement is not used for a period of seven years or longer, it will be deemed abandoned and this Easement will terminate. A delay in completion of construction of the Willamette Water Supply System Water Treatment Plant will not be considered an abandonment if longer than two years, as long as the construction is ongoing. Intake Facilities Easement Page 3 -

205 Exhibit 1 - Willamette Intake Facilities Easement 9. Insurance. Grantee will maintain and abide by the insurance requirements set forth in the IGA and will name Grantor as additional insureds with respect to this Easement. In addition, during construction activities and any time Hazardous Substances are being used within the Easement Area, other than in small quantities as generally needed for landscaping or as cleaning supplies, Grantee or Grantee s contractor shall carry full environmental coverage, including sudden and accidental and gradual release pollution liability coverage that will cover, among other things, environmental damage, any spillage of chemicals, fuels, oils, lubricants, de-icing, anti-freeze, or other hazardous materials, or disturbance of any Hazardous Substances during the performance of any work on the pipeline and/or other activities in the Easement Area or as a result of any pipe rupture, leakage, or other failure, written on an occurrence form policy. Grantee will be fully responsible for the cost of any clean-up of any released materials or disturbance, in accordance with Oregon Department of Environmental Quality ( DEQ ) and Federal Environmental Protection Agency ( EPA ) clean-up requirements. The amount of coverage will be agreed by Grantor and Grantee to be reasonable given the type of construction activity. Whatever the coverage might be, however, will not limit Grantee s liability or responsibility for any environmental damage claim or Hazardous Substances release. If said insurance is carried by Grantee s contractor, in lieu of Grantee, then Grantee must ensure that Grantor is named as an additional insured on the pollution policy in accordance with all requirements for naming Grantor as an additional insured. Nothing contained herein, however, shall be construed as a limitation on liability. Grantor shall maintain a direct right of action against Grantee and shall not be required to first seek relief through the insurance carrier or general contractor. 10. Grantee s General Indemnity. Grantee agrees to defend (using legal counsel reasonably acceptable to Grantor, taking into account insurance defense requirements), indemnify, reimburse, and hold harmless Grantor from and against any and all claims, demands, damages to person or property, including Grantor s own property, causes of action for injury or death, fines, penalties, expenses, costs, fees (including, but not limited to, attorney, accountant, paralegal, expert, and escrow fees), liabilities, losses, proceedings, and/or suits that may be imposed on or claimed against Grantor, in whole or in part, directly or indirectly, arising from or in any way connected with: (a) any act, omission, or negligence by Grantee or its partners, officers, directors, members, managers, agents, employees, invitees, contractors, subcontractors, and suppliers; (b) any use, occupation, management, or control of the Easement Area by Grantee, including, but not limited to, the sudden or accidental release of raw water that causes damage to person or property; (c) any condition created in or about the Easement Area by Grantee, including any accident, injury, or damage occurring on or about the Easement Area during the term of this Easement, unless caused by Grantor or a third party unrelated to Grantee; (d) any breach, violation, or nonperformance of any of Grantee s obligations under this Easement; or (e) any damage caused on or to the Easement Area during Grantee s use or occupancy thereof, unless caused by Grantor or a third party unrelated to Grantee. As used throughout this Easement, Grantee includes all of Grantee s partners, officers, directors, members, managers, agents, employees, invitees, contractors, consultants, and suppliers. This indemnity shall apply to any claim, however caused, or regardless of the legal grounds and basis, in which Grantor is named. 11. Grantee s Environmental Indemnity. Grantee will be solely responsible for and agrees to defend (using legal counsel reasonably acceptable to Grantor, taking into account insurance defense requirements), indemnify, and hold harmless Grantor from and against all environmental costs claimed against or assessed against Grantor arising, in whole or in part, from acts or omissions of Grantee (including Grantee s own employees, agents, contractors, or suppliers) Intake Facilities Easement Page 4 -

206 Exhibit 1 - Willamette Intake Facilities Easement on or about the Easement Area. Grantee will be responsible to promptly and fully address and remediate any claims for natural resources damages, as directed by the agency assessing such damage claim. Notwithstanding the foregoing, Grantee will not be responsible for, and does not indemnify Grantor for, any actions of Grantor, including Grantor s own employees, agents, contractors, suppliers, or any other tenant of Grantor, that cause environmental damage or a violation of any environmental law within the Easement Area occurring after the Effective Date of this Easement. 12. Condemnation. If the Easement Area or any interest therein is taken as a result of the exercise of the right of eminent domain or under threat thereof (a Taking ), this Easement will terminate with regard to the portion that is taken by condemnation authority. If Grantee determines that the portion of the Easement Area taken does not feasibly permit the continuation of the operation of the Intake Facilities, this Easement will terminate. The termination will be effective as of the date of the Taking. Any condemnation award relating to the land will be the property of Grantor. Grantee will not be entitled to any proceeds of any such real property award, except Grantee will be entitled to any compensation attributed by the condemning authority to Grantee s ownership interest in the Intake Facilities and relocation expense and loss or interruption of business. 13. Legal Effect and Assignment. This Easement runs with the land and shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. 14. Defaults and Disputes. Any legal action based on an alleged violation of this Easement will be brought in Clackamas County Circuit Court in the State of Oregon, and all remedies available at law or in equity will be available to the aggrieved Grantor(s) or Grantee. Except in those cases where either Grantor(s) or Grantee determines that equitable relief, including injunctive relief or specific performance, is needed, Grantor and Grantee agree to follow the mediation provision set forth in the IGA. In the case of equitable relief, either Grantor or Grantee may apply for immediate relief from the Court. 15. Legal Action/Attorney Fees. If a suit, action, or other proceeding of any nature whatsoever (including any proceeding under the U.S. Bankruptcy Code) is instituted in connection with any controversy arising out of this Easement or to interpret or enforce any rights or obligations hereunder, the prevailing party shall be entitled to recover attorney, paralegal, accountant, and other expert fees and all other fees, costs, and expenses actually incurred and reasonably necessary in connection therewith, as determined by the court or body at trial or on any appeal or review, in addition to all other amounts provided by law. Payment of all such fees shall also apply to any administrative proceeding, trial, and/or any appeal or petition for review. This attorney fee provision will not apply to mediation proceedings conducted pursuant to the IGA. 16. Governing Law. This Easement will be governed in accordance with the laws of the State of Oregon. 17. Nonwaiver. Any failure to enforce any provision of this Easement will not be deemed a waiver of the right to enforce that provision or any other provision of this Easement. Intake Facilities Easement Page 5 -

207 Exhibit 1 - Willamette Intake Facilities Easement 18. Severability. If any provision of this Easement is found to be void or unenforceable, it is the intent of the parties that the rest of the Easement shall remain in full force and effect, to the greatest extent allowed by law. 19. Modification. This Easement may not be modified unless signed by Grantor and Grantee and the modification is recorded. 20. Time of the Essence. Time is of the essence in performance of this Easement. 21. Recording. The fully executed original of this Easement shall be duly recorded in the Deed Records of Clackamas County, Oregon. 22. Notices. Any notice required or permitted under this Easement shall be in writing and shall be given when actually delivered in person or 48 hours after having been deposited in the United States mail as certified or registered mail, addressed to the addresses set forth below, or to such other address as one party may indicate by written notice to the other party. To Grantor Wilsonville: with copy to: To Grantor TVWD: with copy to: To Grantee: City of Wilsonville Attn: Finance Director SW Town Center Loop East Wilsonville, OR Wilsonville City Attorney SW Town Center Loop East Wilsonville, OR Tualatin Valley Water District Attn: Chief Executive Officer 1850 SW 170 th Avenue Beaverton, OR District Counsel 1850 SW 170 th Avenue Beaverton, OR Willamette River Intake Facilities Commission Attn: Managing Agency 1850 SW 170 th Avenue Beaverton, OR [Signatures on following pages] Intake Facilities Easement Page 6 -

208 Exhibit 1 - Willamette Intake Facilities Easement 23. Authority. The individuals executing this Easement on behalf of Grantor and Grantee each represent and warrant that he/she has the full power and authority to do so on behalf of the respective party and to bind said party to the terms of this Easement. IN WITNESS WHEREOF, the undersigned have executed this Easement effective as of the date first above written. GRANTOR WILSONVILLE: CITY OF WILSONVILLE APPROVED AS TO LEGAL FORM: By: Bryan Cosgrove As Its: City Manager Barbara A. Jacobson, City Attorney STATE OF OREGON ) ) ss. County of Clackamas ) This instrument was acknowledged before me on, 2018, by Bryan Cosgrove, who personally appeared before me, was identified by satisfactory evidence, and acknowledged that he executed the instrument in his authorized capacity as the City Manager of the City of Wilsonville, a municipal corporation of the State of Oregon, to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Notary Public State of Oregon [Signatures continued on following pages] Intake Facilities Easement Page 7 -

209 Exhibit 1 - Willamette Intake Facilities Easement GRANTOR TVWD: TUALATIN VALLEY WATER DISTRICT APPROVED AS TO LEGAL FORM: By: Mark Knudson, P.E. As Its: Chief Executive Officer Clark Balfour, Counsel STATE OF OREGON ) ) ss. County of Washington ) This instrument was acknowledged before me on, 2018, by Mark Knudson, P.E., who personally appeared before me, was identified by satisfactory evidence, and acknowledged that he executed the instrument in his authorized capacity as the Chief Executive Officer of Tualatin Valley Water District, a water supply district organized under ORS Chapter 264, to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Notary Public State of Oregon [Signatures continued on following pages] Intake Facilities Easement Page 8 -

210 Exhibit 1 - Willamette Intake Facilities Easement ACCEPTED BY: GRANTEE: TUALATIN VALLEY WATER DISTRICT By: Richard Schmidt As Its: Board President STATE OF OREGON ) ) ss. County of Washington ) This instrument was acknowledged before me on, 2018, by Richard Schmidt, who personally appeared before me, was identified by satisfactory evidence, and acknowledged that he executed the instrument in his authorized capacity as the Board President of the Tualatin Valley Water District, a water supply district organized under ORS Chapter 264, to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Notary Public State of Oregon APPROVED AS TO FORM: Clark Balfour, Counsel [Signatures continued on following pages] Intake Facilities Easement Page 9 -

211 Exhibit 1 - Willamette Intake Facilities Easement ACCEPTED BY: GRANTEE: CITY OF BEAVERTON By: Dennis Doyle As Its: Mayor STATE OF OREGON ) ) ss. County of Washington ) This instrument was acknowledged before me on, 2018, by Dennis Doyle, who personally appeared before me, was identified by satisfactory evidence, and acknowledged that he executed the instrument in his authorized capacity as the Mayor of the City of Beaverton, to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Notary Public State of Oregon APPROVED AS TO FORM: Peter Livingston, City Attorney [Signatures continued on following pages] Intake Facilities Easement Page 10 -

212 Exhibit 1 - Willamette Intake Facilities Easement ACCEPTED BY: GRANTEE: CITY OF HILLSBORO By: Michael Brown As Its: City Manager STATE OF OREGON ) ) ss. County of Washington ) This instrument was acknowledged before me on, 2018, by Michael Bropwn, who personally appeared before me, was identified by satisfactory evidence, and acknowledged that he executed the instrument in his authorized capacity as the City Manager of the City of Hillsboro, to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Notary Public State of Oregon APPROVED AS TO FORM: Christopher Crean, City Attorney [Signatures continued on following pages] Intake Facilities Easement Page 11 -

213 Exhibit 1 - Willamette Intake Facilities Easement ACCEPTED BY: GRANTEE: CITY OF SHERWOOD By: Lee Weislogel As Its: Mayor STATE OF OREGON ) ) ss. County of Washington ) This instrument was acknowledged before me on, 2018, by Krisanna Clark, who personally appeared before me, was identified by satisfactory evidence, and acknowledged that she executed the instrument in her authorized capacity as the Mayor of the City of Sherwood, to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Notary Public State of Oregon APPROVED AS TO FORM: Josh Soper, City Attorney [Signatures continued on following pages] Intake Facilities Easement Page 12 -

214 Exhibit 1 - Willamette Intake Facilities Easement ACCEPTED BY: GRANTEE: CITY OF TIGARD By: John Cook As Its: Mayor STATE OF OREGON ) ) ss. County of Washington ) This instrument was acknowledged before me on, 2018, by John Cook, who personally appeared before me, was identified by satisfactory evidence, and acknowledged that he executed the instrument in his authorized capacity as the Mayor of the City of Tigard, to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Notary Public State of Oregon APPROVED AS TO FORM: Shelby Rihala, City Attorney [Signatures continued on following page] Intake Facilities Easement Page 13 -

215 Exhibit 1 - Willamette Intake Facilities Easement ACCEPTED BY: GRANTEE: CITY OF WILSONVILLE By: Tim Knapp As Its: Mayor STATE OF OREGON ) ) ss. County of Clackamas ) This instrument was acknowledged before me on, 2018, by Tim Knapp, who personally appeared before me, was identified by satisfactory evidence, and acknowledged that he executed the instrument in his authorized capacity as the Mayor of the City of Wilsonville, to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Notary Public State of Oregon APPROVED AS TO FORM: Barbara A. Jacobson, City Attorney APPROVED AS TO LEGAL DESCRIPTION: Nancy J.T. Kraushaar, P.E., City Engineer City of Wilsonville, Oregon l:\dir\wr wtp\wgg wwsp\doc\esmt water pipeline~wlsv-tvwd (bj^) 11.0.doc Intake Facilities Easement Page 14 -

216 Exhibit 1 - Willamette Intake Facilities Easement EXHIBIT A PLACEHOLDER FOR LEGAL DESCRIPTION To be completed at a later date EXHIBIT A

217 DSL ORDINARY HIGH WATER LINE EL 74' (VERTICAL DATUM: NAVD 88) SECTION 10 ORDINARY HIGH WATER LINE EL 78.7 (VERTICAL DATUM: NAVD 88) N INTAKE FISH SCREEN IMPROVEMENTS EXISTING RAW WATER INTAKE PIPE EXHIBIT B WILLAMETTE INTAKE FACILITIES EASEMENT JANUARY 2018 scale: 50' Exhibit 1 - Willamette Intake Facilities Easement EXHIBIT B AIR RECEIVER TANK CONCEPTUAL SEISMIC 10' DIAMETER DRILLED SHAFT (TYP) CONCEPTUAL SEISMIC 4' DIAMETER TANGENT PILE WALL 5'-0" 5'-0" 5'-0" 5'-0" 5'-0" 5'-0" CONCEPTUAL SEISMIC JET GROUT BLOCK EXISTING CAISSON EXISTING RAW WATER PUMP STATION (TO BE MODIFIED) EASEMENT EXISTING INFRASTRUCTURE NEW WILLAMETTE INTAKE FACILITIES INFRASTRUCTURE SYSTEM SEPARATION AREA NOTES: 1) EXHIBIT B IS A GENERAL LAYOUT DESCRIPTION BASED ON PRELIMINARY DESIGN CONCEPTS, BUT IS SUBJECT TO FINAL APPROVAL AT THE TIME EXHIBIT A IS GENERATED AND APPROVED. 2) THE SYSTEM SEPARATION POINT IS LOCATED AT THE POINT WITHIN SYSTEM SEPARATION AREA THAT THE RAW WATER ENTERS THE RAW WATER PUMPS. 3) THERE ARE ITEMS SUCH AS PUMPS AND ASSOCIATED MECHANICAL AND ELECTRICAL EQUIPMENT THAT ARE LOCATED WITHIN THE SYSTEM SEPARATION AREA THAT ARE NOT PART OF THE WILLAMETTE INTAKE FACILITIES EASEMENT.

218 EXHIBIT C Exhibit 1 - Willamette Intake Facilities Easement STATE OF OREGON Division of State Lands PIPEliNE EASEMENT NO EA The STATE OF OREGON, by and through its Division of State Lands, GRANTOR, for and in consideration of Two Hundred and Fifty Dollars and no cent ($250.00), hereby grants to City of Wilsonville, GRANTEE, an easement and right to construct, maintain, operate and replace a water intake structure and pipeline in, over, upon, and across the State-owned submerged and submersible land of the Willamette River, in Clackamas County, Oregon, described as follows: That portion of the following described land being below the Ordinary Low Water line as defined by elevation 55.0 feet above mean sea level, NGVD 1929, and being described as follows: A strip of land, variable in width located within the Southwest one-quarter of Section 23, Township 3 South, Range I West, Willamette Meridian, City of Wilsonvillie, Clackamas County, Oregon. The centerline of said strip being described as commencing at the Northwest corner of said Section 23, Township 3 South, Range 1 West, Willamette Meridian, from which the North one-quarter corner of said Section 23 bears South East, a distance of feet; thence South East, a distance of feet to the TRUE POINT OF BEGINNING; thence South East, a distance of 230 feet more or less to the said Ordinary Low Water line; thence continuing South East, a distance of feet to the terminus of said centerline. The width of said strip East of said centerline being 12 feet measured at right angles to said centerline from the point of beginning to its terminus. The width of said strip West of said centerline being 12 feet measured at right angles to said centerline from the point of beginning to a point 28 feet from its terminus; varying in width by straight line from 12 feet at 28 feet from the terminus to 17 feet at 14 feet from its terminus; varying in width by straight line from 17 feet at 14 feet from its terminus to 12 feet at the terminus. Said strip of land encompassing 2,571 square feet or 0.06 acres, more or less, and as shown on the attached Exhibit A. STATE TO CITY OF WILSONVILLE Willamette River Page 1 of 3

219 EXHIBIT C Exhibit 1 - Willamette Intake Facilities Easement TO HAVE AND TO HOLD the same unto GRANTEE for 40 years, subject to the following conditions: 1. Construction in navigable waters shall conform to standards and specifications set by the U.S. Army Corps of Engineers or the U.S. Coast Guard for this Project. 2. The bed and banks of the waterway shall be restored to a condition acceptable to the GRANTOR as soon as construction or maintenance is completed. 3. Any blasting which may be necessary in the construction of the pipeline shall be performed according to the laws of the State. 4. GRANTOR reserves the right to lease or otherwise utilize the State-owned lands within the granted area hereinabove described in a manner and for uses that will not be incompatible with the primary use for which this easement is granted. 5. GRANTOR shall have the right to stop operation of the pipeline for noncompliance with the conditions of this easement or any lawful requirement by a regulatory agency of this State. 6. GRANTEE agrees to defend and hold GRANTOR harmless from any and all claims suffered or alleged to be suffered on the promises. Further, GRANTEE shall be responsible for the payment of any fines or penalties charged against the premises as a result of GRANTEE s action in not complying with laws or regulations affecting the premises. 7. If the facility for which this easement is granted is not used for a period of five (5) consecutive years, this easement may be terminated by written notice from GRANTOR to GRANTEE at its last known address. Upon termination, GRANTEE will have 90 days to remove the pipeline and appurtenances from the State-owned lands. 8. Nothing in this document may be construed as permission, except during construction or maintenance periods, to GRANTEE to interfere with navigation or reduce the public s rights to the free and unimpeded use of the navigable waters of the State of Oregon within the boundaries of this easement; provided, however, that to the extent necessary to facilitate construction and maintenance of these facilities, GRANTEE mat so interfere, but shall keep such interference to an absolute minimum. 9. GRANTEE shall pay all assessments that may be legally charged on public lands which are levied against the property subject to this easement, whether or not such assessments have been levied against the leasehold or STATE by the assessing agency. 10. GRANTEE shall use the property subject to this easement only in a manner, or for such purposes, that assure fair and nondiscriminatory treatment or all persons STATE TO CITY OF WILSONVILLE WIIamette River Page 2 of 3

220 EXHIBIT C Exhibit 1 - Willamette Intake Facilities Easement without respect to race, creed, color, religion, handicap, disability, age, gender or national origin. This easement does not convey an estate in fee simple of the lands used for a rightof-way. This grant is for an easement only, and title remains in the State of Oregon. WITNESS the seal of the Division of State Lands affixed this i.? day of STATE OF OREGON, aettng by and through its Division of State Lands. \ Stephe J. Purd STATE OF Oregon ) ss County of Marion ) The foregoing instrument was acknowledged before me this )7 day of 2000, by Stephen J. Purchase, the Assistant Director (title) of the Division of Ske Lands. Signature My Commission Expires 4?, /J, 20(93 J:AllacmenAwestLASEA asement2267o-adoc OFFICIAL SEAL BETh SMITh NOTAFW PVRUC-OREGON GOMM1SFQN NO. 7C2Ø MY COMMJS$Io 2XPIHE$ SEPT. 1 STATE TO CITY OF WILSONVILLE Wiflamette River Page 3 of 3

221 EXHIBIT C Exhibit 1 - Willamette Intake Facilities Easement EXHIBIT TO_ACCOMPANY DESCRIPTION Water hztke Easement SW P Section 3, Towzzsh(p 9 Sout4 Raage 1 West, WJlJameite Henthw, Chj of Wilsonwile, Clackalna5 Counzv Oregon SECTION S = Y 263L I ONE-QUARTER CORNER LA....- Prepared for The CITY fl?( POINT OF BEGLVNTJVG1= Y= of WilSONVILLE Scale: 1 SO AREA ABOVE ELFVA 270N 55 FEET BEARiNGS ARE BASED ON OREGON COORDINATE SYSTEM, NORTH ZONE PRWA 7E SURVEY NZIBE& CLACKAM4S C0t1147 Y SURVEY RECORDS ORDiNARY LOW WA TEi LZTIE AT ELEVATION 55 FEET ABOVE MEAN SEA LEVEL, NGVD = Y 7674fl / 3 / Prepared by DEHAAS & ASSOCIATES, LVC. WILL4ME77 RIVER SLUTE 300 A.G.C. CEER W COMr*fERCE CIRCLE WILSOPIVILLE, OREGON PHOJVE. (503) AREA COVERED BY EASEMENT (503) CENTERL1?VE TERMINUS ii Øxr X= Y=

222 Exhibit 2 Willamette Intake Facilities Preliminary Design Drawings and Layouts Willamette Intake Facilities IGA Exhibit 2 Page 1

223 New, Existing, and Modified WIF Project Components The System Separation Point is located where the raw water enters the raw water pumps. 2

224 Existing intake screen and pipeline 3

225 Exhibit 3 Willamette Intake Facilities Capacity Ownership Allocations Description: Willamette Intake Facilities Capacity Ownership Entity Capacity (mgd) (1) Percent Wilsonville % Tualatin Valley Water District % Sherwood (2) % Tigard (3) % Hillsboro (3) % Beaverton (3) % Total % (1) Estimated capacity which will be evaluated through additional physical hydraulic modeling. (2) Includes existing ownership interest with allocation of increased intake capacity to 150 mgd and estimated capacity to be purchased from TVWD. (3) Estimated capacity to be purchased by each entity from TVWD. Willamette Intake Facilities Asset Values at Original (2002) Cost of Construction* Project Element Wilsonville TVWD Sherwood Total Screening $ 207,147 $ 466,082 $ 51,787 $ 725,016 Intake Pipe $ 228,029 $ 1,083,139 $ 57,007 $ 1,368,175 Wetwell $ 364,847 $ 1,733,021 $ 91,212 $ 2,189,079 Pump Station Building $ 233,834 $ 1,110,709 $ 58,458 $ 1,403,001 Total $ 1,033,857 $ 4,392,950 $ 258,464 $ 5,685,271 *Notes: (1) Original cost shares based on 2002 original construction costs and do not include allocation of program management costs. (2) Pumps, Electrical Wire & Conduit, Electrical Equipment and the Raw Water Pipeline from the caisson to the Willamette River Water Treatment Plant were included as part of the original cost of construction in 2002, but are not included here since those assets are not included in the Willamette Intake Facilities. Methodology used to establish buy-in costs for each Party: Willamette Intake Facilities IGA Exhibit 3 Page 1

226 1. TVWD & Wilsonville identified TVWD s share of Original Direct Cost (2002) for each asset included in the purchase and sale 2. For each asset, added TVWD s share of Program Costs from original Wilsonville-TVWD construction (2002) to Original Direct Cost to establish TVWD Original Cost 3. Subtracted depreciation from TVWD Original Cost to establish TVWD Book Value 4. Added TVWD Cost of Capital (from 2002 to 2016 at 4% per year) to TVWD Book Value to establish TVWD Asset Offer Price 5. Added one-time Administrative Cost (3% of Asset Offer Price) to TVWD Asset Offer Price to establish Buy-in Offer Price 6. Calculated cost per MGD of Buy-in Offer Price based on TVWD available capacity of 59.7 MGD to establish Buy-in Offer Unit Price 7. For each asset being purchased by each Party, multiplied the Buy-in Unit Price times the capacity being purchased by the party to establish Buy-in Offer Price by Party by asset 8. For each party, totaled the Party s Buy-in Offer Price for all assets being purchased Resulting Capacity and Cost of Purchase for WIF Assets Acquired from TVWD* Acquired Capacity (MGD) from TVWD by Party by Asset Project Element Wilsonville TVWD Sherwood Tigard Tualatin Hillsboro Beaverton Total Screening Intake Pipe Wetwell Pump Station Building Cost of Purchase ($) from TVWD by Party by Asset Project Element Wilsonville TVWD Sherwood Tigard Tualatin Hillsboro Beaverton Total Screening $ - $ - $ - $ - $ - $ - $ - $ - Intake Pipe $ - $ - $ 50,462 $ 219,399 $ - $ 529,482 $ 73,133 $ 872,476 Wetwell $ - $ - $ 80,739 $ 351,038 $ - $ 847,171 $ 117,013 $ 1,395,961 Pump Station Building $ - $ - $ 41,355 $ 179,802 $ - $ 433,923 $ 59,934 $ 715,014 Total $ - $ - $ 172,555 $ 750,239 $ - $ 1,810,577 $ 250,080 $ 2,983,451 *Notes: 1. Raw water Pumps, Electrical Wire & Conduit, Electrical Equipment, and Raw Water Pipeline are not WIF assets and transfers of Raw Water Pipeline capacity are covered under separate agreements. 2. Wilsonville acquired 5 MGD of capacity in existing Raw Water Pipeline to the WRWTP from TVWD under separate agreement. 3. Sherwood acquired 4.7 MGD of capacity in existing Raw Water Pipeline to the WRWTP from TVWD under a separate agreement. 4. Tigard will not acquire capacity in the existing Raw Water Pipeline to the WRWTP or the future WWSS at this time. Tigard will conduct planning in the future to determine if Tigard will use capacity from the WWSS system or from the WRWTP Willamette Intake Facilities IGA Exhibit 3 Page 2

227 system, in which case Tigard will need to obtain Raw Water Pipeline capacity from TVWD and/or capacity in the WWSS. Willamette Intake Facilities Seismic and Facilities Improvements (1) Location Year Cost Wilsonville Tualatin Valley Water District Sherwood Tigard Hillsboro Beaverton Total: (1) To be updated after project completion with actual design and construction costs. Willamette Intake Facilities IGA Exhibit 3 Page 3

228 Exhibit 4 Real Property Description: The Real Property currently owned by Wilsonville and TVWD upon which the Willamette Intake Facilities and appurtenances are located are described in Attachment 1, Real Property Legal Description and Map, and Attachment 2, Special Warranty Deed. Willamette Intake Facilities IGA Exhibit 4 Page 1

229 Willamette Intake Facilities IGA Exhibit 4 Attachment 1 Exhibt 4 Attachment 1

230 Willamette Intake Facilities IGA Exhibit 4 Attachment 1 Exhibt 4 Attachment 1

231 Willamette Intake Facilities IGA Exhibit 4 Attachment 1 Exhibt 4 Attachment 1

232 Exhibit 4 Attachment 2 Willamette Intake Facilities IGA Exhibit 4 Attachment 2

233 Exhibit 4 Attachment 2 Willamette Intake Facilities IGA Exhibit 4 Attachment 2

234 Exhibit 4 Attachment 2 Willamette Intake Facilities IGA Exhibit 4 Attachment 2

235 WATER RIGHTS AT WILLAMETTE INTAKE FACILITIES POINT OF DIVERSION EXHIBIT 5 - Water Rights Authorized for Use at Willamette Intake Facilities Water Right Permits and Certificates Authorized by the Oregon Water Resources Department Entity Name on Water Right Application Permit Certificate Transfer or Permit Amendment Priority Date Type of Beneficial Use Authorized Rate (cfs) Authorized Date for Completion Conditions Measuring device required Fish screen required A 60-day waiting period is required between WMCP approval and diversion of water for the first diversion and each increment of green light water for each water supplier. Willamette River Water Coalition S S N/A T June 19, 1973 Municipal & Industrial October 1, 2047 WMCP provisions apply to additional future municipal water suppliers using water under permit under certain conditions. WRWC member Sherwood has access to up to 23 cfs based on last WMCP approval. TVWD has access to up to 80.1 cfs following approval of its most recent updated WMCP. Fish persistence conditions. Proportional reduction based on target flows and the portion of permit to which permittee has legal access. Reduction is capped at 20% during April, May and June. City of Wilsonville S S N/A T-8444 March 27, 1974 Municipal 30.0 October 1, 2042 Measuring device required Fish screen required City of Beaverton S S N/A - March 11, 2014 Municipal 33.7 May 4, 2035 Measuring device and water use reporting are required Fish screen required Diversion of water is prohibited at times when the ODFW recommended flow targets at the Salem gage are not met. Willamette Intake Facilities added as a point of diversion through a permit amendment City of Hillsboro S S N/A T December 6, 1976 Municipal 56 October 1, 2086 Conditions from permit amendment require measurement device and fish screen. Fish persistence conditions. Proportional reduction based on target flows and permit s maximum authorized rate; capped at 20% year-round. Approval of a WMCP is required to obtain access to water under the permit. WILLAMETTE INTAKE FACILITIES IGA EXHIBIT 5 PAGE 1

236 Exhibit 6 Organizational Structure Description: This Exhibit sets forth the Organizational Structure for the Willamette Intake Facilities Commission. Board of Commissioners 1 Managing Agency 2, 3 WIF Operator Management Committee 4, 5 Operations Committee 6 Finance Committee 6 Other Committees 6 Notes: 1. Appointed by governing bodies of each Party 2. Provides its and Management Committee s recommendations to Board 3. Provides support to and consults with all committees 4. Provides recommendations to Managing Agency to be forwarded to the Board 5. Serve as liaisons to Parties governing bodies 6. Provides recommendations to Management Committee Willamette Intake Facilities IGA Exhibit 6 Page 1

237 Exhibit 7 Willamette Intake Facilities Managing Agency Initial Management Plan Description: This Exhibit sets forth the Managing Agency Interim Term Plan under Section 5 of the Willamette Intake Facilities Intergovernmental Agreement (Agreement). 1. Designation of Interim Managing Agency 1.1. TVWD is designated as the Interim Managing Agency under Section 5 until June 30, In 2029, the Commission will complete a performance review of the Managing Agency and will decide whether to initiate the selection process under Section 6.1, Subsequent Appointment of Managing Agency, or continue with TVWD without engaging in the described process. TVWD will designate General Manager that will have primary responsibility for reporting to the Commission. 2. Duties of Interim Managing Agency 2.1. TVWD shall have all duties and powers of the Managing Agency under Section 6, except as provided in Paragraphs 3.0 and 4.0 of this Exhibit. 3. Interim Operations Management Until Wilsonville and TVWD have approved an operations contract extension with Veolia through June 30, 2022 for the Willamette River Water Treatment Plant. The scope of work for this contract includes operation of the Willamette Intake Facilities. Upon execution of this Agreement by the parties, the Commission delegates authority to Wilsonville, through its own forces or through the operations contract, to manage daily operations and operational coordination of the Intake Facilities to: Assure delivery of water to the WRWTP for the benefit of Wilsonville and Sherwood; and Assure effective coordination with the design and construction of improvements, modifications, and expansion of the Intake Facilities and connection to a new WWSS transmission pipeline Prior to expiration of this contract extension, the Parties will cooperate in conducting an evaluation of performance under the contract and will coordinate to identify planned activities of all Parties relating to the Intake Facilities during the period July 1, 2022 to June 30, Based on that coordination, the Management Committee will recommend to Wilsonville terms and activities that should be addressed in a contract extension or operations protocols for the period July 1, 2022 through June 30, Interim Operations Management from 2022 to For the period of July 1, 2022 to June 30, 2026, the Commission delegates authority to Wilsonville, through its own forces or through an operations contract, to manage daily operations and operational coordination of the Intake Facilities. Thereafter, the Commission shall determine who will manage the operations of the Intake Facilities and may either delegate this responsibility to the Managing Agency or to a Party or contractor. Willamette Intake Facilities IGA Exhibit 7 Page 1

238 5. Wilsonville covenants that it will do the following during the Interim Operations Management periods: 5.1. Daily operations and operational coordination to supply water to the existing WRWTP; 5.2. Timely and cooperative coordination with TVWD (or its designee, Willamette Water Supply Program staff) in the construction of the expansion of the Intake Facilities and the WWSS transmission pipeline; 5.3. Timely and cooperative coordination with TVWD (or its designee, Willamette Water Supply Program staff) of Wilsonville/Sherwood operations and the startup and commissioning of the expansion of the Intake Facilities during calendar year 2025; 5.4. Best efforts to effect transition of all intake operations to the Commission and facilitate assumption of operational duties to the Party designated by the Board on or before June 30, Repairs to Existing Intake Facility Assets Prior to June 30, Wilsonville has identified that there may be potential repairs required to the intake pipe, caisson, sparge system, and grout pipe joints in order to repair maintain and preserve the Intake Facilities. Any such repair costs (less any cost for sediment removal which shall only be paid by those actually drawing water through the Intake Facilities, currently Wilsonville and Sherwood), shall be shared by Wilsonville, TVWD, Sherwood, Hillsboro, Tigard and Beaverton in proportion to Intake Facilities Capacity ownership. Wilsonville will evaluate the condition of the Intake Facility when the sediment clean-out occurs, scheduled for Fiscal Year If the need for any repairs is identified, Wilsonville will work with the Willamette Water Supply Program to incorporate those repairs into the expansion of the Intake Facilities, managed by TVWD, to achieve construction coordination and cost savings. If Wilsonville discovers any repairs that it deems must be made before the expansion of the Intake Facilities is ready for construction, including any emergency repairs, Wilsonville will notify the Managing Agency about the repairs and may proceed independent of the expansion of the Intake Facilities. Wilsonville will follow all public contracting rules in making any such repairs and will invoice the Managing Agency the actual costs of any such required repairs. Wilsonville and TVWD will coordinate the Intake Facility expansion and any other Intake Facility repairs so that the making of the repairs and expansion of the Intake Facility will not interfere with or adversely impact the expansion of the Intake Facilities or the WRWTP. 7. Interim Fee 7.1. TVWD, as the initial Managing Agency, will prepare a work plan and associated cost estimate for the Fiscal Year budget for Commission administration responsibilities. Budgets for subsequent years will be proposed by TVWD and will be subject to review by the Parties and will require approval by the Board, as provided in this Agreement Wilsonville elects not to charge an Interim Operations Fee to the Commission. Willamette Intake Facilities IGA Exhibit 7 Page 2

239 Exhibit 8 Willamette Intake Facilities Budget Calendar Description: Annual Proposed Budget Submission and Calendar The Board shall adopt a budget for its operations and capital improvements for each Fiscal Year. The Managing Agency shall annually prepare a budget for administration, operations, and capital improvements in coordination with the appropriate committees representing the Parties as described in Section 7 of this Agreement. The budget review process shall follow the following schedule listed below. Budget Deliverable Preliminary capital improvement project list Annual Submission Date December 15 Party Receiving Budget Operations Committee Preliminary budget January 5 Operations and Finance Committees Draft budget February 15 Management Committee Proposed budget March 31 Board The proposed budget for review shall be submitted with the proposed annual work plan, associated budget narratives, project descriptions, and budget summary spreadsheets for each level of Committee and Board review. Willamette Intake Facilities IGA Exhibit 8 Page 1

240 Exhibit 9 Willamette Intake Facilities Interim Financial Procedures Description: The Willamette Intake Facilities Commission (Commission) is a joint venture of the cities of Beaverton, Hillsboro, Tigard, Sherwood, and Wilsonville and the Tualatin Valley Water District. The Commission owns and operates water intake facilities for the benefit of the Parties to the Willamette Intake Facilities (WIF) Agreement. This Exhibit establishes the interim financial procedures to be followed by the Commission as it undertakes its activities as described in Exhibit 7 to the WIF Agreement. The City of Wilsonville operates the current WIF facilities and those operations are not included within the interim financial procedures. These interim financial procedures consist of three sections. Each is described below. 1. Elements of Financial Procedures: a) Establishing Rates and Charges This section outlines the methodology the Commission will use to set rates and charges to recover the cost of operating the Commission. b) Accounting and Financial Reporting This section outlines the accounting and financial procedures that the Commission and its managing agency will follow. 2. Establishing Rates and Charges: a) Rate Setting Process Each Party s proportionate share of the expenditures of the Commission, shall be estimated by the Commission, and set forth in the Commission s annual budget. b) Quarterly Payments Each Party shall make quarterly payments to the Commission for operations in accordance with the IGA. i. Commission Expenditures Each Party shall pay for its share of the Commission s expenditure quarterly based on the formulas described below. ii. Allocation of Expenditures for Administration Expenditures related to administration of the Commission will be allocated among the Parties using the following formula: Twenty-five percent of the expenditures of the Commission will be divided evenly among the Parties; and Willamette Intake Facilities IGA Exhibit 9 Page 1

241 the remaining 75 percent will be divided among the Parties according to each Party s percentage share of the Capacity Ownership in the WIF facilities. iii. iv. Allocation of Expenditures for Operations, Maintenance, and Repair Expenditures by the WIF for Operations, Maintenance, and Repair of the facilities shall be identified by the Operations and Finance Committees along with an allocation methodology. Operations, Maintenance, and Repair expenditures that are the result of use of the facilities will be allocated based on each Party s proportionate use of the WIF facilities. Operations, Maintenance, and Repair expenditures that are unrelated to use will be allocated based on each Party s proportionate ownership of the WIF facilities. If an expenditure serves multiple purposes, jointly, the Operations and Finance Committees shall divide expenditures into both use-based allocations and ownership-based allocations in a fair and equitable manner. If the matter cannot be resolved by the joint Operations and Finance Committees, the matter shall be referred to the Management Committee for resolution. Invoicing The Commission shall invoice the Parties for the prior quarter s expenditures within thirty days of the end of the preceding quarter. Payment is due to the Commission thirty days after receipt of the invoice. 3. Accounting and Financial Reporting: a) Periodic Financial Reports The Commission shall maintain an independent budget control procedure and provide budget reports at least quarterly to each of the Parties not later than 30 days after the end of each quarter. This report shall show expenditures and receipts by budget item for each transaction through the last working day of the preceding quarter. b) Accounting Policies i. Fiscal Year The Commission shall operate on a fiscal year basis from July 1 through June 30 of the subsequent year. ii. Accounting Standards The Managing Agency shall use generally accepted accounting principles to account for the transactions of the Commission. The Commission shall be treated as an enterprise fund for accounting purposes and report its finances on an accrual basis. Willamette Intake Facilities IGA Exhibit 9 Page 2

242 iii. iv. Indirect Cost Allocations The Managing Agency shall maintain an indirect cost allocation plan that conforms to industry standards for allocating the indirect overhead costs of the entity. The Managing Agency shall submit the indirect cost allocation plan annually with the budget. Working Capital The Managing Agency will provide working capital for the Commission by paying the Commission s bills when due and receiving payments from the Partners within 30 days after invoicing. The Managing Agency shall adopt accounting procedures to determine the cost of providing the Commission working capital and shall be entitled to charge the Parties a proportionate share of the cost of providing the working capital. The cost of providing the Commission s working capital shall be based on the forgone interest earnings the Managing Agency could have earned at its then-current rate of earnings on its portfolio of investments. Working capital, and the rate, will be listed separately on the invoices. Willamette Intake Facilities IGA Exhibit 9 Page 3

243 Firm Lease Formula: Interruptible Lease Formula: Surplus Capacity Pool Formula: Exhibit 10 Willamette Intake Facilities Lease Payment Formulas The lease payment for Willamette Intake Facilities capacity shall be determined by utilizing the depreciated replacement cost value of the asset amorized over the remaining book depreciation life of the asset at an interest rate equal to the Municipal Bond Index rate at the year of the lease payment, Engineering News Record (ENR) index rate, or a comparible index. The Commission may modify the method used to calculate lease payments by resolution of the Board. A firm lease rate example is shown in the Attachment 1 to this Exhibit. The interruptible lease payment for the Willamette Intake Facilities shall be 80 percent of the firm lease rate formula minus the daily rate amount that the capacity was withdrawn from the Lessee back to the Lessor. The interruptible lease shall have a minimum term of 12 months. The lease payment shall be calculated at the start of the lease term using 80 percent of the firm lease as determined by the firm lease formula. The interruptible lease cost shall be recalculated at the end of the lease term. If the Lessor notified the Commission that its interruptible capacity was not available for any portion of that lease year, the interruptible lease cost would be reduced by 1/365 of the cost for each day that it withdrew the interruptible capacity. If the Lessor agency did not exercise the right to withdraw capacity during the lease year, then full interruptible lease cost would apply. Interruptible Lease Rate = 80% * (Firm Lease Rate for 1 year) [(Number of Days Withdrawn/365 * (80% * Firm Lease Rate for 1 Year)] The protocols for Surplus Capacity Pool payment for the Willamette Intake Facilities shall be determined using the firm lease rate formula calculated with a daily rate and multiplied by a factor of two. For each day that the Surplus Capacity Pool capacity was used, the Lessee of the pool will be required to pay that daily rate. The Surplus Capacity Pool capacity requests and payment procedures will be developed and determined by the Managing Agency. Surplus Pool Daily Rate = (1/365) * Firm Lease Rate for 1 year * 2 Willamette Intake Facilities IGA Exhibit 10 Page 1

244 Exhibit 10 - Attachment 1 Willamette Intake Facilities Commission Firm Lease Payment Example Assumptions: Year of Construction 2000 Cost of Constuction $ 19,683,536 Capacity Useful Life 150 MGD 50 Years First Year of Lease 2026 Municipal Bond Index (Year of Lease) 4.93% ENR Cost Construction Index-Seattle (Month/Year Construction was Complete) ENR Cost Construction Index-Seattle-December Prior to Mo/Year of Lease-Update for all assets 7, , Lease Calculation: Replacement Cost (Capacity*ENR CCI-Seattle Construction Complete/ENR CCI-Seattle-Dec prior to lease) Accumulated Depreciation (Replacement cost/useful Life*(First Year of Lease-Year of Construction) $ 19,683,536 10,235,439 Depreciated Replacement Cost $ 9,448,097 Lease Payment $ 680,057 Annual Cost $ 4,534 Per MGD Willamette Intake Facilities IGA Exhibit 10 Attachment 1 Page 1

245 EXHIBIT 10 ATTACHMENT 2 SAMPLE LEASE This Willamette Intake Facilities Lease (Agreement) is entered into this day of, 20 between, located in Washington County, Oregon (hereinafter ), and, a located in Washington County, Oregon. Recital: WHEREAS, the parties to this Agreement are members of the Willamette Intake Facilities Commission (Commission), an intergovernmental entity formed pursuant to ORS Chapter 190 by agreement dated, and amended at various and sundry times since, including the addition of new members; WHEREAS, the parties of the Commission have into a Willamette Intake Facilities Agreement dated, 20 ; WHEREAS, the Willamette Intake Facilities Agreement, among other things, provides for a party to lease all or a portion of its interest in a component(s) of the Intake Facilities as defined therein, including water rights and supplemental water rights, to another party, upon such terms and conditions as approved by the Commission; WHEREAS, the parties hereto have agreed that will lease to upon the terms and conditions set forth herein and that the Commission has approved the terms and conditions as evidenced by signature below and being fully advised NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: 1. Intake Facilities Capacity. agrees to provide, and agrees to purchase, million gallons per day in Willamette Intake Facilities capacity each fiscal year during the life of this Agreement, unless modified by other provisions of this Agreement, for an initial -year period beginning, through, subject to renewal, extension or termination on the terms and conditions as set forth in this Agreement. If a change in lease is anticipated because (Lessor s) demands have increased, the parties will negotiate the terms of such change. 2. Connections, Measurement and Meters. The Commission or the leasing Party as appropriate and necessary will provide and maintain meters, valves and controls, and measurement devices, in proper order for measurement of Intake Facilities capacity used and connections at the following locations: Willamette Intake Facilities IGA Exhibit 10 Attachment 2 Page 1

246 Meters or measurement devices shall be tested and calibrated biennially by the Commission or an independent tester qualified to do such work. A copy of the test report shall be forwarded to the parties hereto. 3. Rates. shall be billed monthly for the total leased Intake Facilities capacity under this Agreement, and payment shall be made within 30 days of billing. A late fee of 1.5 percent per month shall be assessed for any unpaid balance. will pay monthly to for all leased asset capacity, at rates as described in Exhibit X of the Willamette Intake Facilities Agreement. Inasmuch as has contracted to lease an amount of capacity each year, agrees to pay the greater of: the amount calculated based on the actual volume of water passing through the meter(s) described above; or the amount calculated based on the minimum lease amount. This calculation will be done annually after the end of the year. 4. Term. This Agreement shall be for -years, commencing with execution of this Agreement and ending years thereafter. [ALTERNATIVE A] agrees to notify in writing as soon as practicable if wishes to extend the term of this Agreement, but not later than one year prior to the termination of this Agreement. The parties shall meet to determine if extension or renewal and the terms thereof is mutually agreeable. [ALTERNATIVE B] shall have the right to renew this Agreement for successive periods of years, each by giving written notice thereof not less than one year prior to the expiration of this Agreement, whichever shall first occur. The terms and conditions of this Lease shall continue in any renewal term. 5. Notices. Notices shall be deemed sufficient if deposited in the United States mail, postage prepaid, to the following addresses: 6. Severability. In the event any provisions of this Agreement shall be held to be impossible, invalid or unenforceable, the remaining provisions shall be valid and binding upon the parties hereto. One or more waivers by either party of any provision, term, condition or covenant, shall not be construed by the other party as a waiver of subsequent breach of the same by the other party. Both parties have fully participated in negotiating and writing this Agreement; therefore, it Willamette Intake Facilities IGA Exhibit 10 Attachment 2 Page 2

247 shall not be construed against the party preparing it, but shall be construed as if both parties have prepared it. 7. Acts of God, Emergency, Etc. Performance or delay in performance of the obligations stated in this Agreement shall be reasonably excused when performance or timely performance is impossible or impracticable because of the occurrence of unforeseeable events such as emergency, catastrophe, disaster, labor disputes, or acts of God. 8. Disputes: Attorney s Fees. If a dispute arises between the parties regarding breach of this Lease, the dispute resolution process in Section of the Agreement shall be utilized. 9. Full Agreement. This document is the entire, final and complete agreement of the parties pertaining to lease of Intake Facilities to, and supersedes and replaces all prior or existing written and oral agreements between the parties or their representatives. 10. Service Reduction in Case of Emergency. If a general emergency or water shortage requires restrictions on the delivery of raw water, general restrictions placed upon deliveries to shall be determined by the Curtailment Plan. By: By: APPROVED AS TO FORM AND CONTENT WILLAMETTE INTAKE FACILITIES COMMISSION By: Willamette Intake Facilities IGA Exhibit 10 Attachment 2 Page 3

248 Exhibit 11 Willamette Intake Facilities Intake Improvements Cost Allocation Summary Preliminary Estimate - June 2017 Description: The following is a summary of the cost estimate for the Intake Facilities improvements required to achieve a Capacity of 150 MGD. The cost estimates are based on preliminary design and will be refined as design progresses. Attachment 1 includes the preliminary design drawings and layout of the Intake Facilities. Assumptions 1. Costs based on WWSP cost estimates presented to WGG on 5/25/17 2. Assumes total expanded capacity of intake is 150 MGD, including: Feature Capacity (MGD) Existing Screen Capacity 70 Additional Screen Capacity resulting from expansion 80 Existing Hydraulic Capacity of intake pipe & caisson 120 Additional Hydraulic Capacity of intake pipe & caisson from 30 expansion 3. Assumes permitting and mitigation costs = $1.257 million (WWSP, 6/9/17) 4. Assumes screen cost for 150 MGD = $4.65 million includes intake screen replacement to 150 MGD, intake screen protection, and upgrades to air burst system (WWSP, 5/24/17) 5. Assumes seismic upgrade for the Intake Facilities = $9.36 million includes piles and jet grout for seismic stability of existing caisson structure (only); does not include seismic improvements for WWSS improvements (WWSP, 5/24/17) 6. Value of remaining useful life of existing screen = $7,876 per MGD (Wilsonville, March 2017) Anticipated Cost Allocations Note: Costs and cost allocations are based on capacity shares and preliminary cost estimates as of current date and are subject to change. Final cost shares will be updated based on final capacity shares and actual costs for proposed improvements using cost allocation methodology as detailed below. Partner Capacity (MGD) Capacity Share (%) Permitting (1) Cost Allocations ($) Screen & Air Burst WIF Seismic Upgrades (9) Total Wilsonville % $ 75,000 $ 50,000 (2) $ - $ 125,000 (3) TVWD (4,8) % $ 393,786 $ 955,000 (5) $ 4,487,458 $ 5,836,244 Sherwood (6) % $ 77,567 $ 160,000 (7) $ 605,280 $ 842,847 Tigard (8) % $ 189,674 $ 930,160 $ 1,138,949 $ 2,258,783 Willamette Intake Facilities IGA Exhibit 11 Page 1

249 Hillsboro (8) % $ 457,748 $ 2,244,786 $ 2,748,663 $ 5,451,197 Beaverton (8) % $ 63,225 $ 310,053 $ 379,650 $ 752,928 Total % $ 1,257,000 $ 4,650,000 $ 9,360,000 $ 15,267,000 Footnotes for Cost Allocation Methodology Cost allocations are generally based on proportionate ownership shares subject to additional terms and conditions as noted below. 1. Permitting cost allocation assumes 50% of costs applied to new capacity (80 MGD) and 50% of costs applied to total capacity (150 MGD). 2. Wilsonville receives full credit equal to remaining undepreciated asset value of 20 MGD share of existing screen. 3. Wilsonville total cost cap for permitting, screen, air burst & seismic = $125, TVWD capacity share includes 56.5 MGD for demand and 2.6 MGD of capacity not allocated to other partners. 5. TVWD receives partial credit for remaining undepreciated asset value of 45 MGD share of existing screen. 6. Sherwood does not contribute toward Wilsonville s cost shares in excess of Wilsonville cost caps for permitting, screen, and seismic improvements. 7. Sherwood receives partial credit for remaining undepreciated asset value of 5 MGD share of existing screen. 8. TVWD, Tigard, Hillsboro and Beaverton costs include allocation, proportionate to capacity share, for Wilsonville s cost shares for permitting, screen, and seismic improvements in excess of Wilsonville cost caps. 9. Improvements for seismic stability of existing caisson structure and intake pipe only; does not include seismic improvements for WWSS improvements. Wilsonville cost share for seismic improvements = $0. TVWD, Tigard, Hillsboro and Beaverton - but not Sherwood - pay Wilsonville s cost share for seismic improvements. Willamette Intake Facilities IGA Exhibit 11 Page 2

250 Exhibit 12 Willamette Intake Facilities Insurance Requirements and Limits Description: The following insurance requirements and limits are necessary for the operations of the Willamette Intake Facilities (Intake Facilities) and shall be purchased and maintained at all times. The requirements will be reviewed and approved by the Board annually, and modified when necessary. 1. Insurance Requirements (a) The Managing Agency shall obtain and maintain at all times appropriate insurance coverage for the Intake Facilities on behalf of the Commission based on exposure. Where applicable, the insurance limit shall meet or exceed the corresponding monetary limit of the Oregon Tort Claims Act. For all other insurance, the insurance limits shall meet or exceed the corresponding limit or obligation established for a special government body under Oregon law. (b) The Managing Agency shall recommend the purchase of all necessary insurance to protect the interests of the Intake Facilities and the Commission. (c) The Board shall review and approve insurance coverage, limits and deductibles proposed by the Managing Agency. (d) The Commission, its members, officers, boards, agents and employees will be listed as additional insureds on all policies purchased by the Managing Agency for the Intake Facilities, and be listed on insurance policies required of the Commission of their contractors and consultants. 2. Summary Insurance Requirements and Limits: a) Property To include loss or damage to all types of property owned by the Commission due to perils such as fire, wind, theft, vandalism, malicious mischief, earthquake and flood, for the full insurable replacement-cost basis. (For earthquake and flood, a sublimit typical of the industry standard). Property coverage shall also include machinery breakdown coverage. Willamette Intake Facilities IGA Exhibit 12 Page 1

251 b) Commercial General Liability To include all major coverage including bodily injury, personal injury, property damage and wrongful acts. Coverage shall be provided for all XCU (explosion, collapse and all underground) hazards and shall be in the amount not less than $2,000,000 per occurrence and $4,000,000 general aggregate. c) Automobile Liability To include all owned, hired and non-owned vehicles of a combined single limit per occurrence shall not be less than $2,000,000. d) Workers Compensation and Employers Liability Workers' compensation coverage sufficient to meet statutory liability limits and Employers Liability of $1,000,000 for each accident, $1,000,000 for each bodily injury/disease and $1,000,000 for aggregate bodily injury/disease. e) Fidelity bond or Crime A fidelity bond or equivalent crime coverage in the amount not less than $500,000. f) Directors and Officers For the protection of all directors and officers of the Commission in the amount of not less than $1,000,000. g) Pollution Liability The Board may require the purchase of pollution liability coverage for any significant construction projects on the Intake Facilities or may require contractors to obtain pollution liability coverage for the Intake Facilities construction projects. Contractors policy shall name the Commission as an additional insured. Willamette Intake Facilities IGA Exhibit 12 Page 2

252 Exhibit 13 Existing Agreements Description: The following is a list of existing agreements between some or all of the Parties that affect or are affected by the Intake Facilities that are the subject of this Agreement. These related agreements are not superseded by this Agreement unless agreed to by the parties to those agreements. 1) Agreement Regarding Water Treatment Plant Design, Construction, Operation and Property Ownership ( 2000 Master Agreement ), dated July 6, 2000 and entered into by Wilsonville and TVWD 2) The Accord Agreement ( Accord ), dated June 19, 2001 and entered into by Wilsonville and TVWD 3) First Amendment to Agreement Regarding Water Treatment Plant Design, Construction, Operation, and Property Ownership, dated, 2018, entered into by TVWD and Wilsonville; 4) Operation and Maintenance Contract with Veolia Water North America-West LLC, dated July 1, 2017, as amended, entered into by TVWD and Wilsonville; 5) First Restated Intergovernmental Cooperative Agreement Continuing the Willamette River Water Coalition ( WRWC Agreement ), dated October 15, 2008 and entered into by TVWD, Sherwood, Tigard, and Tualatin 6) Sherwood and Tualatin Valley Water District Willamette River Water Treatment Plant Agreement ( Sherwood TVWD WRWTP Agreement ), dated December 27, 2006 and entered into by TVWD and Sherwood 7) Agreement for Design and Construction of the Willamette Water Supply Program ( WWSP Agreement ), dated June 16, 2015 and entered into by TVWD and Hillsboro 8) Agreement(s) for Transfer, Purchase and Sale of Intake Facilities, dated, 2018 and separate agreements entered into by TVWD and Beaverton, TVWD and Hillsboro, TVWD and Sherwood, TVWD and Tigard 9) City of Wilsonville and Tualatin Valley Water District Willamette Water Supply System Intake Facility Agreement, dated, 2018 and entered into by Wilsonville and TVWD Willamette Intake Facilities IGA Exhibit 13 Page 1

253 10) Ground Lease for the Raw Water Pipeline, dated, 2018, entered into by TVWD, Wilsonville, and Hillsboro. 11) Easement for Raw Water Pipe, dated, 2018, entered into by TVWD, Wilsonville, and Hillsboro. 12) Intake and Pipeline Easement No EA, dated July 13, 2000 and granted by the State of Oregon Division of State Lands to the City of Wilsonville. Willamette Intake Facilities IGA Exhibit 13 Page 2

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255 Link back to agenda 4A To: From: Board of Commissioners Clark Balfour, General Counsel Date: February 21, 2018 Subject: Willamette Intake Facilities Purchase and Sale Agreements Requested Action: Consider the following actions regarding the Willamette Intake Facilities: Adoption of a resolution approving the Agreement for Transfer, Purchase and Sale of the Willamette Intake Facilities Between the Tualatin Valley Water District and the City of Beaverton. Adoption of a resolution approving the Agreement for Transfer, Purchase and Sale of the Willamette Intake Facilities Between the Tualatin Valley Water District and the City of Hillsboro. Adoption of a resolution approving the Agreement for Transfer, Purchase and Sale of the Willamette Intake Facilities Between the Tualatin Valley Water District and the City of Sherwood. Adoption of a resolution approving the Agreement for Transfer, Purchase and Sale of the Willamette Intake Facilities Between the Tualatin Valley Water District and the City of Tigard. Key Concepts: The draft Willamette Intake Purchase and Sale Agreements (PSA) were provided to the Board at the November 7, 2017 work session. TVWD and Hillsboro, Beaverton, Sherwood and Tigard have reviewed the Agreements attached hereto to the corresponding resolutions and the Parties are now considering them for approval. This is a related agreement to the Willamette Intake Facilities Intergovernmental Agreement (WIF IGA). Adoption of each Resolution and Agreement is recommended. Background: TVWD, along with the above named entities and Wilsonville, negotiated the proposed WIF IGA to provide for ownership, design, construction, operation, maintenance, repair and replacement of the Willamette Intake Facilities at the existing Willamette River Water Treatment Plant (WRWTP). The WIF IGA provides for creation of an ORS Chapter 190 entity that would own and manage the WIF for the benefits of the existing WRWTP and the to be constructed Willamette Water Supply System Water Treatment Plant. One of the implementing agreements of the WIF IGA is for individual parties to purchase part of TVWD s existing intake facility capacity at the WRWTP and to participate in the cost of expansion of the WIF to achieve a design capacity of 150 million gallons per day. The Agreement between TVWD and each Party, along with an approving resolution, is attached. Approval of these proposed PSAs, the WIF IGA and

256 Page 2 of 2 February 21, 2018 Willamette Intake Facilities Purchase and Sale Agreements other related agreements are part of the overall project package and approval of all is necessary for any one agreement to be effective. Budget Impact: There are funds in the current budget for development of the PSAs and related agreements. TVWD will receive cash payments from each party for the value of the existing intake as described in each of the attached agreements. Funding for expansion of the WIF is part of the Willamette Water Supply Program budget and the WWSP will invoice each participating party for its proportionate share of the WIF improvements project. Staff Contact Information: Mark Knudson, PE; Chief Executive Officer; ; mark.knudson@tvwd.org Clark Balfour; General Counsel; ; clark.balfour@tvwd.org Attachments: Four proposed resolutions Management Staff Initials: Chief Executive Officer Customer Service Manager N/A Chief Engineer N/A IT Services Director N/A Chief Financial Officer Human Resources Director N/A General Counsel Water Supply Program Director

257 Link back to agenda RESOLUTION NO A RESOLUTION APPROVING THE AGREEMENT FOR TRANSFER, PURCHASE AND SALE OF THE WILLAMETTE INTAKE FACILITIES BETWEEN TUALATIN VALLEY WATER DISTRICT AND THE CITY OF BEAVERTON. WHEREAS, on or about July 6, 2000, the District and City of Wilsonville entered into the Agreement Regarding Water Treatment Plant Design, Construction Operation and Property Ownership for the Willamette River Water Treatment Plant as defined therein (2000 Agreement); and, WHEREAS, the Willamette River Water Treatment Plant (WRWTP) was constructed with District and Wilsonville owning the real property and assets in varying percentages; and, WHEREAS, Wilsonville has taken water from the WRWTP and, in 2006, the District sold a portion of its capacity to the City of Sherwood so that Sherwood could also take water from the WRWTP with the District anticipating it would take water at some future time; and, WHEREAS, the District and the City of Hillsboro have entered into an agreement to design, construct own and operate the Willamette Water Supply System (WWSS) which may include additional municipal water providers; and, WHEREAS, the WWSS will design and construct a new water treatment plant at a location in Washington County so that the District will most likely not draw water from the WRWTP; and, WHEREAS, the Water Intake Facility will be owned and governed by a separate Intergovernmental Agreement between District, Wilsonville, Hillsboro, Sherwood, Tigard and Beaverton that will provide for cost allocations for the purchase and sale of the existing intake and expansion thereof to approximately 150 million gallons per day as well as the ongoing operation, maintenance, repair and replacement of the intake facilities; and, WHEREAS, as a condition of participation in the WIF Agreement, District has required that Beaverton enter into the Agreement for Transfer, Purchase and Sale of the Willamette Facilities (Agreement), attached hereto as Exhibit 1 and incorporated by reference, that provides for purchase of a proportionate interest in the existing facilities and a commitment to participate in the permitting, design and construction of the expansion of the facilities to achieve a capacity of 150 million gallons per day and being fully advised. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE TUALATIN VALLEY WATER DISTRICT THAT: Section 1: The Agreement for Transfer, Purchase and Sale of the Willamette Intake Facilities between the City of Beaverton and Tualatin Valley Water District, attached hereto as Exhibit 1, is hereby approved. Section 2: The Chief Executive Officer is authorized to execute the Agreement. The Board recognizes that there may be edits and corrections to the final Agreement and the Chief Executive Officer is authorized to accept amendments and sign on behalf of the District so long as the Page 1 of 2

258 amendments do not substantially change the Agreement and such amendments are approved by General Counsel. Section 3: There are related agreements to this Agreement and the Chief Executive Officer is authorized to defer signature to this Agreement pending final approvals and signatures on any or all related documents as the Chief Executive Officer deems appropriate in his exercise of discretion and professional judgment. Approved and adopted at a regular meeting held on the 21 st day of February Richard Burke, President Dick Schmidt, Secretary Page 2 of 2

259 AGREEMENT FOR TRANSFER, PURCHASE AND SALE OF THE WILLAMETTE INTAKE FACILITIES BETWEEN TUALATIN VALLEY WATER DISTRICT AND THE CITY OF BEAVERTON EFFECTIVE MARCH 1, 2018 This is an Agreement for Transfer, Purchase and Sale of the Willamette Intake Facilities (Agreement) between the Tualatin Valley Water District (TVWD) and the City of Beaverton (Beaverton). RECITALS A. TVWD is a domestic water supply district organized under ORS Chapter 264, which distributes potable water to its water system users. B. Beaverton is a municipal corporation that operates a municipal water supply utility under ORS Chapter 225 to distribute potable water to its water system users. C. TVWD and the City of Wilsonville entered into the Agreement Regarding Water Treatment Plant Design, Construction, Operation and Property Ownership dated July 6, 2000 (2000 Master Agreement), the Accord Agreement dated June 19, 2001 (Accord Agreement) and the First Amendment to the 2000 Master Agreement dated, 2018 (First Amendment) to construct and operate intake facilities, pumps, a water treatment plant and certain transmission facilities upon real property jointly owned by them (Willamette River Water Treatment Plant or WRWTP Supply Facilities) for the purpose of supplying potable water to Wilsonville and providing a future supply to TVWD. The ownership interests in the real property and WRWTP Supply Facilities of TVWD and Wilsonville are specified in those agreements. D. TVWD and the City of Sherwood entered into an Agreement on December 27, 2006 (Sherwood TVWD WRWTP Agreement) for the purchase and sale of five (5) million gallons per day (MGD) of capacity in the WRWTP Supply Facilities. E. The WRWTP Supply Facilities include components referred to herein as Intake Facility assets or Intake Facilities, to wit: fish screens, intake pipe, protective bollards, caisson, pump station building, pipe, electrical conduit, instruments and controls and related appurtenances that convey raw water to the WRWTP. F. TVWD has received an offer from Beaverton dated March 20, 2017 to purchase a portion of TVWD s capacity ownership interest in the Intake Facility assets, for the purpose of providing Beaverton with a total of a 3.3 percent ownership capacity in the Intake Facilities or Five (5.0) MGD capacity in the Intake Facility, contingent upon, among other things, completion of capacity expansion improvements so that the Intake Facilities can deliver approximately 150 MGD. G. TVWD and Beaverton will become members of the Willamette Intake Facilities Commission (WIF Commission) established by the Willamette Intake Facilities Page 1 of 11

260 Intergovernmental Agreement (WIF Agreement) effective April 1, 2018, to govern management and operation of the Intake Facilities. H. According to the terms of the 2000 Master Agreement and Accord Agreement and in consideration of the terms and conditions of the First Amendment, Wilsonville has agreed to waive exercise of its Right of First Offer as to the ownership capacity for the 5.0 MGD capacity in the existing and expanded Intake Facilities conveyed to Beaverton under this Agreement. I. The Parties hereto wish to state the terms and conditions of transfer, purchase and sale of a portion of existing TVWD Intake Facilities capacity from TVWD to Beaverton and participation by Beaverton in the expansion and construction of Intake Facility improvements to obtain a total capacity of 150 MGD. NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: AGREEMENT Based on the foregoing Recitals and the mutual promises and obligations set forth herein, and other good and fair consideration, the sufficiency of which is hereby acknowledged, the Parties agree: 1. Effective Date. This agreement is effective as of March 1, Recitals. The Recitals above are incorporated and made part of this Agreement. 3. Intake Facilities. Intake Facilities shall mean the facilities used to withdraw and transmit water from the Willamette River to the Parties at the System Separation Point between the WRWTP and the WWSS WTP as defined in the WIF Agreement including the screens, intake pipe, wetwell, pump station building, pumps and associated electric and mechanical systems (e.g. wire, conduit, electrical devices and ventilation equipment). Intake Facilities includes both the existing Intake Facilities and the Intake Facilities after they are expanded and upgraded to the anticipated 150 MGD capacity. 4. Sale of Existing Intake Facility Capacity. TVWD hereby agrees to sell, transfer and assign, and Beaverton agrees to purchase, an amount of TVWD s capacity ownership interest in the Intake Facilities so that Beaverton will obtain an undivided 3.33 percent ownership interest as tenant in common to TVWD s portion of the capacity of the existing Intake Facilities set forth on Exhibit I, attached hereto and incorporated by reference. It is intended that when the existing Intake Facilities are expanded and modified as provided in Section 5, Beaverton will own 5.0 MGD of capacity in the expanded Intake Facilities. Accordingly, the sale and transfer of the existing Intake Facility capacity is expressly contingent upon the expansion and Page 2 of 11

261 upgrade of the Intake Facility to achieve the approximate 150 MGD capacity, subject to proportionate reduction based on actual capacity achieved as set forth in Section Expansion and Upgrade of Intake Facilities. 5.1 TVWD and Beaverton, as well as the cities of Sherwood, Tigard, Hillsboro and Wilsonville have executed or will execute the WIF Agreement as well as separate agreements with TVWD to provide for the permitting, design and construction of screens, intake pipe, protective bollards, building(s), pumps, electrical wire, conduit and equipment, instrumentation and controls and seismic improvements to achieve Intake Facilities approximate capacity of 150 MGD (Expansion Project). Upon completion of expansion, the ownership capacity of the Intake Facilities is expected to be: Entity Ownership Capacity (MGD) Ownership Interest (%) TVWD Wilsonville Sherwood Hillsboro Tigard Beaverton TOTAL Following completion of the Expansion Project, if the total capacity of the Intake Facilities is less than 150 MGD, all parties have agreed that the reduction shall be proportionately shared by all of the above Parties; except that in no event will TVWD s capacity share be reduced below 56.5 MGD nor will Wilsonville s and Sherwood s share be reduced below 20 MGD and 5 MGD respectively. If proportionate reductions are still necessary once these minimum thresholds are reached, the remaining parties will proportionately share in the additional reduction as provided in the WIF Agreement. 5.3 TVWD and Beaverton agree that the Expansion Project will be managed by TVWD as Managing Agency under the WIF Agreement unless the Parties later mutually agree upon a construction agreement for the Project. 6. Consideration. 6.1 On or before May 1, 2018, Beaverton shall pay TVWD $250,080 in return for a 3.33 percent (5.0 MGD) ownership interest in the capacity of the Intake Facilities as set forth on Exhibit I attached hereto and incorporated by reference. 6.2 In addition, Beaverton shall pay to TVWD through the Willamette Water Supply Program (WWSP) a proportionate share of actual costs incurred for permitting, acquiring and installing new screens, design and construction of seismic improvements, and all other improvements necessary to expand the Intake Facilities to 150 MGD at the estimated cost set forth on Exhibit I, attached hereto and incorporated by reference. These actual costs include costs expended to date and future costs for ongoing work to complete Page 3 of 11

262 the Expansion Project. As Managing Agency of the WIF Commission, TVWD will cause the WWSP staff to manage all aspects of the Expansion Project. 6.3 The Parties agree that the cumulative amounts described in paragraphs 6.1 and 6.2 above constitute full consideration (the Purchase Price) for Beaverton s 3.33 percent (5.0 MGD) ownership interest in the capacity of the Intake Facilities. If the Expansion Project achieves a maximum intake capacity in excess of 150 MGD, Beaverton is entitled to ownership of the proportionate increase in the capacity in excess of 5.0 MGD based on the Ownership Capacity table shown in Section 5.1 above. 6.4 The Purchase Price paid to TVWD under paragraphs 6.1 and 6.2 above entitle Beaverton s to 3.33 percent ownership interest in the capacity of the Intake Facilities with the expectation of realizing 5.0 MGD of capacity ownership. If the final approved design capacity of the expanded Intake Facilities is less than 150 MGD such that Beaverton s resulting capacity is less than 5.0 MGD, TVWD and Beaverton will renegotiate the cost shares of the purchase price based on the updated total capacity of the expanded Intake Facilities, following the same methodology used to calculate the proposed purchase price that assumed the total capacity of 150 MGD. If Beaverton s resulting capacity exceeds 5.0 MGD, TVWD is not entitled to an increase in the Purchase Price. 7. Payment. 7.1 TVWD will submit a monthly invoice to Beaverton for the City s proportionate share of Expansion Project costs incurred. The invoice may include costs incurred from previous months that were carried forward provided they are separately listed. 7.2 Beaverton shall review each invoice and pay any uncontested charges within 30 days of receipt. Beaverton shall provide a written notice for any contested charge. Within 15 days of receiving the notice, TVWD and Beaverton shall discuss and attempt to resolve the objection. If not resolved, the matter will be submitted to Dispute Resolution. 7.3 When a disputed cost is resolved and results in payment of all or a part of the amount originally invoiced, Beaverton shall pay the amount within 10 days along with interest at the rate TVWD would have earned upon the amount in the Local Government Investment Pool commencing 30 days from the original invoice to the date of payment. 8. Conditions of Sale. TVWD and Beaverton agree that the sale and transfer of capacity ownership of the existing Intake Facilities is conditioned upon satisfaction of the following: 8.1 Beaverton and TVWD shall each become a party to the Willamette Intake Facilities Intergovernmental Agreement and a member of the WIF Commission. 8.2 The Intake Facilities will be expanded and upgraded to achieve approximate capacity of 150 MGD as provided in Section The grant of an easement to the WIF Commission by TVWD and Wilsonville over, under and through the WRWTP Property to access, locate, design, construct, operate, maintain, repair, replace and reconstruct the Intake Facilities. The easement form is part of the WIF Agreement and by signature below is acceptable to the Parties. 8.4 The grant of an easement by TVWD and Wilsonville to Hillsboro, Beaverton and Tigard, or to an intergovernmental entity to which they are parties, over, Page 4 of 11

263 under and through the WRWTP Property for a raw water pipeline, electrical ductwork, surge tanks, electrical equipment, instrumentation and controls and any necessary structures or buildings to take raw water from the System Separation Point and convey it to the WWSS WTP. The easement form attached hereto is acceptable to the Parties. 8.5 Beaverton has water rights with an approved point of diversion at the WRWTP, River Mile Beaverton and Hillsboro enter into an intergovernmental agreement to create an ORS 190 entity with TVWD for the ownership, construction, operation, maintenance, repair and replacement of the Willamette Water Supply System (WWSS IGA). This condition may be satisfied by execution of a Joinder Agreement to become a party to the Agreement For Design and Construction of Willamette Water Supply Program between TVWD and Hillsboro dated January 15, 2015 until the WWSS IGA is executed. 8.7 TVWD and Beaverton have executed a mutually agreeable Urban Service Boundary Agreement no later than March 1, Failure to so agree will result in cancellation and recession of this Agreement. 9. Wilsonville. 9.1 TVWD has entered into various agreements with the City of Wilsonville regarding co-ownership of the Property upon which the WRWTP, the Supply Facilities that comprise the WRWTP, and the Intake Facilities are located. 9.2 Under the 2000 Master Agreement and the Accord Agreement, Wilsonville and TVWD have reciprocal rights of first offer in any proposed sale or transfer of Property or Supply Facilities as well as a right to notice of any requested expansion of facilities to determine whether leasing is available to defer the capital expansion proposed in the notice and whether to participate. By letter dated June 7, 2017, Wilsonville declined to exercise its right of first offer and for this sale and transfer by TVWD to Beaverton. TVWD has retained capacity ownership of 59.1 MGD in the Intake Facilities and Wilsonville and TVWD have agreed that the right of first offer remains as to TVWD s 56.5 MGD and Wilsonville s 25 MGD capacities respectively. Beaverton s 5.0 MGD capacity ownership is not subject to the rights of first offer in the 2000 Master Agreement, Accord Agreement or First Amendment. 9.3 Wilsonville has also consented to expansion of the Intake Facilities to 150 MGD with the expectation that its capacity ownership will increase to 25 MGD. Under the First Amendment between TVWD and Wilsonville, among other consideration, those parties agreed that Wilsonville s expansion cost share would only be $75,000 for intake permitting and $50,000 for new screens. TVWD and Beaverton understand and agree that this cap on Wilsonville s cost share will cause the other Parties to the WIF Commission to pay for all other costs for expansion and upgrade at the actual costs as estimated on Exhibit I. 9.4 Beaverton understands and agrees that by entry into this agreement, it does not become a party to the 2000 Master Agreement, Accord Agreement or First Amendment nor does it acquire any ownership interest in the Property or the remaining WRWTP Supply Facilities, existing raw water pumps, existing electrical equipment or the existing raw water pipeline from the System Separation Point into the WRWTP except as provided in this Agreement (the easements). Page 5 of 11

264 10. Intake Facilities Expansion Beaverton agrees that TVWD, as the Managing Agency of the WIF Commission, will be responsible for the permitting, design, construction and commissioning of the Intake Facilities Expansion Project. TVWD shall act by and through the WWSP staff. Under the WIF Agreement, TVWD shall: Serve as the contracting agency for the Expansion Project including, but not limited to, the preparation and administration of RFPs and RFQs and all procurement solicitations, manage all contracts and change orders in accordance with TVWD Local Contract Review Board Rules Following receipt of bids or proposals, WWSP staff shall develop a written recommendation of award for presentation to all participants in the Expansion Project. Beaverton shall have 10 days to approve or object. If approved, then TVWD will issue the Notice of Intent to Award. The Parties will reasonably cooperate to resolve objections. A final decision on award must be made within the timelines stated in the solicitation Any change order or procurement contract that will exceed $100,000 of Beaverton s proportionate share of the contract price will require prior approval except in the case of emergency A change order that is deemed an emergency may be approved by the WWSP Program Director, or designee, as the Program Director deems reasonable under the circumstances. The emergency change order will be provided to Beaverton as soon thereafter as reasonable WWSP will prepare a Work Plan and Cash Requirements Schedule for the Expansion Project and update it periodically so that Beaverton can monitor progress, expenditures and forecast when monetary contributions to the Expansion Project are due and payment required TVWD and Beaverton anticipate entering into a subsequent agreement(s) regarding design and construction of the Expansion Project or to combine the Expansion Project with other WWSS facilities or entry into an agreement to create an ORS Chapter 190 entity for the entire WWSS. The Parties may elect to have those agreements, if created, supersede this Agreement and govern the Expansion Project. 11. Representations by TVWD The execution, delivery and performance of this Agreement have been duly authorized by TVWD s Board of Commissioners and the person signing below has full power to bind TVWD to the terms of this Agreement The entry into this Agreement will not result in a breach or violation of, or constitute a default under, any other agreement to which TVWD is a party. 12. Representations by Beaverton The execution, delivery and performance of this Agreement have been duly authorized by the Beaverton City Council and the person signing below has full power to bind Beaverton to the terms of this Agreement The entry into this Agreement will not result in a breach or violation of, or constitute a default under, any other agreement to which Beaverton is a party. Page 6 of 11

265 13. Existing Intake Facilities Assets and WIF Site Conditions AS-IS. The Parties agree that TVWD makes no representation or warranties as to the condition of the Existing Intake Facility Assets and Beaverton accepts them in AS- IS condition Site Conditions. The Parties agree that TVWD makes no representation or warranty as to the condition of the property site for construction of the expanded and upgraded facilities. Beaverton accepts the site conditions AS-IS and any and all risks (known or unknown) as to what may be encountered when the Expansion Project occurs Risk of Loss. Risk of loss, damage or destruction of the Intake Facilities assets will be borne by TVWD for the period prior to the effective date of the Agreement. Thereafter, risk of loss, damage or destruction to the Intake Facilities (Existing and Expanded) shall be borne by Beaverton to the extent of Beaverton s proportionate capacity ownership. 14. Sale, Transfer and Assignment. The Parties agree that any subsequent sale, transfer or assignment of any interest in the Intake Facilities shall be subject to the WIF Agreement. 15. Dispute Resolution Mediation and Litigation. If a dispute arises regarding any term of this Agreement or the performance thereof, then one party shall give written notice to the other specifying the dispute. The chief executive officer of each party shall meet. If the matter is not resolved within 30 days from the date of notice, then either party may request mediation by notice to the other party mailed or delivered within 15 days after impasse. The parties shall mutually agree on a mediator. If no mediator is selected or if mediation is not successfully completed within 60 days of the notice requesting mediation, then the Parties may proceed to litigation in the Circuit Court of the State of Oregon for Washington County. The Parties may also mutually agree to arbitration. A Party may seek all legal and equitable remedies. Interest on any judgment shall accrue at the statutory rate Consent to Joinder of Disputes. The Parties understand that TVWD has similar agreements with Sherwood, Tigard, Hillsboro and Wilsonville regarding the Project and that a dispute under this agreement or a dispute under those agreements may impact each other and the Parties desire to avoid conflicting decisions in the case of disputes affecting the Project. Therefore, the Parties to this Agreement consent to joinder of any dispute hereunder with similar disputes between TVWS and those other Partners. This obligation to joinder as a party will apply to mediation or any litigation in Circuit Court. 16. Breach of Agreement and Remedies Notice. If a Party to this agreement believes that the other Party is in material breach of its obligations under this Agreement, the non-breaching Party must provide the breaching Party with not less than 10 days written notice of the breach in the case of nonpayment or 30-day notice in all other cases 16.2 Cure. Within 10 days of receipt of such notice, the breaching Party must provide a written response stating how cure will be performed. If the default is for failure to make payment, then payment must be made within 10 days unless the Parties mutually Page 7 of 11

266 agree otherwise. The disputed amount will be paid but the Party so making payment may proceed to dispute resolution to obtain repayment of the money. Cure for defaults other than failure to make payment must be completed within 30 days unless a longer period to cure is necessary. In such case, within 30 days, the breaching party must begin diligent cure. Nothing herein prevents a party from seeking Dispute Resolution Remedies. Following Dispute Resolution, the non-breaching party may seek all available legal or equitable remedies available under Oregon law. 17. Termination This Agreement may be terminated by mutual agreement of the Parties The Parties agree that voluntary or involuntary termination and transfer of any interest in the Intake Facilities shall be governed by the terms and provisions of the WIF Agreement. 18. Force Majeure. The obligations of a Party, other than the payment of money, shall be suspended to the extent and for the period that performance is prevented by any cause, whether foreseen, foreseeable or unforeseeable, beyond the Party s reasonable control if the Party is making a good faith effort to resolve or avoid the cause, including without limitation labor disputes (however arising and whether or not employee demands are reasonable or within the power of the Party to grant); acts of God, laws, regulations, orders, proclamations, instructions or requests of any government or governmental entity; judgments or orders of any court; inability to obtain on reasonably acceptable terms any public or private license, permit or other authorizations; curtailment or suspension of activities to remedy or avoid an actual or alleged, present or prospective violation of federal, state, or local environmental standards; acts of war or condition arising out of or attributable to war, whether declared or undeclared, riot, civil strife, insurrection or rebellion, fire, explosion, earthquake, storm, flood, sinkholes, drought or other adverse weather conditions out of the ordinary; material delay or failure by suppliers or transporters of materials, parts, supplies, utilities or services; accidents, breakdown of equipment, machinery or facilities, or any other cause whether similar or dissimilar to the foregoing, provided that the affected Party shall give notice to the other Party within 30 days of the suspension of performance or as soon as reasonably possible, stating in such notice the nature of the suspension, the reasons for the suspension and the expected duration of the suspension. The affected Party shall resume performance as soon as reasonably possible. 19. Severability. Should any provision of this Agreement be rendered invalid by a court of competent jurisdiction or arbitrator with authority to render a provision invalid, it is agreed that every other part of the Agreement shall remain in full force and effect so long as the benefit of the bargain remains. 20. Entire Agreement. This Agreement, including all attached exhibits, and the referenced Agreements contains the entire and final understanding of the Parties and supersedes all prior Page 8 of 11

267 Agreements and understandings between the Parties related to the subject matter of this Agreement. 21. No Joint and Several Liability Each Party to this Agreement assumes its own rights and obligations and does not assume the rights and obligations of any other Party. 22. Counterparts. This Agreement may be executed in counterparts, all of which taken together shall constitute a single Agreement. 23. Covenant of Good Faith The Parties agree in construing this Agreement no covenants shall be implied between the Parties except the covenants of good faith and fair dealing. 24. Governing Law and Judicial Review. This Agreement and construction thereof shall be governed by and interpreted in accordance with the laws of the State of Oregon without regards to principles of conflicts of law. Subject to Dispute Resolution, any claim, action or proceeding between the Parties that arises from or relates to this Agreement shall be brought in the Circuit Court of the State of Oregon for Washington County. 25. Amendments and Modifications. Any modification or amendment to this Agreement must be in writing and signed by both Parties. 26. Successors and Assigns This Agreement shall bind and insure to the benefit of the Parties and their successors and assigns. 27. Third Parties. The Parties recognize and agree that TVWD has entered into this Agreement with Beaverton for sale and purchase of a portion of TVWD s existing Intake Facilities and the commitment by Beaverton to participate in the Expansion Project. This Agreement is pursuant to a larger plan with the Cities of Sherwood, Tigard and Hillsboro under nearly identical Agreements. Therefore, the Parties hereto recognize that those other entities are third party beneficiaries of this Agreement and the Parties to this Agreement are 3 rd Party beneficiaries of those Agreements. 28. Non Waiver. Failure of any Party at any time to require performance of any provision of this Agreement shall not limit the Party s right to enforce the provision, nor shall any waiver of any breach of any provision be a waiver of any succeeding breach of the provision or a waiver of the provision itself or any other provisions. 29. Time is of the Essence. Page 9 of 11

268 Time is of the essence of each and every term, covenant, and condition set forth in this Agreement. A material consideration of the Parties for entering into this Agreement is that each Party will make all payments as and when due and will perform all other obligations under this Agreement in a timely manner. 30. Further Assurances. Each Party agrees that it will, without further consideration, execute and deliver such other documents and take such other action as may be reasonably requested by the other Party to more effectively consummate or achieve the purposes or subject matter of this Agreement. 31. Notices. All notices, payments and other communications to the Parties under this Agreement must be in writing, and shall be addressed respectively as follows: Hillsboro: TVWD: City of Beaverton Attention: Mayor 12575SW.Millikan Way Beaverton, Oregon Tualatin Valley Water District Attention: Chief Executive Officer 1850 SW 170 th Avenue Beaverton, Oregon All notices shall be given by (i) personal delivery to the Party, (ii) certified or registered mail, or (iii) electronic communication followed immediately by registered or certified mail return receipt requested. All notices shall be effective and shall be deemed delivered (a) if by personal delivery, on the date of delivery, (b) if by certified or registered mail on the date delivered to the United States Postal Service as shown on the receipts; and (c) if by electronic communication, on the date the confirmation is delivered to the United States Postal Service as shown on the actual receipt. Upon a change in ownership, a new Party shall, upon entering into this Agreement, notify the other Party or Parties of their contact person, address and facsimile number. Any Party may change its address from time to time by notice to the other Parties. 32. Remedies Not Exclusive. Each and every power and remedy specifically given to the non-defaulting Party shall be in addition to every other power and remedy now or hereafter available at law or in equity (including the right to specific performance), and each and every power and remedy may be exercised from time to time and as often and in such Order as may be deemed expedient. All such powers and remedies shall be cumulative, and the exercise of one shall not be deemed a waiver of the right to exercise any other or others. No delay or omission in the exercise of any such power or remedy and no renewal or extension of any payments due under this Agreement shall impair any such power or remedy or shall be construed to be a waiver of any default. Page 10 of 11

269 33. Survival of Terms and Conditions. The provisions of this Agreement shall survive its termination to the full extent necessary for their enforcement and the protection of the Party in whose favor they run. TUALATIN VALLEY WATER DISTRICT By: Title: Approved as to Form: District Counsel CITY OF BEAVERTON By: Title: Approved as to Form: City Attorney Page 11 of 11

270 Exhibit I Cost Shares for Willamette Intake Facilities Purchased from TVWD January 24, 2017 Acquired Capacity (MGD) from TVWD by Party by Asset Project Element Wilsonville TVWD Sherwood Tigard Tualatin Hillsboro Beaverton Total Screening Intake Pipe Wetwell Pump Station Building Pumps Electrical wire & conduit Electrical equipment Raw Water Pipeline Cost of Purchase ($) from TVWD by Party by Asset Project Element Wilsonville TVWD Sherwood Tigard Tualatin Hillsboro Beaverton Total Screening $ $ $ $ $ $ $ $ Intake Pipe $ $ $ 50,462 $ 219,399 $ $ 529,482 $ 73,133 $ 872,476 Wetwell $ $ $ 80,739 $ 351,038 $ $ 847,171 $ 117,013 $ 1,395,961 Pump Station Building $ $ $ 41,355 $ 179,802 $ $ 433,923 $ 59,934 $ 715,014 Pumps $ $ $ $ $ $ $ $ Electrical wire & conduit $ $ $ $ $ $ $ $ Electrical equipment $ $ $ $ $ $ $ $ Raw Water Pipeline $ $ $ 65,888 $ $ $ $ $ 65,888 Total $ $ $ 238,443 $ 750,239 $ $ 1,810,577 $ 250,080 $ 3,049,339

271 Link back to agenda RESOLUTION NO A RESOLUTION APPROVING THE AGREEMENT FOR TRANSFER, PURCHASE AND SALE OF THE WILLAMETTE INTAKE FACILITIES BETWEEN TUALATIN VALLEY WATER DISTRICT AND THE CITY OF HILLSBORO. WHEREAS, on or about July 6, 2000, the District and City of Wilsonville entered into the Agreement Regarding Water Treatment Plant Design, Construction Operation and Property Ownership for the Willamette River Water Treatment Plant as defined therein (2000 Agreement); and WHEREAS, the Willamette River Water Treatment Plant (WRWTP) was constructed with District and Wilsonville owning the real property and assets in varying percentages; and WHEREAS, Wilsonville has taken water from the WRWTP and, in 2006, the District sold a portion of its capacity to Sherwood so that Sherwood could also take water from the WRWTP with the District anticipating it would take water at some future time; and WHEREAS, the District and the City of Hillsboro have entered into an agreement to design, construct own and operate the Willamette Water Supply System (WWSS) which may include additional municipal water providers; and WHEREAS, the WWSS will design and construct a new water treatment plant at a location in Washington County so that the District will most likely not draw water from the WRWTP; and WHEREAS, the Water Intake Facility will be owned and governed by a separate Intergovernmental Agreement between District, Wilsonville, Hillsboro, Sherwood, Tigard and Beaverton that will provide for cost allocations for the purchase and sale of the existing intake and expansion thereof to approximately 150 million gallons per day as well as the ongoing operation, maintenance, repair and replacement of the intake facilities; and WHEREAS, as a condition of participation in the WIF Agreement, District has required that Hillsboro enter into the Agreement for Transfer, Purchase and Sale of the Willamette Facilities (Agreement), attached hereto as Exhibit 1 and incorporated by reference, that provides for purchase of a proportionate interest in the existing facilities and a commitment to participate in the permitting, design and construction of the expansion of the facilities to achieve a capacity of 150 million gallons per day, and being fully advised. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE TUALATIN VALLEY WATER DISTRICT THAT: Section 1: The Agreement for Transfer, Purchase and Sale of the Willamette Intake Facilities between the City of Hillsboro and Tualatin Valley Water District, attached hereto as Exhibit 1, is hereby approved. Section 2: The Chief Executive Officer is authorized to execute the Agreement. The Board recognizes that there may be edits and corrections to the final Agreement and the Chief Executive Officer is authorized to accept amendments and sign on behalf of the District so long as the Page 1 of 2

272 amendments do not substantially change the Agreement and such amendments are approved by General Counsel. Section 3: There are related agreements to this Agreement and the Chief Executive Officer is authorized to defer signature to this Agreement pending final approvals and signatures on any or all related documents as the Chief Executive Officer deems appropriate in his exercise of discretion and professional judgment. Approved and adopted at a regular meeting held on the 21 st day of February Richard Burke, President Dick Schmidt, Secretary Page 2 of 2

273 AGREEMENT FOR TRANSFER, PURCHASE AND SALE OF THE WILLAMETTE INTAKE FACILITIES BETWEEN TUALATIN VALLEY WATER DISTRICT AND THE CITY OF HILLSBORO EFFECTIVE MARCH 1, 2018 This is an Agreement for Transfer, Purchase and Sale of the Willamette Intake Facilities (Agreement) between the Tualatin Valley Water District (TVWD) and the City of Hillsboro (Hillsboro). RECITALS A. TVWD is a domestic water supply district organized under ORS Chapter 264, which distributes potable water to its water system users. B. Hillsboro is a municipal corporation that operates a municipal water supply utility under ORS Chapter 225 to distribute potable water to its water system users. C. TVWD and the City of Wilsonville entered into the Agreement Regarding Water Treatment Plant Design, Construction, Operation and Property Ownership dated July 6, 2000 (2000 Master Agreement), the Accord Agreement dated June 19, 2001 (Accord Agreement) and the First Amendment to the 2000 Master Agreement dated, 2017 (First Amendment) to construct and operate intake facilities, pumps, a water treatment plant and certain transmission facilities upon real property jointly owned by them (Willamette River Water Treatment Plant or WRWTP) for the purpose of supplying potable water to Wilsonville and providing a future supply to TVWD. The ownership interests in the real property and WRWTP Supply Facilities of TVWD and Wilsonville are specified in those agreements. D. TVWD and the City of Sherwood entered into an Agreement on December 27, 2006 (Sherwood TVWD WRWTP Agreement) for the purchase and sale of five (5) million gallons per day (MGD) of capacity in the WRWTP Supply Facilities. E. The WRWTP Supply Facilities include components referred to herein as Intake Facility assets or Intake Facilities, to wit: fish screens, intake pipe, protective bollards, caisson, pump station building, pipe, electrical conduit, instruments and controls and related appurtenances that convey raw water to the WRWTP. F. TVWD has received an offer from Hillsboro dated March 22, 2017 to purchase a portion of TVWD s capacity ownership interest in the Intake Facility assets as described in Section 3 of this Agreement, for the purpose of providing Hillsboro with a total of percent ownership interest or Thirty Six and Two Tenths (36.2) MGD capacity in the Intake Facility, contingent upon, among other things, completion of capacity expansion improvements so that the intake can deliver approximately 150 MGD. G. TVWD and Hillsboro will become members of the Willamette Intake Facilities Commission (WIF Commission) established by the Willamette Intake Facilities Page 1 of 11

274 Intergovernmental Agreement (WIF Agreement) effective April 1, 2018, to govern management and operation of the Intake Facilities. H. According to the terms of the 2000 Master Agreement and Accord Agreement and in consideration of the terms and conditions of the First Amendment, Wilsonville has agreed to waive exercise of its Right of First Offer as to the ownership capacity for the 36.2 MGD capacity in the existing and expanded Intake Facilities conveyed to Hillsboro under this Agreement. I. The Parties hereto wish to state the terms and conditions of transfer, purchase and sale of a portion of existing TVWD Intake Facilities capacity from TVWD to Hillsboro and participation by Hillsboro in the expansion and construction of Intake Facility improvements to obtain a total capacity of 150 MGD. NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: AGREEMENT Based on the foregoing Recitals and the mutual promises and obligations set forth herein, and other good and fair consideration, the sufficiency of which is hereby acknowledged, the Parties agree: 1. Effective Date. This agreement is effective as of March 1, Recitals. The Recitals above are incorporated and made part of this Agreement. 3. Intake Facilities. Intake Facilities shall mean the facilities used to withdraw and transmit water from the Willamette River to the Parties at the System Separation Point between the WRWTP and the Willamette Water Supply System Water Treatment Plant as defined in the WIF Agreement including the screens, intake pipe, wetwell, pump station building, pumps and associated electric and mechanical systems (e.g. wire, conduit, electrical devices and ventilation equipment). Intake Facilities includes both the existing Intake Facilities and the Intake Facilities after they are expanded and upgraded to the anticipated 150 MGD capacity. 4. Sale of Existing Intake Facility Capacity. TVWD hereby agrees to sell, transfer and assign, and Hillsboro agrees to purchase an amount of TVWD s ownership interest in the Intake Facility so that Hillsboro will obtain an undivided percent ownership interest as tenant in common to TVWD s portion of the capacity of the existing Intake Facilities set forth on Exhibit I, attached hereto and incorporated by reference. It is intended that when expanded and modified as provided in Section 5, Hillsboro will own 36.2 MGD of capacity in the expanded Intake Facilities. Accordingly, the sale and transfer of the existing Intake Facility capacity is expressly Page 2 of 11

275 contingent upon the expansion and upgrade of the Intake Facility to achieve the approximate 150 MGD capacity, subject to proportionate reduction based on actual capacity achieved as set forth in Section Expansion and Upgrade of Intake Facilities. 5.1 TVWD and Hillsboro, as well as the cities of Beaverton, Sherwood, Tigard and Wilsonville, have executed or will execute the WIF Agreement as well as separate agreements with TVWD to provide for the permitting, design and construction of screens, intake pipe, protective bollards, building(s), pumps, electrical wire, conduit and equipment, instrumentation and controls and seismic improvements to achieve Intake Facilities approximate capacity of 150 MGD (Expansion Project). Upon completion of expansion, the ownership capacity of the Intake Facilities is expected to be: Entity Ownership Capacity (MGD) Ownership Interest (%) TVWD Wilsonville Sherwood Hillsboro Tigard Beaverton TOTAL Following completion of the Expansion Project, if the total capacity of the Intake Facilities is less than 150 MGD, all parties have agreed that the reduction shall be proportionately shared by all of the above Parties; except that in no event will TVWD s capacity share be reduced below 56.5 MGD nor will Wilsonville s and Sherwood s share be reduced below 20 MGD and 5 MGD respectively. If proportionate reductions are still necessary once these minimum thresholds are reached, the remaining parties will proportionately share in the additional reduction as provided in the WIF Agreement. 5.3 TVWD and Hillsboro agree that the Expansion Project will be managed by TVWD as Managing Agency under the WIF Agreement unless the Parties later mutually agree upon a construction agreement for the Project. 6. Consideration. 6.1 On or before May 1, 2018, Hillsboro shall pay TVWD $1,810, in return for a percent (36.2 MGD) ownership interest in the capacity of the Intake Facilities as set forth on Exhibit I attached hereto and incorporated by reference. 6.2 In addition, Hillsboro shall pay to TVWD, through the Willamette Water Supply Program (WWSP) a proportionate share of actual costs incurred for permitting, acquiring and installing new screens, design and construction of seismic improvements, and all other improvements necessary to expand the Intake Facilities to 150 MGD at the estimated cost set forth on Exhibit I, attached hereto and incorporated by reference. These actual costs include costs expended to date and future costs for ongoing work to complete Page 3 of 11

276 the Expansion Project. As Managing Agency of the WIF Commission, TVWD will cause the WWSP staff to manage all aspects of the Expansion Project. 6.3 The Parties agree that the cumulative amounts described in paragraphs 6.1 and 6.2 above constitute full consideration (the Purchase Price ) for Hillsboro s percent (36.2 MGD) ownership interest in the capacity of the Intake Facilities. If the Expansion Project achieves a maximum intake capacity in excess of 150 MGD, Hillsboro is entitled to ownership of the proportionate increase in the capacity in excess of 36.2 MGD based on the Ownership Capacity table shown in Section 5.1 above. 6.4 The Purchase Price paid to TVWD under paragraphs 6.1 and 6.2 above entitles Hillsboro to percent ownership interest in the capacity of the Intake Facilities with the expectation of realizing 36.2 MGD of capacity ownership. If the final approved design capacity of the expanded Intake Facilities is less than 150 MGD such that Hillsboro s resulting capacity is less than 36.2 MGD, TVWD and Hillsboro will renegotiate the cost shares of the Purchase Price based on the updated total capacity of the expanded Intake Facilities, following the same methodology used to calculate the proposed Purchase Price that assumed the total capacity of 150 MGD. If Hillsboro s resulting capacity exceeds 36.2 MGD, TVWD is not entitled to an increase in the Purchase Price. 7. Payment. 7.1 TVWD will submit a monthly progress payment invoice to Hillsboro for the City s proportionate share of Expansion Project costs incurred. The invoice may include costs incurred from previous months that were carried forward provided they are separately listed. 7.2 Hillsboro shall review each invoice and pay any uncontested charges within 30 days of the invoice date. Hillsboro shall provide a written notice for any contested charge. Within 15 days of receiving the notice, TVWD and Hillsboro shall discuss and attempt to resolve the objection. If not resolved, the matter will be submitted to Dispute Resolution. 7.3 When a disputed cost is resolved and results in payment of all or a part of the amount originally invoiced, Hillsboro shall pay the amount within 10 days along with interest at the rate TVWD would have earned upon the amount in the Local Government Investment Pool commencing 30 days from the date of the original invoice to the date of payment. 8. Conditions of Sale. TVWD and Hillsboro agree that the sale and transfer of capacity ownership of the existing Intake Facilities is conditioned upon satisfaction of the following: 8.1 Hillsboro and TVWD shall each become a party to the Willamette Intake Facilities Intergovernmental Agreement and a member of the WIF Commission. 8.2 The Intake Facilities will be expanded and upgraded to achieve approximate capacity of 150 MGD as provided in Section The grant of an easement to the WIF Commission by TVWD and Wilsonville over, under and through the WRWTP Property to access, locate, design, construct, operate, maintain, repair, replace and reconstruct the Intake Facilities. The easement form is part of the WIF Agreement and by signature below is acceptable to the Parties. Page 4 of 11

277 8.4 The grant of an easement by TVWD and Wilsonville to Hillsboro, Beaverton and Tigard, or to an intergovernmental entity to which they are parties, over, under and through the WRWTP Property for a raw water pipeline, electrical ductwork, surge tanks, electrical equipment, instrumentation and controls and any necessary structures or buildings to take raw water from the System Separation Point and convey it to the WWSS WTP. The easement form attached hereto is acceptable to the Parties. 8.5 Hillsboro has water rights with an approved point of diversion at the WRWTP, River Mile Hillsboro enters into an intergovernmental agreement to create an ORS 190 entity with TVWD for the ownership, construction, operation, maintenance, repair and replacement of the Willamette Water Supply System (WWSS IGA). This condition is satisfied by continuance of the Agreement For Design and Construction of Willamette Water Supply Program between TVWD and Hillsboro dated January 15, 2015 until the WWSS IGA is executed. 9. Wilsonville. 9.1 TVWD has entered into various agreements with the City of Wilsonville regarding co-ownership of the Property upon which the WRWTP, the Supply Facilities that comprise the WRWTP, and the Intake Facilities are located. 9.2 Under the 2000 Master Agreement and the Accord Agreement, Wilsonville and TVWD have reciprocal rights of first offer in any proposed sale or transfer of Property or Supply Facilities as well as a right to notice of any requested expansion of facilities to determine whether leasing is available to defer the capital expansion proposed in the notice and whether to participate. By letter dated June 7, 2017, Wilsonville declined to exercise its right of first offer for this sale and transfer by TVWD to Hillsboro. TVWD has retained capacity ownership of 59.1 MGD in the Intake Facilities and Wilsonville and TVWD have agreed that the right of first offer remains as to TVWD s 56.5 MGD and Wilsonville s 25 MGD capacities respectively. Hillsboro s 36.2 MGD capacity ownership is not subject to the rights of first offer in the 2000 Master Agreement, Accord Agreement or First Amendment. 9.3 Wilsonville has also consented to expansion of the Intake Facilities to 150 MGD with the expectation that its capacity ownership will increase to 25 MGD. Under the First Amendment between TVWD and Wilsonville, among other consideration, those parties agreed that Wilsonville s expansion cost share would only be $75,000 for intake permitting and $50,000 for new screens. TVWD and Hillsboro understand and agree that this cap on Wilsonville s cost share will cause the other Parties to the WIF Commission to pay for all other costs for expansion and upgrade at the actual costs as estimated on Exhibit I. 9.4 Hillsboro understands and agrees that by entry into this agreement, it does not become a party to the 2000 Master Agreement, Accord Agreement or First Amendment nor does it acquire any ownership interest in the Property or the remaining WRWTP Supply Facilities, existing raw water pumps, existing electrical equipment or the existing raw water pipeline from the System Separation Point into the WRWTP except as provided in this Agreement (i.e. the easements). 10. Intake Facilities Expansion. Page 5 of 11

278 10.1 Hillsboro agrees that TVWD, as the Managing Agency of the WIF Commission, will be responsible for the permitting, design, construction and commissioning of the Intake Facilities Expansion Project. TVWD shall act by and through the WWSP staff. Under the WIF Agreement, TVWD shall: Serve as the contracting agency for the Expansion Project including, but not limited to, the preparation and administration of RFPs and RFQs and all procurement solicitations, manage all contracts and change orders in accordance with TVWD Local Contract Review Board Rules Following receipt of bids or proposals, WWSP staff shall develop a written recommendation of award for presentation to all participants in the Expansion Project. Hillsboro shall have 10 days to approve or object. If approved, then TVWD will issue the Notice of Intent to Award. The Parties will reasonably cooperate to resolve objections. A final decision on award must be made within the timelines stated in the solicitation Any change order or procurement contract that will exceed $100,000 of Hillsboro s proportionate share of the contract price will require prior approval by Hillsboro except in the case of emergency A change order that is deemed an emergency may be approved by the WWSP Program Director, or designee, as the Program Director deems reasonable under the circumstances. The emergency change order will be provided to Hillsboro as soon thereafter as reasonable WWSP will prepare a Work Plan and Cash Requirements Schedule for the Expansion Project and update it periodically so that Hillsboro can monitor progress, expenditures and forecast when monetary contributions to the Expansion Project are due and payment required TVWD and Hillsboro anticipate entering into a subsequent agreement(s) regarding design and construction of the Expansion Project or to combine the Expansion Project with other WWSS facilities or entry into an agreement to create an ORS Chapter 190 entity for the entire WWSS. The Parties may elect to have those agreements, if created, supersede this Agreement and govern the Expansion Project. 11. Representations by TVWD The execution, delivery and performance of this Agreement have been duly authorized by TVWD s Board of Commissioners and the person signing below has full power to bind TVWD to the terms of this Agreement The entry into this Agreement will not result in a breach or violation of, or constitute a default under, any other agreement to which TVWD is a party. 12. Representations by Hillsboro The execution, delivery and performance of this Agreement have been duly authorized by the Hillsboro City Council and the person signing below has full power to bind Hillsboro to the terms of this Agreement The entry into this Agreement will not result in a breach or violation of, or constitute a default under, any other agreement to which Hillsboro is a party. Page 6 of 11

279 13. Existing Intake Facilities Assets and WIF Site Conditions AS-IS. The Parties agree that TVWD makes no representation or warranties as to the condition of the Existing Intake Facility Assets and Hillsboro accepts them in AS- IS condition Site Conditions. The Parties agree that TVWD makes no representation or warranty as to the condition of the property site for construction of the expanded and upgraded facilities. Hillsboro accepts the site conditions AS-IS and any and all risks (known or unknown) as to what may be encountered when the Expansion Project occurs Risk of Loss. Risk of loss, damage or destruction of the Intake Facilities assets will be borne by TVWD for the period prior to the effective date of this Agreement. Thereafter, risk of loss, damage or destruction to the Intake Facilities (Existing and Expanded) shall be borne by Hillsboro to the extent of Hillsboro s proportionate capacity ownership. 14. Sale, Transfer and Assignment. The Parties agree that any subsequent sale, transfer or assignment of any interest in the Intake Facilities shall be subject to the WIF Agreement. 15. Dispute Resolution Mediation and Litigation. If a dispute arises regarding any term of this Agreement or the performance thereof, then one party shall give written notice to the other specifying the dispute. The chief executive officer of each party shall meet. If the matter is not resolved within 30 days from the date of notice, then either party may request mediation by notice to the other party mailed or delivered within 15 days after impasse. The parties shall mutually agree on a mediator. If no mediator is selected or if mediation is not successfully completed within 60 days of the notice requesting mediation, then the Parties may proceed to litigation in the Circuit Court of the State of Oregon for Washington County. The Parties may also mutually agree to arbitration. A Party may seek all legal and equitable remedies. Interest on any judgment shall accrue at the statutory rate Consent to Joinder of Disputes. The Parties understand that TVWD has similar agreements with Beaverton, Sherwood, Tigard and Wilsonville regarding the Project and that a dispute under this agreement or a dispute under those agreements may impact each other and the Parties desire to avoid conflicting decisions in the case of disputes affecting the Project. Therefore, the Parties to this Agreement consent to joinder of any dispute hereunder with similar disputes between TVWD and those other Partners. This obligation to joinder as a party will apply to any mediation or any litigation in Circuit Court. 16. Breach of Agreement and Remedies Notice. If a Party to this Agreement believes that the other Party is in material breach of its obligations under this Agreement, the non-breaching Party must provide the breaching Party with not less than 10 days written notice of the breach in the case of nonpayment or 30-day notice in all other cases 16.2 Cure. Within 10 days of receipt of such notice, the breaching Party must provide a written response stating how cure will be performed. If the default is for failure to make payment, then payment must be made within 10 days unless the Parties mutually Page 7 of 11

280 agree otherwise. The disputed amount will be paid but the Party so making payment may proceed to dispute resolution to obtain repayment of the money. Cure for defaults other than failure to make payment must be completed within 30 days unless a longer period to cure is necessary. In such case, within 30 days, the breaching party must begin diligent cure. Nothing herein prevents a party from seeking Dispute Resolution Remedies. Following Dispute Resolution, the non-breaching party may seek all available legal or equitable remedies available under Oregon law. 17. Termination This Agreement may be terminated by mutual agreement of the Parties The Parties agree that voluntary or involuntary termination and transfer of any interest in the Intake Facilities shall be governed by the terms and provisions of the WIF Agreement. 18. Force Majeure. The obligations of a Party, other than the payment of money, shall be suspended to the extent and for the period that performance is prevented by any cause set forth below, whether foreseen, foreseeable or unforeseeable, beyond the Party s reasonable control if the Party is making a good faith effort to resolve or avoid the cause, including without limitation labor disputes (however arising and whether or not employee demands are reasonable or within the power of the Party to grant); acts of God, laws, regulations, orders, proclamations, instructions or requests of any government or governmental entity; judgments or orders of any court; inability to obtain on reasonably acceptable terms any public or private license, permit or other authorizations; curtailment or suspension of activities to remedy or avoid an actual or alleged, present or prospective violation of federal, state, or local environmental standards; acts of war or condition arising out of or attributable to war, whether declared or undeclared, riot, civil strife, insurrection or rebellion, fire, explosion, earthquake, storm, flood, sinkholes, drought or other adverse weather conditions out of the ordinary; material delay or failure by suppliers or transporters of materials, parts, supplies, utilities or services; accidents, breakdown of equipment, machinery or facilities, or any other cause whether similar or dissimilar to the foregoing, provided that the affected Party shall give notice to the other Party within 30 days of the suspension of performance or as soon as reasonably possible, stating in such notice the nature of the suspension, the reasons for the suspension and the expected duration of the suspension. The affected Party shall resume performance as soon as reasonably possible. 19. Severability. Should any provision of this Agreement be rendered invalid by a court of competent jurisdiction or arbitrator with authority to render a provision invalid, it is agreed that every other part of the Agreement shall remain in full force and effect so long as the benefit of the bargain remains. 20. Entire Agreement. This Agreement, including all attached exhibits, and the referenced Agreements contains the entire and final understanding of the Parties and supersedes all prior Page 8 of 11

281 Agreements and understandings between the Parties related to the subject matter of this Agreement. 21. No Joint and Several Liability Each Party to this Agreement assumes its own rights and obligations and does not assume the rights and obligations of any other Party. 22. Counterparts. This Agreement may be executed in counterparts, all of which taken together shall constitute a single Agreement. 23. Covenant of Good Faith The Parties agree in construing this Agreement no covenants shall be implied between the Parties except the covenants of good faith and fair dealing. 24. Governing Law and Judicial Review. This Agreement and construction thereof shall be governed by and interpreted in accordance with the laws of the State of Oregon without regards to principles of conflicts of law. Subject to Dispute Resolution, any claim, action or proceeding between the Parties that arises from or relates to this Agreement shall be brought in the Circuit Court of the State of Oregon for Washington County. 25. Amendments and Modifications. Any modification or amendment to this Agreement must be in writing and signed by both Parties. 26. Successors and Assigns This Agreement shall bind and insure to the benefit of the Parties and their successors and assigns. 27. Third Parties. The Parties recognize and agree that TVWD has entered into this Agreement with Hillsboro for sale and purchase of a portion of TVWD s existing Intake Facilities and the commitment by Hillsboro to participate in the Expansion Project. This Agreement is pursuant to a larger plan with the Cities of Beaverton, Sherwood and Tigard under nearly identical Agreements. Therefore, the Parties hereto recognize that those other entities are third party beneficiaries of this Agreement and the Parties to this Agreement are third party beneficiaries of those Agreements. 28. Non Waiver. Failure of any Party at any time to require performance of any provision of this Agreement shall not limit the Party s right to enforce the provision, nor shall any waiver of any breach of any provision be a waiver of any succeeding breach of the provision or a waiver of the provision itself or any other provisions. 29. Time is of the Essence. Page 9 of 11

282 Time is of the essence of each and every term, covenant, and condition set forth in this Agreement. A material consideration of the Parties for entering into this Agreement is that each Party will make all payments as and when due and will perform all other obligations under this Agreement in a timely manner. 30. Further Assurances. Each Party agrees that it will, without further consideration, execute and deliver such other documents and take such other action as may be reasonably requested by the other Party to more effectively consummate or achieve the purposes or subject matter of this Agreement. 31. Notices. All notices, payments and other communications to the Parties under this Agreement must be in writing, and shall be addressed respectively as follows: Hillsboro: City of Hillsboro Attention: City Manager 150 E. Main Street Hillsboro, Oregon TVWD: Tualatin Valley Water District Attention: Chief Executive Officer 1850 SW 170 th Avenue Beaverton, Oregon All notices shall be given by (i) personal delivery to the Party, (ii) certified or registered mail, or (iii) electronic communication followed immediately by registered or certified mail return receipt requested. All notices shall be effective and shall be deemed delivered (a) if by personal delivery, on the date of delivery, (b) if by certified or registered mail on the date delivered to the United States Postal Service as shown on the receipts; and (c) if by electronic communication, on the date the confirmation is delivered to the United States Postal Service as shown on the actual receipt. Upon a change in ownership, a new Party shall, upon entering into this Agreement, notify the other Party or Parties of their contact person, address and facsimile number. Any Party may change its address from time to time by notice to the other Parties. 32. Remedies Not Exclusive. Each and every power and remedy specifically given to the non-defaulting Party shall be in addition to every other power and remedy now or hereafter available at law or in equity (including the right to specific performance), and each and every power and remedy may be exercised from time to time and as often and in such Order as may be deemed expedient. All such powers and remedies shall be cumulative, and the exercise of one shall not be deemed a waiver of the right to exercise any other or others. No delay or omission in the exercise of any such power or remedy and no renewal or extension of any payments due under this Agreement shall impair any such power or remedy or shall be construed to be a waiver of any default. Page 10 of 11

283 33. Survival of Terms and Conditions. The provisions of this Agreement shall survive its termination to the full extent necessary for their enforcement and the protection of the Party in whose favor they run. TUALATIN VALLEY WATER DISTRICT By: Title: Approved as to Form: District Counsel CITY OF HILLSBORO By: Title: Approved as to Form: City Attorney Page 11 of 11

284 Exhibit I Cost Shares for Willamette Intake Facilities Purchased from TVWD January 24, 2017 Acquired Capacity (MGD) from TVWD by Party by Asset Project Element Wilsonville TVWD Sherwood Tigard Tualatin Hillsboro Beaverton Total Screening Intake Pipe Wetwell Pump Station Building Pumps Electrical wire & conduit Electrical equipment Raw Water Pipeline Cost of Purchase ($) from TVWD by Party by Asset Project Element Wilsonville TVWD Sherwood Tigard Tualatin Hillsboro Beaverton Total Screening $ $ $ $ $ $ $ $ Intake Pipe $ $ $ 50,462 $ 219,399 $ $ 529,482 $ 73,133 $ 872,476 Wetwell $ $ $ 80,739 $ 351,038 $ $ 847,171 $ 117,013 $ 1,395,961 Pump Station Building $ $ $ 41,355 $ 179,802 $ $ 433,923 $ 59,934 $ 715,014 Pumps $ $ $ $ $ $ $ $ Electrical wire & conduit $ $ $ $ $ $ $ $ Electrical equipment $ $ $ $ $ $ $ $ Raw Water Pipeline $ $ $ 65,888 $ $ $ $ $ 65,888 Total $ $ $ 238,443 $ 750,239 $ $ 1,810,577 $ 250,080 $ 3,049,339

285 Link back to agenda RESOLUTION NO A RESOLUTION APPROVING THE AGREEMENT FOR TRANSFER, PURCHASE AND SALE OF THE WILLAMETTE INTAKE FACILITIES BETWEEN TUALATIN VALLEY WATER DISTRICT AND THE CITY OF SHERWOOD. WHEREAS, on or about July 6, 2000, the District and City of Wilsonville entered into the Agreement Regarding Water Treatment Plant Design, Construction Operation and Property Ownership for the Willamette River Water Treatment Plant as defined therein (2000 Agreement); and WHEREAS, the Willamette River Water Treatment Plant (WRWTP) was constructed with District and Wilsonville owning the real property and assets in varying percentages; and WHEREAS, Wilsonville has taken water from the WRWTP and, in 2006, the District sold a portion of its capacity to Sherwood so that Sherwood could also take water from the WRWTP with the District anticipating it would take water at some future time; and WHEREAS, the District and the City of Hillsboro have entered into an agreement to design, construct own and operate the Willamette Water Supply System (WWSS) which may include additional municipal water providers; and WHEREAS, the WWSS will design and construct a new water treatment plant at a location in Washington County so that the District will most likely not draw water from the WRWTP; and WHEREAS, the Water Intake Facility will be owned and governed by a separate Intergovernmental Agreement between District, Wilsonville, Hillsboro, Sherwood, Tigard and Beaverton that will provide for cost allocations for the purchase and sale of the existing intake and expansion thereof to approximately 150 million gallons per day as well as the ongoing operation, maintenance, repair and replacement of the intake facilities; and WHEREAS, as a condition of participation in the WIF Agreement, District has required that Sherwood enter into the Agreement for Transfer, Purchase and Sale of the Willamette Facilities (Agreement), attached hereto as Exhibit 1 and incorporated by reference, that provides for purchase of a proportionate interest in the existing facilities and a commitment to participate in the permitting, design and construction of the expansion of the facilities to achieve a capacity of 150 million gallons per day, and being fully advised. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE TUALATIN VALLEY WATER DISTRICT THAT: Section 1: The Agreement for Transfer, Purchase and Sale of the Willamette Intake Facilities between the City of Sherwood and Tualatin Valley Water District, attached hereto as Exhibit 1, is hereby approved. Section 2: The Chief Executive Officer is authorized to execute the Agreement. The Board recognizes that there may be edits and corrections to the final Agreement and the Chief Executive Officer is authorized to accept amendments and sign on behalf of the District so long as the Page 1 of 2

286 amendments do not substantially change the Agreement and such amendments are approved by General Counsel. Section 3: There are related agreements to this Agreement and the Chief Executive Officer is authorized to defer signature to this Agreement pending final approvals and signatures on any or all related documents as the Chief Executive Officer deems appropriate in his exercise of discretion and professional judgment. Approved and adopted at a regular meeting held on the 21 st day of February Richard Burke, President Dick Schmidt, Secretary Page 2 of 2

287 AGREEMENT FOR TRANSFER, PURCHASE AND SALE OF THE WILLAMETTE INTAKE FACILITIES BETWEEN TUALATIN VALLBY \ilater DISTRICT AND THE CITY OF SHERWOOD EFFECTIVE MARCH 1,2018 This is an Agreement for Transfer, Purchase and Sale of the V/illamette Intake Facilities (Agreement) between the Tualatin Valley Water District (TVWD) and the City of Sherwood (Sherwood). RECITALS A. TVWD is a domestic water supply district organized under ORS Chapter 264, which distributes potable water to its water system users. B. Sherwood is a municipal corporation that operates a municipal water supply utility under ORS Chapter 225 to distribute potable water to its water system users. C. TVWD and the City of Wilsonville entered into the Agreement Regarding Water Treatment Plant Design, Construction, Operation and Property Ownership dated July 6, 2000 (2000 Master Agreement), the Accord Agreement dated June 19, 2001 (Accord Agreement), and the First Amendment to the 2000 Master Agreement dated _,2078 (First Amendment) to construct and operate intake facilities, pumps, a water treatment plant, and certain transmission facilities (Willamette River Water Treatment Plant, or WRWTP, Supply Facilities) upon real property jointly owned by them for the purpose of supplying potable water to Wilsonville and providing a future supply to TVWD. The ownership interests in the real property and WRWTP Supply Facilities of TVWD and Wilsonville are specified in those agreements. D. TVWD and Sherwood entered into an Agreement on December 27, 2006 (Sherwood TVWD WRV/TP Agreement) for the purchase and sale of f,rve (5) million gallons per day (MGD) of capacity in the V/RWTP Supply Facilities. E. The WRWTP Supply Facilities include components referred to herein as Intake Facility assets or Intake Facilities, to wit: fish screens, intake pipe, protective bollards, caisson, pump station building, pipe, electrical conduit, instruments and controls, and related appurtenances that convey raw water to the WRV/TP. F. TVWD has received an offer from Sherwood dated March 1,2017 to purchase a portion of TVV/D's capacity ownership interest in the Intake Facility assets for the purpose of providing Sherwood with a total of a 6.47 percent ownership interest in the Intake Facility, or Nine Million Seven Hundred Thousand gallons per day (9.7 MGD) capacity ownership in the Intake Facility, contingent upon, among other things, completion of capacity expansion improvements so that the Intake Facilities can deliver approximately 150 MGD. G. TVWD and Sherwood have or will become members of the Willamette Intake Facilities Commission (WIF Commission) established by the V/illamette Intake Facilities Intergovernmental Agreement (WIF Agreement) effective April 1, 2078, to govern management and operation of the Intake Facilities. Page I of11

288 H. According to the terms of the 2000 Master Agreement and Accord Agreement and in consideration of the terms and conditions of the First Amendment, Wilsonville has agreed to waive exercise of its Right of First Offer as to the ownership capacity for the capacity in the existing and expanded Intake Facilities conveyed to Sherwood under this Agreement. I. The Parties hereto wish to state the terms and conditions of transfèr, purchase and sale of a portion of existing TVWD Intake Facilities capacity from TVV/D to Sherwood, and participation by Sherwood in the expansion and construction of Intake Facility improvements to obtain atotal capacity of 150 MGD. NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: AGRBEMENT Based on the foregoing Recitals and the mutual promises and obligations set forth herein, and other good and fair consideration, the sufficiency of which is hereby acknowledged, the Parties agree: 1. ) Bffective Date. This agreement is effective as of March 1,2018 Recitals. The Recitals above are incorporated and made part of this Agreement 3. Intake Facilities. Intake Facilities shall mean the facilities used to withdraw and transmit water from the Willamette River to the Parties at the System Separation Point between the WRV/TP and the WWSS V/TP as defined in the WIF Agreement, including the screens, intake pipe, wetwell, pump station building, pumps and associated electric and mechanical systems (e.g. wire, conduit, electrical devices and ventilation equipment). Intake Facilities includes both the existing Intake Facilities and the Intake Facilities after they are expanded and upgraded to the anticipated 150 MGD capacity. 4. Sale of Intake Facility Capacity. Sherwood currently owns a 5.0 MGD capacity share in the existing Intake Facilities. TVWD hereby agrees to sell, transfer and assign, and Sherwood agrees to purchase, an amount of TVWD's capacity ownership interest in the Intake Facilities such that, when added to Sherwood's existing ownership share, Sherwood's total ownership share will equal an undivided 6.47 percent ownership interest, as tenant in common, of the total capacity of the Intake Facilities, as set forth on Exhibit I, attached hereto and incorporated by reference. It is intended that, when the existing Intake Facilities are expanded and modified as provided in Section 5, Sherwood will own a total of 9.7 MGD of capacity in the expanded Intake Facilities. Accordingly, the sale and transfer of the existing Intake Facility capacity is expressly contingent upon the expansion and upgrade of the Intake Facilities to achieve the approximate 150 MGD capacity, and is subject to Page 2 of 11

289 proportionate reduction based on actual capacity achieved as set forth in Section 5.2. Sherwood's anticipated 9.7 MGD total capacity ownership in the Intake Facilities is based on the following: Description Existing owned capacity Increasecl owned capacity based on proportionate scaling up of existing owned capacity in connection with the Expansion Project (assuming 150 MGD total capacity is achieved) Additional capacity acquired from TVWD through this Agreement (assuming 150 MGD total capacity is achieved) Total owned capacify Quantitv 5.0 MGD 1.2 MGD 3.5 MGD 9.7 MGD 5. Expansion and Upgrade of Intake Facilities. 5.1 TVWD and Sherwood, as well as the cities of Beaverton, Tigard, Hillsboro and Wilsonville, have executed or will execute the WIF Agreement as well as separate agreements with TVWD to provide for the permitting, design and construction of screens, intake pipe, protective bollards, building(s), pumps, electrical wire, conduit and equipment, instrumentation and controls and seismic improvements to achieve expanded Intake Facilities with an approximate capacity of 150 MGD (Expansion Project). Upon completion of expansion, the ownership capacity of the Intake Facilities is expected to be: Entify Ownership Capacity Ownership Interest (MGD) (%l TVWD s Wilsonville 25.0 t6.67 Sherwood Hillsboro r3 Tieard Beaverton 5.0 J.JJ TOTAL Following completion of the Expansion Project, if the total capacity of the Intake Facilities is less than 150 MGD, all parties have agreed that the reduction shall be proportionately shared by all of the above Parties; except that in no event will TVV/D's capacity share be reduced below 56.5 MGD nor will Sherwood's share be reduced below 5 MGD. If proportionate reductions are still necessary once TVWD's 56.5 MGD andlor Sherwood's 5 MGD threshold is reached, the remaining parties (without TVWD andlor Sherwood, as applicable) witl proportionately share in the additional reduction as provided in the WIF Agreement. Page 3 of11

290 5.3 TVV/D and Sherwood agree that the Expansion Project will be managed by TVWD as Managing Agency under the WIF Agreement unless the Parties later mutually agree upon a construction agreement for the Project. 6. Consideration. 6.1 On or before May 1, 2018, Sherwood shall pay TVV/D $238,443 in exchange for an increase to a total 6.47 percent (9.7 MGD) ownership interest in the capacity of the Intake Facilities as set forth on Exhibit I attached hereto and incorporated by reference. 6.2 In addition, Sherwood shall pay to TVWD, through the Willamette Water Supply Program (WWSP), a proportionate share of actual costs incurred for permitting, acquiring and installing new screens, design and construction of seismic improvements, and all other improvements necessary to expand the Intake Facilities to 150 MGD at the estimated cost set forth on Exhibit I, attached hereto and incorporated by reference. These actual costs include costs expended to date and future costs for ongoing work to complete the Expansion Project. As Managing Agency of the WIF Commission, TVWD will cause the'wwsp staff to manage all aspects of the Expansion Project. 6.3 The Parties agreethatthe cumulative amounts described inparagraphs 6.1 and 6.2 above constitute full consideration (the Purchase Price) for Sherwood's 6.47 percent (9.7 MGD) ownership interest in the capacity of the Intake Facilities. If the Expansion Project achieves a maximum intake capacity in excess of 150 MGD, Sherwood is entitled to ownership of the proportionate increase in the capacity in excess of 9.7 MGD based on the Ownership Capacity table shown in Section 5.1 above. 6.4 The Purchase Price paid to TVWD under paragraphs 6.1 and 6.2 above entitles Sherwood to 6.47 percent ownership interest in the capacity of the Intake Facilities with the expectation of realizing 9.7 MGD of capacity ownership. If the final approved design capacify of the expanded Intake Facilities is less than 150 MGD such that Sherwood's resulting capacity is less than 9.7 MGD, TVWD and Sherwood will renegotiate the cost shares ofthe Purchase Price based on the updated total capacity ofthe expanded Intake Facilities, following the same methodology used to calculate the proposed purchase price that assumed the total capacity of 150 MGD. If Sherwood's resulting capacity exceeds 9.7 MGD, TVV/D is not entitled to an increase in the Purchase Price. 7. Payment. 7.1 TVWD will submit a monthly invoice to Sherwood for Sherwood's proportionate share of Expansion Project costs incurred. The invoice may include costs incurred from previous months that were carried forward provided they are separately listed. 7,2 Sherwood shall review each invoice and pay any uncontested charges within 30 days of receipt. Sherwood shall provide a written notice for any contested charge. Within 15 days of receiving the notice, TVV/D and Sherwood shall discuss and attempt to resolve the objection. If not resolved, the matter will be submitted to Dispute Resolution. 7.3 When a disputed cost is resolved and results in payment of all or a part of the amount originally invoiced, Sherwood shall pay the amount within 10 days along with Page 4 of 11

291 interest at the rate TVWD would have earned upon the amount in the Local Government Investment Pool commencing 30 days from the original invoice to the date of payment. 8. Conditions of Sale. TVWD and Sherwood agree that the sale and transfer of capacity ownership of the Intake Facilities is conditioned upon satisfaction of the following: 8.1 Sherwoocl and TVWD shall each become aparty to the V/illamette Tntake Facilities Intergovernmental Agreement and a member of the WIF Commission. 8.2 The Intake Facilities will be expanded and upgraded to achieve approximate capacity of 150 MGD as provided in Section The grant of an easement to the WIF Commission by TV'WD and Wilsonville over, under and through the WRWTP Property to access, locate, design, construct, operate, maintain, repair, replace and reconstruct the Intake Facilities. The easement form is part of the WIF Agreement and by signature below is acceptable to the Parties. 8.4 The grant of an easement by TV'WD and Wilsonville to Hillsboro, Beaverton and Tigard, or to an intergovernmental entity to which they are parties, over, under and through the WRWTP Property for a raw water pipeline, electrical ductwork, surge tanks, electrical equipment, instrumentation and controls and any necessary structures or buildings to take raw water from the System Separation Point and convey it to the WWSS WTP. The easement form attached hereto is acceptable to the Parties. 8.5 Sherwood has water rights through the Willamette River Water Coalition with an approved point of diversion at the WRWTP, River Mile The Sherwood-TV'WD WRWTP Agreement remains in full force and effect, except as may otherwise be agreed by the Parties thereto. 9. \ililsonville. 9.1 TVV/D has entered into various agreements with the City of Wilsonville regarding co-ownership of the Properly upon which the V/RV/TP, the Supply Facilities that comprise the WRWTP, and the Intake Facilities are located. 9.2 Under the 2000 Master Agreement and the Accord Agreement, V/ilsonville and TVWD have reciprocal rights of first offer in any proposed sale or transfer of Property or Supply Facilities as well as a right to notice of any requested expansion of facilities to determine whether leasing is available to defer the capital expansion proposed in the notice and whether to participate. By letter dated June7,2017, Wilsonville declined to exercise its right of first offer for this sale and transfer by TVWD to Sherwood. TVV/D has retained capacity ownership of 59.1 MGD in the Intake Facilities and V/ilsonville and TVWD have agreed that the right of first offer remains as to TVWD's 56.5 MGD and Wilsonville's 25 MGD capacities respectively. Sherwood's 9.7 MGD capacity ownership is not subject to the rights of first offer in the 2000 Master Agreement, Accord Agreement or First Amendment. 9.3 Wilsonville has also consented to expansion of the Intake Facilities to 150 MGD with the expectation that its capacity ownership will increase to 25 MGD. Under the First Amendment between TVWD and Wilsonville, among other consideration, those parties agreed that Wilsonville's expansion cost share would only be $75,000 for intake permitting and $50,000 for new screens. TVWD and Sherwood understand and agree that Page 5 of 11

292 this cap on Wilsonville's cost share will cause the other Parties to the WIF Commission to pay for all other costs for expansion and upgrade at the actual costs as estimated on Exhibit I. 9.4 Sherwood understands and agrees that by entry into this Agreement, it does not become aparty to the 2000 Master Agreement, Accord Agreement or First Amendment nor does it acquire any ownership interest in the Property or the remaining WRV/TP Supply Facilities, existing raw water pumps, existing electrical equipment or the existing raw water pipeline from the System Separation Point into the WRV/TP except as provided in this Agreement (the easements). 10. Intake Facilities Expansion Sherwood agrees that TVWD, as the Managing Agency of the WIF Commission, will be responsible for the permitting, design, construction and commissioning of the Intake Facilities Expansion Project. TVWD shall act by and through the WV/SP staff. Under the WIF Agreement, TVWD shall: Serve as the contracting agency for the Expansion Project including, but not limited to, the preparation and administration of RFPs and RFQs and all procurement solicitations, and management all contracts and change orders in accordance with TVV/D Local Contract Review Board Rules' Following receipt of bids or proposals, WWSP staff shall develop a written recommendation of award for presentation to all participants in the Expansion Project. Sherwood shall have 10 days to approve or object. Ifapproved, then TVWD will issue the Notice of Intent to Award. The Parties will reasonably cooperate to resolve objections. A final decision on award must be made within the timelines stated in the solicitation Any change order or procurement contract that will exceed $100,000 of Sherwood's proportionate share of the contract price will require prior approval except in the case of emergency A change order that is deemed an emergency may be approved by the W'WSP Program Director, or designee, as the Program Director deems reasonable under the circumstances. The emergency change order will be provided to Sherwood as soon thereafter as reasonably possible' WWSP will prepare a Work Plan and Cash Requirements Schedule for the Expansion Project and update it periodically so that Sherwood can monitor progress and expenditures, and forecast when monetary contributions to the Expansion Project are due and payment required TVWD and Sherwood anticipate entering into a subsequent agreement(s) regarding design and construction of the Expansion Project. 11. Representations by TVWD The execution, delivery and performance of this Agreement have been duly authorized by TVWD's Board of Commissioners and the person signing below has full power to bind TVWD to the terms of this Agreement. ll.2 The entry into this Agreement will not result in a breach or violation of, or constitute a default under, any other agreement to which TVWD is a party. Page 6 of 11

293 12. Representations by Sherwood. l2.l The execution, delivery and performance of this Agreement have been duly authorized by the Sherwood City Council and the person signing below has full power to bind Sherwood to the terms of this Agreement The entry into this Agreement will not result in a breach or violation of, or constitute a default under, any other agreement to which Sherwood is a party. 13. Existing Intake Facilities Assets and \ilif Site Conditions AS-IS. The Parlies agree that TVWD makes no representation or warranties as to the condition of the Existing Intake Facility Assets and Sherwood, as an existing owner, accepts them in AS-IS condition Site Conditions. The Parties agree that TVWD makes no representation or warranty as to the condition of the property site for construction of the expanded and upgraded facilities. Sherwood accepts the site conditions AS-IS and any and all risks (known or unknown) as to what may be encountered when the Expansion Project occurs Risk of Loss. Risk of loss, damage or destruction of the Intake Facilities assets will be borne by TVWD for the period prior to the effective date of this Agreement. Thereafter, risk of loss, damage or destruction to the Intake Facilities (Existing and Expanded) shall be borne by Sherwood to the extent of Sherwood's proportionate capacity ownership. 14. Sale, Transfer and Assignment. The Parties agree that any subsequent sale, transfer or assignment of any interest in the Intake Facilities shall be subject to the WIF Agreement. 15. Dispute Resolution Mediation and Litigation. If a dispute arises regarding any term of this Agreement or the performance thereof, then one Party shall give written notice to the other specifying the dispute. The chief executive officers of each Party shall meet. If the matter is not resolved within 30 days from the date of notice, then either Party may request mediation by notice to the other Party mailed or delivered within 15 days after such impasse. The parties shall mutually agree on a mediator. If no mediator is selected or if mediation is not successfully completed within 60 days of the notice requesting mediation, then the Parties may proceed to litigation in the Circuit Courl of the State of Oregon for Washington County. The Parties may also mutually agree to arbitration. A Party may seek all legal and equitable remedies. Interest on any judgment shall accrue at the statutory rate Consent to Joinder of Disputes. The Parties understand that TVWD has similar agreements with Beaverton, Tigard, Hillsboro and Wilsonville regarding the Project and that a dispute under this Agreement or a dispute under those agreements may impact each other and the Parties desire to avoid conflicting decisions in the case of disputes affecting the Project. Therefore, the Parties to this Agreement consent to joinder of any dispute hereunder with similar disputes between TVWD and those other parlies. This obligation to joinder as a party will apply to any mediation, arbitration, or any litigation in Circuit Court. 16. Breach of Agreement and Remedies. Page 7 of l1

294 16.l Notice. If a Party to this Agreement believes that the other Party is in material breach of its obligations under this Agreement, the non-breaching Party must provide the breaching Party with not less than 10 days written notice of the breach in the case of nonpayment or 30-day notice in all other cases Cure. Within 10 days of receipt of such notice, the breaching Party must provide a written response stating how cure will be performed, if applicable. If the default is for failure to make payment, then payment must be made within l0 days unless the Parties mutually agree otherwise. The disputed amount will be paid but the Party so making payment may proceed to dispute resolution to obtain repayment of the money. Cure for defaults other than failure to make payment must be completed within 30 days unless a longer period to cure is necessary. In such case, within 30 days, the breaching Party must begin diligent cure. Nothing herein prevents a Party from seeking Dispute Resolution Remedies. Following Dispute Resolution, the non-breaching Party may seek all available legal or equitable remedies available under Oregon law. 17, Termination. 17.l This Agreement may be terminated by mutual agreement of the Parties The Parlies agree that voluntary or involuntary termination and transfer of any interest in the Intake Facilities shall be governed by the terms and provisions of the 'WIF Agreement. 18. Force Majeure. The obligations of a Party, other than the payment of money, shall be suspended to the extent and for the period that performance is prevented by any cause, whether foreseen, foreseeable or unforeseeable, beyond the Party's reasonable control if the Party is making a good faith effort to resolve or avoid the cause, including without limitation labor disputes (however arising and whether or not employee demands are reasonable or within the power of the Party to grant); acts of God, laws, regulations, orders, proclamations, instructions or requests of any government or governmental entity; judgments or orders of any court; inability to obtain on reasonably acceptable terms any public or private license, permit or other authorizations; curtailment or suspension of activities to remedy or avoid an actual or alleged, present or prospective violation of federal, state, or local environmental standards; acts of war or condition arising out of or attributable to war, whether declared or undeclared, riot, civil strife, insurrection or rebellion, fire, explosion, earthquake, storm, flood, sinkholes, drought or other adverse weather conditions out of the ordinary; material delay or failure by suppliers or transporlers of materials, parts, supplies, utilities or services; accidents, breakdown of equipment, machinery or facilities, or any other cause whether similar or dissimilar to the foregoing, provided that the affected Party shall give notice to the other Party within 30 days of the suspension of performance or as soon as reasonably possible, stating in such notice the nature of the suspension, the reasons for the suspension and the expected duration of the suspension. The affected Party shall resume performance as soon as reasonably possible. 19, Severability. Page 8 of 11

295 Should any provision of this Agreement be rendered invalid by a court of competent jurisdiction or arbitrator with authority to render a provision invalid, it is agreed that every other part of the Agreement shall remain in full force and effect so long as the benefit of the bargain remains. 20. Entire Agreement. This Agreement, including all attached exhibits, and the referenced agreements, contains the entire and final understanding of the Parties and supersedes all prior agreements and understandings between the Parties related to the subject matter of this Agreement. 21. No Joint and Several Liability Each Party to this Agreement assumes its own rights and obligations and does not assume the rights and obligations of any other Party. 22. Counterparts. This Agreement may be executed in counterparts, all of which taken together shall constitute a single Agreement. 23. Covenant of Good Faith The Parties agree in construing this Agreement no covenants shall be implied between the Parties except the covenants of good faith and fair dealing. 24. Governing Law and Judicial Review. This Agreement and construction thereof shall be governed by and interpreted in accordance with the laws of the State of Oregon without regards to principles of conflicts of law. Subject to Dispute Resolution, any claim, action or proceeding between the Parties that arises from or relates to this Agreement shall be brought in the Circuit Court of the State of Oregon for Washington County. 25. Amendments and ModifTcations. Any modification or amendment to this Agreement must be in writing and signed by both Parties. 26. Successors and Assigns This Agreement shall bind and insure to the benefit of the Parties and their successors and assigns. 27. Third Parties. The Parties recognize and agree that TVWD has entered into this Agreement with Sherwood for sale and purchase of a portion of TVV/D's existing Intake Facilities and the commitment by Sherwood to participate in the Expansion Project. This Agreement is pursuant to a larger plan with the Cities of Beaverton, Tigard and Hillsboro under nearly identical Agreements. Therefore, the Parties hereto recognize that those other entities are third party beneficiaries of this Agreement and the Parties to this Agreement are 3'd Party beneficiaries of those Agreements. Page 9 of 11

296 28. Non \ilaiver. Failure of any Party at any time to require performance of any provision of this Agreement shall not limit the Pafty's right to enforce the provision, nor shall any waiver ofany breach ofany provision be a waiver ofany succeeding breach ofthe provision or a waiver of the provision itself or any other provisions. 29, Time is of the Essence. Time is of the essence of each and every term, covenant, and condition set forth in this Agreement. A material consideration of the Parties for entering into this Agreement is that each Party will make all payments as and when due and will perform all other obligations under this Agreement in a timely manner. 30. Further Assurances. Each Party agrees that it will, without further consideration, execute and deliver such other documents and take such other action as may be reasonably requested by the other Party to more effectively consummate or achieve the purposes or subject matter of this Agreement. 31. Notices. All notices, payments and other communications to the Parties under this Agreement must be in writing, and shall be addressed respectively as follows: Sherwood: TVWD: City of Sherwood Attention: City Manager SW. Pine Street Sherwood, Oregon Tualatin Valley Water District Attention : Chief Executive Offrcer 1850 SW 170th Avenue Beaverton, Oregon All notices shall be given bv (i) personal delivery to the Party, (ii) certified or registered mail, or (iii) electronic communication followed immediately by registered or certified mail return receipt requested. All notices shall be effective and shall be deemed delivered (a) if by personal delivery, on the date of delivery, (b) if by cerlified or registered mail on the date delivered to the United States Postal Service as shown on the receipts; and (c) if by electronic communication, on the date the confirmation is delivered to the United States Postal Service as shown on the actual receipt. Upon a change in ownership, a new Party shall, upon entering into this Agreement, notify the other Party or Parties of their contact person, address and facsimile number. Any Party may change its address from time to time by notice to the other Parties. 32. Remedies Not Exclusive. Each and every power and remedy specifically given to the non-defaulting Party shall be in addition to every other power and remedy now or hereafter available at law or Page 10 of11

297 in equity (including the right to specific performance), and each and every power and remedy may be exercised from time to time and as often and in such order as may be deemed expedient. All such powers and remedies shall be cumulative, and the exercise of one shall not be deemed a waiver of the right to exercise any other or others. No delay or omission in the exercise of any such power or remedy and no renewal or extension of any payments due under this Agreement shall impair any such power or remedy or shall be construed to be a waiver of any default. 33. Survival of Terms and Conditions. The provisions of this Agreement shall survive its termination to the full extent necessary for their enforcement and the protection of the Party in whose favor they run. TUALATIN VALLEY WATER DISTRICT CITY O By: Title Approved as to Form: By Title: C, fro.*t Approved as to Form: District Counsel.f"cÀ So/el City Attomey Page 11 of11

298 Resolution , Exhibit A (Cost Shares) February 6, 2018, Page 1 of 1 Exhibit I Cost Shares for Willamette lntake Facilities Purchased from TVWD January 24,2OL7 Acquired Capacity (MGD) from TVWD by Party by Asset Project Element Wilsonville TVWD Shenn ood Tigard Tualatin Hillsboro Beaverton Total Screeni ng 0 0 c c 0 lntake Pi pe Wetwell q Pump Station Buildine Pumps c Electrical - wire & conduit c 0 TJ c 0 Electrical - equipment c Raw Water Pipeline c Cost of Purchase (S) from TVWD by Party by Asset Proiect Element Wilsonville TVWD Sherwood Tigard Tualati n Hillsboro Beaverton Total Scree ni ns s s s s s s $ s lntake Pi pe s s 5 s0, ,399 s S s29,482 S 73, ,476 Wetwell s s s 80,73e s 3s1,038 s S aqt,vt s s 1,39s,961 Pump Statlon Building s s s 41,3ss 5 L79,802 s S 433,923 S sg,gs+ 5 7ts,0r4 Pumps s s s s s s s s Electrical - wire & conduit s s s s s s s s Electrical - equipment s s s s ( s s s Raw Water Pipeline s s S 6s,888 s s s s s 6s,888 Total s s 5 238,M3 s 7s0.239 s S 1,810,s77 5 2s0,080 s 3,049,339