Alderwood Water & Wastewater District Interlocal Agreement for Water SupplyL)rIFUGINAL
WHOLESALE WATER SUPPLY AGREEMENT
Between Alderwood Water & Wastewater District
and City of Edmonds
Table of Contents
SECTIONI. - WATER SUPPLY........................................................................................... 2
SECTIONII. - DEFINITIONS..............................................................................................
3
SECTION III. - FUTURE FACILITY ACQUISITIONS..................................................
5
SECTION IV. - CONTINUITY OF SERVICE....................................................................
7
SECTION V. - OPERATIONAL EFFICIENCY.................................................................
8
SECTION VI. - WHOLESALE COMMITTEE..................................................................
9
SECTION VII. - MASTER METER...................................................................................
10
SECTIONVIII. - AREA OF USE........................................................................................
11
SECTION IX. - WATER QUALITY...................................................................................
11
SECTION X. - SUPPLY TO DISTRICT -OWNED SERVICES TRANSMITTED
THROUGH CUSTOMER MAINS............................................................
11
SECTION XI. - WHOLESALE WATER RATE...............................................................
12
SECTION XII. - BILLING & PAYMENT.........................................................................
16
SECTION XIII. - TERM & EXPIRATION.......................................................................
16
SECTION XIV. - NOTICE OF NEGOTIATION.............................................................
17
SECTION XV. - FORCE MAJEURE AND CHANGES IN LAW ..................................
17
SECTION XVI. - LEGAL RELATIONS............................................................................
17
SECTION XVII. - DISPUTE RESOLUTION...................................................................
18
SECTION XVIII. - GOVERNING LAW AND VENUE ..................................................
19
SECTION IXX. - NO THIRD PARTY BENEFICIARIES ..............................................
19
SECTION XX. - LIMITATION ON DAMAGES..............................................................
19
SECTION XXI. - GENERAL PROVISIONS....................................................................
19
EXHIBIT A - QUANTITY OF WATER TO BE PURCHASED ...................................
23
EXHIBIT B - WHOLESALE FACILITIES..................................................................... 24
EXHIBIT C - REGIONAL FACILITIES......................................................................... 25
EXHIBIT D - CUSTOMERS WATER SERVICE AGREEMENT TO OTHER
SUPPLIERS................................................................................................ 26
EXHIBIT E - MASTER METER LOCATION............................................................... 27
8'A-/o
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WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 1
I AGREEMENT BETWEEN
2 ALDERWOOD WATER & WASTEWATER DISTRICT
3 AND CITY OF EDMONDS
4 FOR WATER SUPPLY
5
6 This Wholesale Water Supply Agreement ("Agreement") between the ALDERWOOD
7 WATER & WASTEWATER DISTRICT, a special purpose municipal corporation (the
8 "District,") and CITY OF EDMONDS (the "Customer") (individually a "Party" and collectively
9 the "Parties") for the purposes set forth herein.
10
11 WHEREAS, the District and the Customer are each authorized under the law of the
12 State of Washington to supply potable water to their retail customers and to enter into
13 wholesale contracts for the purchase and sale of wholesale water supply; and
14
15 WHEREAS, the District and the Customer desire to enter into an agreement wherein
16 the District sells wholesale water to the Customer at a wholesale water rate that will adequately
17 compensate the District for those current and future costs attributable to supplying wholesale
18 water to the Customer;
19
20 NOW, THEREFORE, The District and the Customer agree as follows:
21
22 SECTION I. - WATER SUPPLY
23
24 The District agrees to sell to the Customer and the Customer agrees to purchase from
25 the District up to the daily quantity of water shown in Exhibit "A" according to the terms and
26 conditions of this Agreement. The water shall be delivered to a Master Meter at a point in or
27 immediately adjacent to a site as depicted on Exhibit B and E. The District shall be the
28 Customer's primary source of water; provided that the Customer may use any existing
29 alternate source connections and re -use water as sources of water supply.
30
31
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 2
32 SECTION II. - DEFINITIONS
33
34 As used in this Agreement, unless the context clearly indicates otherwise, the
35 following words and phrases shall mean:
36 "Administrative Time" means the District's administrative costs incurred to
37 maintain, operate and repair the Wholesale Facilities.
38 Cubic Foot" means a unit of measurement of water equal to 7.48 gallons. The term "CCF"
39 shall mean 100 cubic feet of water.
40 "Distribution Main means any water main owned and operated by either the District or by the
41 Customer as part of its Retail Water System.
42 "District Peak Day Water" means the 24-hour maximum usage day measured in million
43 gallons pumped from the Everett System through the three pump stations operated by the
44 District.
45 "Everett Supply Contract" means the current agreement between the City of Everett and the
46 District for water supply, dated January 28, 2005, and any future amendments thereof.
47 Master Meter" means the measuring device installed to measure the volume of water
48 supplied to the Customer by the District.
49 "Peak Day Water" means the 24-hour maximum usage day measured in million gallons
50 during a calendar year.
51 "Regional Facilities" means District assets as identified on Exhibit C that are necessary to
52 provide service to all District retail and wholesale customers.
53 "Retail Water System means that system owned and operated by the District or by the
54 Customer composed of Distribution Mains and appurtenances used for receiving a supply of
55 water and distributing it directly to the District's or the Customer's retail customers.
56 "Service Connections means those separate connections between a Retail Water System
57 and a retail customer.
58 Service Meters means the meter or measuring device installed on a service line or Service
59 Connection for the purpose of measuring the volume of water supplied to a retail customer.
60 "Terminal Storage Reservoir" means a storage reservoir used primarily to provide
61 reserves against transmission failure from the supply, supply or pumping failure, pump control
62 storage to balance and economically operate the supply pumps and which permits a reduced
63 sizing in the supply transmission and pumping system to the terminal storage reservoirs.
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 3
64 Transmission Maine means a pipe owned and operated by the District primarily used for
65 carrying water from a source (currently the Everett Water System) to a Retail Water System that
66 normally has limited or no Service Connections.
67 "Wholesale Customer" means a customer who purchases water from the District
68 according to the terms and conditions of this Agreement or an agreement with substantially
69 similar terms and conditions, delivered through the Wholesale Facilities.
70 "Wholesale Facilities" means current assets, identified on Exhibit B, and future assets
71 hereafter added to an amended Exhibit B, owned and operated by the District that are necessary
72 to supply water to the Wholesale Customers in this Agreement. These Wholesale Facilities may
73 also be part of the Regional Facilities.
74 "Wholesale Water Cost" means all of the costs incurred by the District to supply water to
75 Wholesale Customers, including
76 (1) The cost of purchased water, which is the annual amount (U.S dollars) paid by the
77 District for water supplied to the Wholesale Customers under either the Everett
78 Supply Contract or any other agreement for the purchase of water to supply the
79 Wholesale Customers.
80 (2) Maintenance and operation costs ("Wholesale M&O costs"), which are costs
81 incurred by the District to maintain, operate and repair the Wholesale Facilities,
82 including Administrative Time, cost of materials and supplies, and the full cost of
83 labor attributable to serving the Wholesale Customers.
84 (3) "Power Costs," which are the electrical and other fuel charges associated with
85 operating the Wholesale Facilities.
86 (4) "Existing Wholesale Debt," (Principal + Interest) which is the existing bonded
87 debt service and debt obligations of the District attributable to serving the
88 Wholesale Customers, including principal and interest payments.
89 (5) "Future Wholesale Debt Service," (Principal + Interest), which is future debt
90 issued by the District to finance capital improvements and infrastructure,
91 attributable to serving the Wholesale Customers, including principal and interest
92 payments.
93 (6) "Cash (Rate) Funded Wholesale Facility Improvements," ("CFI") which is that
94 revenue component of the Wholesale Water Rate used, in whole or in part, to cash
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 4
95 fund Wholesale Facilities.
96 (7) "Other Program Funding," which includes costs incurred by the District that
97 benefit Wholesale Customers but are not otherwise included in the Wholesale
98 Water Rate.
99 (8) "Quantity of Water Supplied," which is the prior year's total of water supplied to
100 the Wholesale Customers (CCF) as measured by all Master Meters, plus or minus
101 any adjustments for individual services of the Customer or District connected
102 upstream or downstream, respectively, of the Master Meters.
103 (9) "District Finance Option," which is a revenue component of the Wholesale Water
104 Rate used in whole or in part to fund capital improvements where bonds or CFI
105 are impractical or are not available.
106 "Wholesale Water Rate" means the cost of water to the Wholesale Customer in dollars
107 per hundred cubic feet (CCF).
108 "Wholesale Water System" includes the Wholesale Facilities and the Retail Water
109 System of any Wholesale Customer and of the District.
110
111 SECTION III. - FUTURE FACILITY ACQUISITIONS
112
113 The Customer and the District agree that at such times in the future that the Customer
114 extends its corporate boundaries to include parts of the District's service area, the Parties will
115 benefit from having a process in place to determine what will become the property of the
116 Customer and what will remain the property of the District. Recognizing that Chapter 35.13A
117 RCW is the governing basis for such a process, the fact that the District provides service to seven
118 cities and the county's unincorporated area adds complexity to the process which requires more
119 process detail to insure that both the Customer and the District can fulfill their respective
120 obligations for service. Therefore, the following process shall define the requirements and
121 responsibilities of each party.
122 The Parties agree that the facilities and infrastructure that are necessary for supporting the
123 District's regional customers ("Regional Facilities") are identified herein. In areas proposed for
124 annexation, where the potential exists for the transfer of ownership of any portion of the
125 Regional Facilities, it is agreed that the Regional Facilities shall remain in the ownership and
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 5
126 control of the District. Nothing herein shall be interpreted to waive any right or obligation under
127 Washington law as the same exists or shall hereinafter be created.
128 If the Customer initiates the process to consider annexation of additional areas that are
129 located within the District, the Customer will notify the District in writing of its intent. After
130 receiving Customer's notice of intent to annex, representatives of the Customer and the District
131 shall meet at a mutually agreeable time and place to review the proposed annexation area with
132 regard to its potential impact on water and sewer service. Discussions between the Customer and
133 the District shall include a preliminary assessment of service continuing with the District and/or
134 the potential of facility transfer to the Customer. The preliminary assessment should include a
135 review of the extent of modifications that would be required to transfer the utilities to the
136 Customer, including the possibility for relocation of master meters and realignment of existing
137 distribution utilities.
138 Within 30 days following the initial meetings and completion of the preliminary
139 assessment of utility options, the Customer agrees to notify the District in writing of its intent
140 regarding which Party should be the service provider to the proposed annexation area.
141 If the Customer provides notice of its intent to further consider Customer ownership of
142 certain utilities owned by the District within the proposed annexation area, the Customer and the
143 District may agree to participate in a more detailed study in order to determine the extent of
144 facility modifications and costs impacts associated with the transfer of the utilities in the annexed
145 areas. The cost of any such study shall be split equally between the Parties.
146 After the Parties' review and analysis of the additional data provided by the detailed
147 study, if the Customer notifies the District in writing of its decision to assume ownership of the
148 utilities, a plan will be developed jointly for defining the steps necessary to complete the transfer
149 of ownership. The plan will include design and specifications for any required infrastructure
150 improvements, transfer of accounts, and final agreements on costs involved including costs
151 related to outstanding bond indebtedness. The costs associated with the preparation of this plan
152 shall be split equally between the Parties.
153 Once the plan (including the allocation of construction costs between the Parties) has
154 been agreed to by the Customer and the District, the District will prepare the final contract plans
155 and specifications for the required improvements, and will administer the contract for the
156 construction.
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 6
157 Upon completion of the required improvements and payment to the District of agreed
158 costs associated with the assumption of the utilities, including all associated construction costs,
159 the District will transfer accounts, assign any existing easements, and provide the necessary bills
160 of sale for the transferred utilities.
161 The parties agree that the contract may be reopened if the assumption will affect rates. If
162 the process leads to facility assumption, the parties agree that the District would be provided
163 three (3) years to make the changes necessary to allow for transitional impact adjustments by the
164 District.
165 In the event the Parties are not able to agree on the plan, the amounts to be paid by the
166 Customer for the transfer of facilities, or any other disputes relating to the Customer's
167 acquisition of the District's facilities, the matter shall be referred to mediation for resolution in
168 accordance with Section XVII (Dispute Resolution). If the matter is not resolved through
169 mediation, the Parties shall proceed in accordance with the dispute resolution procedures set
170 forth in Section XVII.
171
172 SECTION IV. - CONTINUITY OF SERVICE
173
174 Except as otherwise provided, the District's supply of water to the Customer shall be
175 continuous. In the event of a general emergency or water shortage affecting the District, the
176 District and the Customer shall implement necessary water conservation measures. Because
177 the District and the Customer have critical customers, the District shall consult with the
178 Customer regarding water allocations. General restrictions placed upon deliveries to the
179 Customer shall be made according to the District's most recent Emergency/Drought
180 Response Plan. In the event of localized emergency problems, temporary service
181 interruptions may result.
182 The District may have to implement emergency Wholesale Water System
183 conservation measures to meet an emergency condition. The Customer shall assist and
184 support such emergency conservation measures.
185 If the District determines that interruptions and reductions are necessary or reasonable in
186 case of system emergencies, the District shall provide oral notice to the Customer and may
187 temporarily interrupt or reduce deliveries of water to the Customer. Except in cases of
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 7
188 emergency, and to avoid unreasonable interference with the Customer's operations, the District
189 shall give the Customer at least fourteen (14) calendar days notice of any proposed interruptions
190 or reduction in service, the reason therefore, and the probable duration thereof, including any
191 interruptions or reduction in services that will be caused by the installation of equipment, repairs,
192 replacements, investigations, inspections or other maintenance performed by the District on its
193 water system or those parts of the system supplying the Customer.
194 The City of Everett currently holds water rights regulated by the State Department
195 of Ecology and an approved Water System Plan regulated by the State Department of
196 Health that enables the City of Everett to perform the Everett Supply Contract. Said water
197 rights and plan currently authorize the District to supply City of Everett water to Customer
198 under this Agreement and consistent with the terms of the Everett Supply Contract.
199 Customer acknowledges and agrees that any interruption or restriction of said authorization
200 could result in the curtailment, interruption or reduction in the District's service to
201 Customer, the declaration of an emergency, or other measures reasonable under the
202 circumstances.
203 In the event of any of the foregoing or otherwise, the District shall have no
204 obligation whatsoever to obtain and furnish a substitute supply of water and Customer may
205 obtain and use any alternate lawful source of water supply including re -use water as
206 substitute water supply. The District shall cooperate with the Customer and use its best
207 efforts to assist Customer in obtaining an alternative source(s) of water supply. Nothing
208 herein shall be interpreted to waive any right or obligation under Washington law as the
209 same exists or shall hereinafter be created.
210
211 SECTION V. - OPERATIONAL EFFICIENCY
212
213 The Everett Supply Contract includes a rate component of peak to average day flow
214 that affects the District and the Customer. Therefore, as a material element of this
215 Agreement, the Customer shall track during the high water demand period June through
216 August the operational control components of its Retail Water System, including, at a
217 minimum, reservoir storage capacity and flow controls, and provide the data collected to
218 the District in accordance with procedures and on a schedule as established by the
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 8
219 Wholesale Committee.
220
221 SECTION VI. - WHOLESALE COMMITTEE
222
223 The District shall establish and staff, and the Customer shall participate in, a wholesale
224 committee ("Wholesale Committee") composed of the District and each Wholesale Customer.
225 Each Wholesale Customer shall designate in writing a representative to serve on the Wholesale
226 Committee. A representative may be replaced by a written designation of the committee
227 member. The Wholesale Committee shall have the powers and authority as set forth below:
228 1. Advisory Powers and Authority. The Wholesale Committee shall review and advise
229 the District on the following topics or issues:
230 a. Proposed wholesale rate changes, including Administrative Time;
231 b. Proposed multi -year wholesale capital improvement plans;
232 c. Coordination with the District on day-to-day operations relating to high water
233 demand;
234 d. Proposed bond issues for wholesale system capital improvements;
235 e. Changes in District standards that would apply to wholesale improvements;
236 f. Proposed modifications to the Everett Supply Contract;
237 g. Proposed regulatory changes that could potentially impact wholesale customers;
238 h. Day-to-day operational issues and coordination efforts; and
239 i. District Finance Option
240
241 2. Approval Powers and Authority. The Wholesale Committee shall review and approve
242 of the following topics:
243 a. The District's Emergency/Drought Response Plan;
244 b. Limits on cash funded wholesale system capital improvements; and
245 c. "Other Program Funding" as defined and used in this Agreement.
246 Approval will require a majority vote of the Wholesale Customers plus District.
247 The Wholesale Committee shall meet annually by the 15t' of March to review the
248 proposed wholesale rates and, as necessary, to address the other topics as outlined above. A
249 meeting may be called by any member of the Wholesale Committee. The Wholesale
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 9
250 Committee shall evaluate each Wholesale Customer's operational efficiency by the end of each
251 year and provide a report and recommendation to the District's Board of Commissioners on the
252 summarized data of the Wholesale Customers' tracking of high water demand to identify
253 potential efficiency measures to be implemented under the state -mandated Water Use
254 Efficiency Rule, Each Wholesale Customer shall receive a copy of the report.
255
256 SECTION VII. - MASTER METER
257
258 All water delivered by the District to Customer shall be measured by a Master
259 Meter. All Master Meters, including vaults and appurtenances, will be owned, maintained,
260 repaired, replaced and upgraded by the District and the cost thereof included in the
261 Wholesale Water Cost. The District shall own all facilities from the connection to the
262 District pipeline to the upstream flange of the valve downstream of the Master Meter. The
263 cost of a new Master Meter requested by the Customer, including appurtenances and
264 installation, shall be paid by the Customer. Relocation of a Master Meter necessitated by
265 the Customer shall be paid by the Customer.
266 The District shall establish standards for Master Meters, including appurtenances
267 and access to flow data. Access to the Master Meter and the flow records shall be made
268 available to the Customer upon request. The Master Meter shall be checked by the District
269 on a schedule and for accuracy per the manufacturer's recommendation and the cost thereof
270 included in the Wholesale Water Cost. Either the District or the Customer may request
271 additional tests. The costs of additional tests shall borne equally, if both Parties agree to
272 the test; otherwise, by the Party requesting the test, unless the meter is not performing
273 within the manufacturer's specification, whereupon the benefited Party shall pay for the
274 test. Any adjustment to charges for water supplied shall be determined by the average water
275 use of the three prior years for the same period, unless some other method is agreed upon.
276 Either a credit or an additional billing calculated at the applicable Wholesale Water Rate
277 shall accrue to the appropriate party. If review of the meter records does not establish when
278 the change in accuracy occurred, the period of adjustment shall be one-half of the period
279 since the last meter calibration, not to exceed 12 months.
280
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 10
281 SECTION VIII. - AREA OF USE
282
283 The Customer shall not furnish service under any terms to services or systems other than
284 those within its approved service area as defined within its Water Comprehensive Plan without
285 first receiving written approval of the District. The Customer currently serves other water
286 suppliers or the service area of such suppliers by agreement. Those agreements are identified on
287 Exhibit D and continued service to those suppliers is hereby approved by District.
288
289 SECTION IX. - WATER QUALITY
290
291 The water delivered by the District to the Master Meter shall comply with state and
292 federal standards for drinking water and be of the same standard and quality normally
293 delivered to the District's other customers. The District shall not be liable for any
294 degradation of water quality and resulting damages that may occur beyond the Master
295 Meter, including liability for acts of sabotage. Customer shall operate its system in
296 conformance with law and in a manner which does not impair the water quality of the
297 "Wholesale Water System."
298
299 SECTION X. - SUPPLY TO DISTRICT -OWNED SERVICES TRANSMITTED
300 THROUGH CUSTOMER MAINS
301
302 The District shall have the right to continue to serve its Retail Water System with
303 water transmitted through the Customer's Master Meter and Retail Water System. Every
304 two months, the District shall read meters in that portion of the District's Retail Water
305 System supplied through Customer's Master Meter and Retail Water System. The volume
306 of water shown by meter reading shall be deducted from the total Master Meter reading for
307 the month in which these meters are read, plus 25% added for meter losses, flushing, leakage
308 and other authorized unmetered usage.
309
310
311
312
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 11
313 SECTION XI. - WHOLESALE WATER RATE
314
315 Wholesale Customers shall pay a Wholesale Water Rate that shall be adjusted annually
316 on April 1 and shall be effective on that date. The Wholesale Water Rate shall recover the
317 District's Wholesale Water Cost computed by the following formula:
318
319 R=E+M+P+(ED+FD)+CFI+DFO+O
320 Q
321 "ere:
322 R = Wholesale Water Rate ($/CCF) computed to the nearest ten -thousandth of a
323 dollar
324 E = The District's cost of Purchased Water ($/CCF)
325 M = Wholesale M&O Costs for the prior calendar year, excluding Power Costs
326 P = Power Costs for the prior calendar year [Wholesale -Related Portion Only]
327 ED = Existing Wholesale Debt including Principal + Interest
328 FD = Future Wholesale Debt Service including Principal + Interest
329 CFI = Cash (Rate) Funded Wholesale Facility Improvements
330 DFO = District Finance Option
331 O = Other Program Funding as may be deemed appropriate by the Wholesale
332 Committee
333 Q = Quantity of Water Supplied (CCF) in the prior calendar year measured by
334 the Wholesale Customers' Master Meters
335
336 In determining the Wholesale Water Rate, the District shall be governed by the following
337 principles:
338
339 1. Revenue recovery for debt service shall be based upon the debt service
340 (payment) schedule associated with each debt issue. Whenever the District issues re-
341 funding debt, it shall analyze the refunding issue to determine an equitable allocation of
342 principal and interest to the Wholesale Water Rate. The Wholesale Committee shall be
343 convened to review the allocation for either a new debt issue or a refunding issue.
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 12
344
345 2. In the year in which the District proposes to issue a new long-term debt
346 instrument to finance, in whole or in part, the construction of or improvements to
347 Wholesale Facilities, the cost attributable to Wholesale Facilities, including projected
348 principal, interest, reserve payments, and debt service, incurred by the District for that
349 year shall be included in the Wholesale Water Rate. The cost of such debt shall be
350 allocated to the Wholesale Customers, over the life of the debt issue, according to the
351 specific use of proceeds from that debt issuance. At the end of the year, and after the
352 debt has been issued, the debt issue is considered "Existing Wholesale Debt" for purposes
353 of establishing wholesale water rates in subsequent years.
354
355 3. Whenever financially feasible, debt service coverage shall be met by the
356 District's overall financial operations (retail and wholesale). If debt service coverage
357 cannot be met by the District's overall financial operations, then the Wholesale Water
358 Rate shall be adjusted to include a component sufficient to meet the specific debt service
359 coverage covenants.
360
361 4. Every fifth (5) year commencing in the year 2015, the District shall re-
362 determine Wholesale M&O Costs for the purpose of setting the Wholesale Water Rate
363 for that year. In each of the subsequent four years, the Wholesale M&O Cost (M) shall
364 be escalated by the consumer price index for all Urban Consumers (CPI-U)
365 (Seattle/Tacoma/Bremerton metropolitan area) December to December or a comparable
366 index, if that index is unavailable; provided that in any year, the District may, at its
367 discretion, forego escalation of cost according to the index and determine the actual
368 Wholesale M&O Costs that year.
369
370 5. Power Costs attributable to the Wholesale Customers shall be determined
371 when the Wholesale Water Rate is re -calculated and shall be equal to the following:
372 P = (District's prior calendar year cost of power at Wholesale Facilities identified on
373 Exhibit B, and as Exhibit B may be amended) times (the Wholesale Customers'
374 combined prior calendar year volumetric use of water as recorded on Master Meters
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 13
375 identified on Exhibit B, and as Exhibit B may be amended) divided by (the District's
376 prior calendar year volumetric use of water as recorded at the District's Master Maters at
377 the Evergreen Way Pump Stations.
378
379 6. The CFI component of the Wholesale Water Rate shall be determined by
380 the District after a review of the District's 5-year capital improvement plan by the
381 Wholesale Committee. The Wholesale Committee shall approve CFI funding for each
382 year of the five (5) year capital improvement plan, after considering the different
383 financial and rate impacts of funding wholesale projects with cash or by debt and such
384 other factors deemed relevant by the Committee.
385
386 7. Annually, before the Wholesale Water rate is developed, the Wholesale
387 Committee shall review and approve what, if any, Other Program Funding, including
388 costs incurred by the District that are not otherwise included in the Wholesale Water
389 Cost, should be allocated to Wholesale Customers and included in the Wholesale Water
390 Rate. Approval will require a majority vote of the Wholesale Customers plus District.
391
392 8. The District shall establish a separate wholesale capital improvement
393 sinking fund (reserve) to segregate and account for certain revenues received from the
394 Wholesale Customers as identified in this Agreement. The sinking fund shall contain the
395 balance in the bond reserve fund as identified in the current wholesale contract. The
396 District shall deposit into the wholesale capital improvement sinking fund all revenues
397 received from:
398
399 A. The Cash (Rate) Funded Improvements (CFI) component of the
400 Wholesale Water Rate; and
401 B. Wholesale Water Rates to meet the minimum debt service coverage
402 ratio requirements (rate covenant).
403
404 Interest earned on the balance of the Wholesale Capital Improvement Sinking
405 Fund shall be retained in the sinking fund and credited to the sinking fund on a monthly
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 14
406 basis in a manner consistent with the methodology the District uses to allocate interest to
407 its funds.
408 Except as otherwise provided, all funds deposited into the Wholesale Capital
409 Improvement Sinking Fund shall be applied to the cost of wholesale capital improvement
410 projects undertaken by the District. On the recommendation of the Wholesale Committee
411 the District may use these funds to pay the cost of any other wholesale -related activity
412 (e.g. early buy -down of debt, buy -down a rate adjustment, rate transition, etc.).
413
414 9. Whenever a component of the Wholesale Water Cost is determined by
415 meter readings and some condition (e.g. meter failure, emergency conditions [e.g.
416 earthquake]) would make the use of those readings unreasonable or inequitable to the
417 District or to the Wholesale Customers, the District shall use its best and reasonable
418 judgment to "normalize" the volumetric usage data for purposes of establishing the
419 affected component of the Wholesale Water Rate.
420
421 10. The District may utilize District funds to finance Wholesale Facility
422 improvements, the funding size of which is not practical for issuance of bonds, and the
423 Cash (Rate) Funded Wholesale Facility Improvements option has not been approved by
424 the Wholesale Committee. The capital funds necessary for the improvement would be
425 provided by the District subject to reimbursement through wholesale water rates for a
426 term not to exceed ten (10) years. The rate would be determined based upon the average
427 rate of investments for District funds for the prior year. The rate may be adjusted
428 annually utilizing the District's annual investment rate for the prior year. The District
429 also reserves the right to terminate this funding option at any time during the term by
430 adding the remaining funds yet to be paid to a larger bond issue. If so elected, the
431 wholesale portion would be the pro rata share of the bond issue at the terms of the bond
432 issue.
433
434
435
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 15
436 SECTION XII. - BILLING & PAYMENT
437
438 The District shall bill the Customer for water supplied under this Agreement on regular
439 monthly intervals.
440 The Master Meters shall be read and recorded on or about the last normal work day of the
441 month in which the service was furnished. Billing to the Customer shall be made by the 1 Oth day of
442 the month following, and payment to the District is due by the 30th day of the month in which the
443 statement is received. If any payment or portion thereof due the District shall remain unpaid for
444 25 days following its due date, the Customer shall be charged with and pay to the District interest
445 on the amount unpaid from its due date until paid at the rate of eight (8)% per annum.
446 If any or all of a bill is in dispute, the Customer shall pay the amount as billed and both
447 the District and the Customer shall agree to the time line to resolve the disputed amount. If any
448 material error, an amount greater than $1,000 per month is discovered in the rate calculation,
449 billing, payment, interest allocation, or any other calculation or assumption, the District shall
450 correct the error retroactively from the date of receipt of notice of the error backwards for a
451 period of up to three (3) years or as mutually agreed. The $1,000 amount shall be adjusted for
452 inflation every five (5) years with CPI-U as described in Section XI of this agreement.
453
454 SECTION XIII. - TERM & EXPIRATION
455
456 (1) The term of this Agreement shall be from its effective date until January 1, 2055.
457 The Parties may renew this Agreement by mutual written agreement upon such terms and
458 conditions as the Parties may later agree.
459 (2) If the Customer shall cease to take water from the District without the District's
460 consent, the Customer shall remain liable for its proportionate share of the then existing wholesale
461 bonded indebtedness issued before January 1, 2055 as may at that time be determined including
462 credits for certain payments and recognition given to the growth experienced in the Customer, District,
463 and all other Wholesale Customers. This liability shall continue only until such time as all or
464 part of the water supply no longer taken by the Customer from the District is sold by the District
465 to another party. In that event, liability shall be reallocated, in whole or in part, to the new
466 customer.
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 16
467 (3) If the District shall cease to supply water to the Customer without the Customer's
468 consent, the Customer shall cease to be liable for its proportionate share of the wholesale bonded
469 indebtedness as described in Subsection 2 above.
470
471 SECTION XIV. - NOTICE OF NEGOTIATION
472
473 The Customer shall receive timely written notice of negotiation with City of Everett for a
474 rate change or additional water and the Customer shall have the right to be present at such meetings.
475
476 SECTION XV. - FORCE MAJEURE AND CHANGES IN LAW
477
478 Neither Party hereto shall be considered to be in default in respect to any obligations
479 hereunder if prevented from fulfilling such obligations due to conditions beyond their reasonable
480 control or due to changes in state or federal law. If a Party is unable to perform in whole or in
481 part because of such condition or change in the law, the Party shall diligently and promptly take
482 reasonable steps to allow it to perform. The Parties expressly acknowledge and agree that the
483 inability or preclusion of the City of Everett to perform, in whole or material part, the Everett
484 Supply Agreement caused by an order or directive of governmental authority or a court with
485 jurisdiction shall constitute a force majeure or change in law event hereunder.
486
487 SECTION XVI. - LEGAL RELATIONS
488
489 Each Party shall defend, hold harmless, and indemnify the other from any and all claims,
490 demands, suits, and judgments arising out of its conduct. If, and to the extent, the Parties are
491 both liable to a third party claimant, each Party shall be responsible to the extent of its fault, and
492 shall defend, hold harmless, and indemnify the other for its fault. The foregoing indemnity is
493 specifically and expressly intended to constitute a waiver of each Party's immunity under
494 Washington's Industrial Insurance Act, RCW Title 51, but only with respect to the other Party
495 only, and only to the extent necessary to provide each Party with a full and complete indemnity
496 of claims made by the other Parry's employees. The Parties acknowledge that these provisions
497 were specifically negotiated and agreed upon by them.
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 17
498 SECTION XVII. - DISPUTE RESOLUTION
499
500 The Parties are committed to working cooperatively in resolving all matters related to this
501 Agreement and achieving its intent and purpose. If a dispute should arise, the Parties agree to
502 meet on an informal basis within fourteen (14) calendar days after receipt of written notice of the
503 dispute submitted by a Party to attempt to resolve the dispute.
504 If the Parties are unable to resolve the dispute on an informal basis within thirty (30)
505 days, the Parties agree they shall utilize mediation. Each Party shall be responsible for the costs
506 of their own legal representation and pro rata cost of mediator.
507 Any dispute arising under this Agreement that is not resolved pursuant to the mediation
508 process may, upon mutual agreement of the Parties, if such agreement occurs within twenty
509 (20) calendar days of the failure of the Parties to reach resolution through mediation, be resolved
510 by binding arbitration by a single arbitrator. Within seven (7) calendar days of the date the
511 Parties agree to arbitration, each Party shall provide the other Party with the names of three (3)
512 neutral arbitrators having experience in the subject matter of the dispute and in arbitrating
513 disputes. The Parties will thereafter attempt in good faith to select an arbitrator from this panel
514 of six (6) potential arbitrators.
515 If the Parties are unable to agree upon a single arbitrator within twenty (20) calendar days
516 from the date the Parties agree to binding arbitration, then each Party shall designate one (1)
517 arbitrator from its panel of three (3) arbitrators. The two (2) designated arbitrators shall then
518 select a third arbitrator from the remaining arbitrator panel members, and this third arbitrator
519 shall act and serve as the single arbitrator for the dispute. The Parties shall equally split the
520 arbitrator's fee and all arbitration expenses. The prevailing party at arbitration shall be entitled to
521 an award by the arbitrator of its attorneys' fees and costs at the arbitrator's discretion.
522 The Parties agree that this dispute resolution process shall precede any action in a judicial
523 or quasi-judicial tribunal.
524 The Parties also agree that at all times pending resolution of the dispute, the Parties shall
525 continue to perform their respective duties and obligations in accordance with the terms and
526 conditions of this Agreement. The intent of the Parties is to preserve the status quo under the
527 Agreement. By way of illustration and not limitation, the Parties wish to assure uninterrupted
528 water service and compliance with the payment provisions of Section XII.
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 18
529 SECTION XVIII. - GOVERNING LAW AND VENUE
530
531 This Agreement shall be governed by and construed in accordance with the laws of the
532 state of Washington. Any lawsuit or judicial action or proceeding arising out of or relating to
533 this Agreement that could not be resolved through Dispute Resolution, shall be heard in the
534 Superior Court of the State of Washington in and for Snohomish County.
535
536 SECTION IXX. - NO THIRD PARTY BENEFICIARIES
537
538 Except as expressly set forth in this Agreement, nothing in this Agreement is intended
539 to confer upon any person or entity, other than the Parties hereto, any rights, benefits, or
540 obligations. No such third -party shall have any right to enforce any of the provisions of this
541 Agreement unless expressly stated otherwise herein.
542
543 SECTION XX. - LIMITATION ON DAMAGES
544
545 Notwithstanding any other provision of this Agreement, neither the District nor the
546 Customer shall be liable to the other under or pursuant to this Agreement for indirect,
547 incidental, special, exemplary, punitive, or consequential damages, including but not limited
548 to damages for lost profits, revenues or benefits, loss of property use, the cost of capital, or
549 the cost of purchased or replacement water.
550
551 SECTION XXI. - GENERAL PROVISIONS
552
553 (1) Waiver: A waiver by either Party of any terms or conditions of this
554 Agreement shall not be deemed or construed to be a waiver of any other term or condition,
555 nor shall the waiver of any breach be deemed or construed to constitute a waiver of any
556 subsequent breach, whether of the same or any other term or condition of this Agreement.
557 (2) Assignment: Except where one of the Parties merges, consolidates or
558 combines with another entity neither this Agreement nor any of the rights, interests or
559 obligations created hereunder may be assigned by either Party without the written consent of
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 19
560 the other Party. This Agreement shall be binding upon and inure to the benefit of the
561 successors and assigns of the respective Parties.
562 (3) Notices: Any notices required or permitted to be given hereunder shall be given
563 in writing and shall be delivered (a) in person, (b) by certified mail, postage prepaid, return
564 receipt requested, (c) by electronic transmission in the form of email or facsimile, or (d) by a
565 commercial overnight courier that guarantees next day delivery and provides a receipt, and such
566 notices shall be addressed as follows:
567
568 To the Customer:
569 Public Works Director
570 City of Edmonds
571 7110 210t1} Street SW
572 Edmonds, WA 98026
573 Fax: 425-774-6057
574
575 To the District:
576 General Manager
577 Alderwood Water & Wastewater District
578 3626 - 156th Street SW
579 Lynnwood, Washington 98087
580 Fax: 425-742-4562
581
582 or to such other address designated in writing by the addressee.
583 (4) Entirety: All prior negotiations and agreements between the parties hereto
584 relating to the subject matter hereof are merged into and superseded by this Agreement,
585 which shall constitute the entire agreement between the Customer and the District concerning
586 the sale of water to the Customer.
587 (5) Authority: Each Party represents and warrants that it has the power and legal
588 authority to enter into this Agreement. The individual(s) executing this Agreement on behalf
589 of the respective Party represents and warrants that such individual has the power and
590 authority to do so.
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 20
591 (6) Effective Date: This Agreement shall become effective ("Effective Date")
592 upon the date of the expiration or termination of the existing contract for wholesale water
593 supply between the Parties dated the 20th day of September 2010.
594 (7) Attorneys' Fees and Costs: In the event that either Party commences any legal
595 action or proceeding relating to the provisions or enforcement of this Agreement, the
596 prevailing party shall be entitled to receive, and the non -prevailing party shall pay, its
597 reasonable attorneys' fees and costs, including those incurred in any appeal.
598 (8) Exhibits Incorporated by Reference: Any exhibits attached to this Agreement
599 are fully incorporated herein by this reference.
600 (9) Titles to sections and subsections in this Agreement are for reference purposes
601 only and shall have no substantive effect.
602 (10) In the event of a material breach or default of this Agreement by either of the
603 Parties, the Parties acknowledge that it may be difficult to measure the resulting damages and
604 that monetary damages may not provide a complete or adequate remedy. Accordingly, the
605 non -defaulting Party, in addition to damages and any other relief sought or recovered, shall
606 be entitled to seek injunctive relief and the specific performance of the terms and conditions
607 of this Agreement.
608 (11) If any term, condition or provision of this Agreement is determined to be void,
609 unenforceable or limited in its application or effect in a legal proceeding, such determination
610 shall not affect any other provisions in this Agreement and all other provisions shall remain
611 in full force and effect.
612 (12) Any new water Wholesale Customer Agreement utilizing the same Wholesale
613 Water Facilities as included in the Agreement, shall have the same terms and conditions as
614 this Agreement, with the exclusion of Exhibits A, D and E.
615
616
617
618
619
620
621
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 21
622 CITY OF EDMONDS
623 A Municipal Corporation
624
625
626 By:�`
627 Its: ma- o 0-
628 Date: y- -)o - /o
629
630
631
632
633
634
635
636
637
638
639
640
641
642
643
644
645
646
647
648
ATTEST:
—,L,e, .
City Clerk
APPR (h&5-
M:
City Attorney
ALDERWOOD WATER & WASTEWATER
DISTRICT
A Municipal Corporation
By:
Its: BOARD Prl DENT
Date: _ULMM t'p2 7. 2010
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds
pg. 22
ALDERWOOD WATER & WASTEWATER DISTRICT
AND CITY OF EDMONDS
WHOLESALE WATER SUPPLY AGREEMENT
EXHIBIT A — QUANTITY OF WATER TO BE PURCHASED
All quantities in Million Gallons per Day (MGD)
2010
3.6
7.1
2020
3.6
7.2
2050
4.6
9.0
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 23
ALDERWOOD WATER & WASTEWATER DISTRICT
AND CITY OF EDMONDS
WHOLESALE WATER SUPPLY AGREEMENT
EXHIBIT B - WHOLESALE FACILITIES
The water lines including transmission facilities are shown on a separate map exhibit.
The following is a list of the wholesale facilities referenced in the Agreement, in addition to the
water lines shown on the separate map.
Evergreen Way Puimp Station Site (6003 Evergreen Way, Everett)
Pump Station No. 1
Pump Station No. 2
Maintenance and Operation Site (15204 35th Avenue W, Lynnwood)
Reservoir No. 1
Chlorination Facility
Ancillary valves and piping associated with the above assets
Administration Site (3626 156t1i Street SW Lynnwood)
Reservoir No. 2
Reservoir No. 3
Chlorination Facility
Ancillary valves and piping associated with the above assets
Edmonds Master Meter Site (168th Street SW and 62nd Avenue W, Edmonds)
Master Meter
Vault and ancillary assets
Lynnwood Master Meter Site (Spruce Way and 164th Street SW, Lynnwood)
Master Meter
Vault and ancillary assets
Mountlake Terrace Master Meter Site (212th Street SW and 44th Avenue W, Mountlake Terrace)
Master Meter
Vault and ancillary assets
(Emergency supply at 38th Avenue W and 228th Street SW)
Mukilteo Water & Wastewater District Meter Site (Harbour Point Boulevard and St. Andrews
Drive; and Beverly Park Road and Center Road, Mukilteo)
Master Meter
Vault and ancillary assets
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 24
ALDERWOOD WATER & WASTEWATER DISTRICT
AND CITY OF EDMONDS
WHOLESALE WATER SUPPLY AGREEMENT
EXHIBIT C - REGIONAL FACILITIES
The regional water lines and larger water transmission facilities are shown on a separate map
exhibit.
The following list contains additional regional facilities as referenced in the Agreement.
Evergreen Wa-Pump Station Site (6003 Evergreen Way, Everett)
Leased Site
Pump Station No. 1
Pump Station No. 2
Maintenance and Operation Site (15204 35t' Avenue W, Lynnwood)
Site
Reservoir No. 1
High Tank No. 1
High Tank No. 2
Booster Pump Station
Chlorination Facility
Ancillary valves and piping associated with the above assets
Maintenance and Operation Administration Building
Shop Facility
Warehouse Facilities
Material Storage Facilities
Administration Site (3626 156t' Street SW, Lynnwood)
Site
District Administration Building
Reservoir No. 2
Reservoir No. 3
Chlorination Facility
Ancillary valves and piping associated with the above assets
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 25
ALDERWOOD WATER & WASTEWATER DISTRICT
AND CITY OF EDMONDS
WHOLESALE WATER SUPPLY AGREEMENT
EXHIBIT D - CUSTOMERS WATER SERVICE AGREEMENT TO OTHER
SUPPLIERS
NONE IDENTIFIED
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 26
ALDERWOOD WATER & WASTEWATER DISTRICT
AND CITY OF EDMONDS
WHOLESALE WATER SUPPLY AGREEMENT
EXHIBIT E — MASTER METER LOCATION
1680' Street SW and 62nd Avenue W
WHOLESALE WATER SUPPLY AGREEMENT
Alderwood Water & Wastewater District / City of Edmonds pg. 27