HomeMy Public PortalAboutMemo re Agreements 030905 - EDITED 031510MEMORANDUM RE: SEWER DISTRICT - 1
TROUT, WEEKS & NEMEC, PLLC
MEMORANDUM
TO: City of McCall
FROM: Kim J. Trout; David T. Krueck
RE: Memorandum Re: Sewer District Issues
DATE: 3/9/05
_______________________________________________________________________
INTRODUCTION
The City was presented with analyses from both J-U-B Engineers, Inc. and
Holladay Engineering Co. in the fall of 2004 concluding that the current wastewater
treatment facility does not have the capacity to serve additional users.1
The Sewer District is fully aware of these capacity limitations.
Both firms
identified the land application portion of the facility as the limiting factor.
2 In spite of this
knowledge, the Sewer District recently approved inclusion of two new subdivisions with
approximately 211 dwelling units to be added to the facility.3
The City Council wants to explore whether the City should attempt to pursue
legal recourse against the Sewer District to limit the inclusion of additional users to the
existing treatment facility.
On February 24, 2005, the
City annexed these two subdivisions into the City of McCall.
1 J-U-B recommended very limited growth (10-20 units per year) while Holladay recommended a
moratorium. 2 J-U-B and Holladay provided their written analysis to the Sewer District and Lindley Kirkpatrick notified
the Sewer District in writing on these limitations.
MEMORANDUM RE: SEWER DISTRICT - 2
FACTUAL BACKGROUND
Cooperative Agreement and Amendments
In December 1977, the Payette Lakes Water and Sewer District (“Sewer District”)
and the City of McCall (“City”) entered into a Cooperative Agreement to establish the
rights and duties of the parties for the shared use of the sewage treatment facilities then
owned by the City. Section 10 of the Cooperative Agreement, pertaining to Future
Improvements, specifically provides:
“The District shall participate, in relation to benefit derived, in any future
improvements to the sewage treatment facilities of the City to which the parties
mutually agree.”4
In December 1978, the City and the Sewer District executed the First Amendment
to Cooperative Agreement (“First Amendment”). The purpose of the First Amendment
was to establish the allocation of the existing sewage treatment facility.5
Section 16 of the First Amendment states:
Exhibit ‘A’ to
the First Amendment describes the allocation as being 45% to the City in 1978, 47% in
1988 and 48% in 1998, with the remaining capacity being allocated to the Sewer District.
“In the event lands now situate, lying and being within the boundaries of the
Payette Lakes Water & Sewer District are from time to time annexed to and
become a part of the City of McCall the allocation of capacity of the sewage
treatment system of the City of McCall shall be increased to include the capacity
necessary to furnish sewage treatment facilities to such annexed lands limited to
the densities heretofore applied to such lands by the District.”6
3 Minutes from January 21, 2005, Sewer District Board Meeting and cover page referencing the additional
inclusion. 4 Cooperative Agreement, p. 5. 5 Section 15 of the First Amendment states that the total design flow of the system is 2,000,000 gallons per
day (2 MGD). Bill Keating has subsequently described the total capacity to have been 1.8 MGD in 1987
and is presently 1.8 MGD. The 2 MGD estimate was based on the presumption that a fifth sand filter
would be installed by 1998.
6 First Amendment to Cooperative Agreement, p. 2.
MEMORANDUM RE: SEWER DISTRICT - 3
Consequently, as the City annexes property formerly within the Sewer District’s
boundaries, the City must serve such customers within its allocation of the treatment
facility.
In July 1984, the parties entered into the Fourth Amendment to Cooperative
Agreement (“Fourth Amendment”).7 The Fourth Amendment directly relates to
ownership and capacity rights between the City and the Sewer District, and was entered
into as a result of the settlement of a legal dispute regarding flow allocations.8
“These new sections and the agreements contained therein are intended to
supercede (sic) any conflicting language or agreements contained in the original
Cooperative Agreement and the three previously approved amendments thereto
and to the extent that there is any conflict between the language contained herein
and the language of the said Cooperative Agreement and the three amendments
thereto, the language of this Amendment shall supersede and determine the
agreements between the parties.”
The
Fourth Amendment is intended to supersede previous provisions in the Cooperative
Agreement relating to ownership and capacity rights between the City and the Sewer
District:
9
The Fourth Amendment created a Joint Powers Board to “administer and be
responsible for the operation of the treatment facility.”10 However, through this Fourth
Amendment, the City and the Sewer District also granted the Joint Powers Board “the
authority to determine whether any proposed expansion [of the existing facility] poses a
threat to either party’s use of the existing facility or share in its capacity.”11
7 The Second and Third Amendments to the Cooperative Agreement did not affect capacity or ownership
of the treatment facility.
Therefore,
the Joint Powers Board has the authority to determine whether expansion of the facility
8 Case No. 2483, Fourth Judicial District, Valley County. No pleadings from this lawsuit have been made
available for review. 9 Fourth Amendment to Cooperative Agreement p. 2. 10 Fourth Amendment to Cooperative Agreement, Section 20.1, p. 4.
11 Fourth Amendment to Cooperative Agreement, Section 20, p. 4.
MEMORANDUM RE: SEWER DISTRICT - 4
impacts either party’s allocated capacity. No further authority is granted to the Joint
Powers Board to re-allocate capacity.12
In addition to creating the Joint Powers Board, the Fourth Amendment also sets
forth the agreement between the City and the Sewer District pertaining to ownership of
various components to the facility and the capacity rights for use of the facility. Section
20 states:
“Each party agrees that it will not interfere with or otherwise impede the other
party’s plans for expansion of the capacity of the treatment facility, so long as
such expansion will not interfere with that other party’s use of the plant or reduce
its allocated share of the existing facility’s capacity.”13
(Emphasis added).
In the Fourth Amendment, the City and the Sewer District confirmed the flow
allocations set forth in Exhibit ‘A’ to the First Amendment to the Cooperative
Agreement.14 The parties further agreed that the Joint Powers Board has the authority to
“select an engineer or other technical resource person to evaluate actual flow experience
to date and analyze anticipated future flow and provide the best data available as to the
actual capacity of the facility. “15 The parties agreed to share equally the expenses
related to these evaluations, and to make periodic adjustments to their respective
allocations to reflect adjusted anticipated future demands.16
Ownership of future assets purchased and utilized in the facility was also
described in the Fourth Amendment:
“With respect to all personal property and fixtures hereafter purchased for use at
the treatment site, title shall vest in the party purchasing and supplying such
property. Where such personal property is purchased by utilizing jointly supplied
12 Section 20.1 of the Fourth Amendment states that the parties would enter into a more detailed joint
powers agreement for the operation of the treatment facility. It does not appear any further agreements
were executed by the parties. 13 Fourth Amendment to Cooperative Agreement, Section 20, p. 4. 14 Fourth Amendment to Cooperative Agreement, Section 22, p. 8. 15 Fourth Amendment to Cooperative Agreement, Section 22, p. 9.
16 Fourth Amendment to Cooperative Agreement, Section 25, p. 15.
MEMORANDUM RE: SEWER DISTRICT - 5
funds, title shall vest with the City and District in co-tenancy in proportion to the
funds supplied by each. In the event the funds are allocated from other state,
federal or local agencies, that proportion so allocated shall be credited to
whichever party received the funds. This provision is solely for the purpose of
proportioning ownership rights.”17
As part of the Fourth Amendment, the City and the Sewer District altered the
allocation of capacity for property annexed by the City. The Fourth Amendment
provides, as follows:
“The parties also agree that if any property presently within the District is
annexed into the City during the term of this agreement, it will remain part of the
District, will be billed and taxed for sewer services by the District, will have its
sewer collection system maintained by the District, and otherwise remain within
the District.”18
In March 1987, the parties executed the Fifth Amendment to Cooperative
Agreement (“Fifth Amendment”). The purpose of the Fifth Amendment was to re-
allocate the respective shares of treatment capacity of the facility. The City agreed to
purchase a portion of the Sewer District’s allocated share, and the City was entitled to an
adjusted allocation of 67% of the capacity of the treatment facility.19 The remaining 33%
of the existing treatment capacity in 1987 was allocated to the Sewer District. The parties
agreed that this allocation “shall remain fixed, unless and until further modifications are
agreed to by the parties.”20
Under the terms of the Fifth Amendment, the parties better defined the basis for
future adjustments to the allocation of operating costs. The parties agreed that future
The parties further agreed to share the costs of operating the
treatment facility on the same basis – 67% for the City and 33% for the Sewer District.
17 Fourth Amendment to Cooperative Agreement, Section 21, Par. 5, p. 7. 18 Fourth Amendment to Cooperative Agreement, Section 26, p. 16. 19 This amounts to approximately 1.266 MGD of the existing facility.
20 Fifth Amendment to Cooperative Agreement, p. 5.
MEMORANDUM RE: SEWER DISTRICT - 6
adjustments to the operating cost allocations would be made on the basis of “equivalent
user hookups,” which is defined under the following provision:
“For the purposes of this determination the term equivalent user, or hookup unit,
shall be deemed to mean a single family residence (generating 550 gallons per
day) as a single equivalent unit hookup; the flow factors used by the Central
District Health Department shall be scaled using this base to determine equivalent
unit hookups for various other classes of users, e.g., multi-family, commercial and
industrial.”21
The parties also entered into two additional Amendments to the Cooperative
Agreement, but neither of these Amendments effected the ownership and capacity
provisions of the original Cooperative Agreement or subsequent Amendments to the
Agreement.
21 Fifth Amendment to Cooperative Agreement, Section 4, p. 4.