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HomeMy Public PortalAboutPLRWS Settlement AgreementSETTLEMENT AGREEMENT City of McCall/Payette Lakes Recreational Water & Sewer District Valley County Case No. CV-2005-352-C This Settlement Agreement ("Agreement") is made between the City of McCall, a municipal corporation located in Valley County, Idaho (the "City"), and the Payette Lakes Recreational Water and Sewer District, a sewer district organized and existing under and by virtue of Chapter 32, Title 42, Idaho Code, and lying partially adjacent and contiguous to the geographical boundaries of the City of McCall, Idaho (the "District") (the District and the City shall be referred to collectively herein as the "Parties"). The Agreement was entered into to be effective October 20, 2010 (the "Effective Date"), and is conditioned upon prior approval by the governing boards of the City and the District, and execution by their duly authorized officers. RECITALS A. Valley County Case No. CV-2005-352-C (the "Lawsuit") involves a dispute between the City and the District regarding their conflicting interpretations of the Cooperative Agreement between the Parties dated December 15, 1977, and its seven amendments (collectively, the "Cooperative Agreement"). B. The Cooperative Agreement established the Parties' rights and responsibilities in relation to the facility which receives, treats, stores and disposes of the City's and the District's wastewater (the "Facility"). The Facility is primarily located upon real property owned by the City in Valley County (the "Property"). C. On October 20, 2010, the Parties executed the Settlement Term Sheet (the "Term Sheet") which set forth the conceptual terms upon which the Parties agreed to settle the Lawsuit. D. The purpose of this Agreement is to formalize the Term Sheet. SETTLEMENT AGREEMENT (MCCALL/PLRWSD) - 1 AGREEMENT In consideration of the above recitals, which are hereby incorporated into this Agreement, and the promises, representations, warranties, covenants, conditions and agreements contained herein, the Parties agree as follows: 1. The District's Wastewater. In accord with this Agreement and all applicable local, state and federal statutes, rules, ordinances and policies, the City confirms and guarantees to receive, treat, store and dispose of up to 608,000 gallons per day of wastewater from the District unless and until the District completes detachment of its collection system from the Facility. 2. Ownership of Facility and Property. The District acknowledges and agrees that the City is the owner of the Property and the Facility and that the District has no ownership interest of any kind in the Property or the Facility, but subject to the terms and conditions set forth in this Agreement, has an enforceable right to have its wastewater received, treated, stored and disposed of in the Facility. 3. Interim Facility Fee. As compensation to the City for receiving, treating, storing and disposing of the District's wastewater, the District agrees to pay a monthly user fee of $8,333.33 commencing on November 1, 2010 ("Interim Facility Fee"). The first Interim Facility Fee payment was due and paid November 1, 2010. All Interim Facility Fee payments are due and payable on the first day of each month, and shall be delinquent at the close of office hours on the tenth day of the month in which such payment falls due; provided, that if such tenth day of the month falls on a Saturday, Sunday, or legal holiday, then such payment shall be delinquent at the close of office hours on the next business day. If not paid before delinquency, a penalty of five percent (5%) of the amount due shall be assessed and immediately payable. A monthly service charge shall be added to any portion of the Interim Facility Fee not paid within thirty (30) days past the due date thereof; provided, however, that any such service charge shall be calculated in the same manner as service charges to non -District rate payers are calculated. a. Interim Facility Fee Increases. In the event the City increases its rates to its non -District rate payers, the Interim Facility Fee shall be concurrently increased in an SETTLEMENT AGREEMENT (MCCALL/PLRWSD) - 2 amount equal to such increases and based upon Equivalent Dwelling Units (EDU's). For example, if the City increases the wastewater charge to non -District rate payers by $2.00 per month per EDU, the charge to the District will be increased by $2.00 per month per EDU. In the event of any such increase(s), the City shall make available for the District's inspection, complete documentation detailing how any such rate increase(s) was (were) calculated. The District shall not be responsible for any portion of such a rate increase that is attributable to the following: (1) Maintenance, repair or replacement of elements of the City's collection system; (2) Removal or reduction of inflow and infiltration into the City's collection system; (3) The J-Ditch/Wausau/St. Clair litigation, or any other prior costs incurred in connection with the cost of the J-Ditch project; (4) Any other costs incurred prior to the Effective Date; (5) Costs for the expansion of any element of the Facility, so long as at the time of such expansion the flow generated by the District is less than 608,000 gallons per day. For purposes of this Paragraph 3.a(5), the term "expansion" shall mean any improvements to the Facility required to increase the amount of gallons per day that can be received, treated, stored or disposed of by the Facility. "Expansion" does not include any improvements related to upgrades, replacements, repairs and/or maintenance which do not increase the amount of gallons per day that can be received, treated, stored or disposed of by the Facility; and (6) Any increase solely attributable to or caused by inflow and infiltration into the City's collection system. b. Expiration of Interim Facility Fee Payments. The District shall continue to pay the Interim Facility Fee, together with adjustments thereto as permitted SETTLEMENT AGREEMENT (MCCALL/PLRWSD) - 3 by the terms of this Agreement, and any prorated portion thereof, until the earlier of: (a) the District's detachment from the Facility; (b) the date established in the TAG Plan (defined below) if the TAG Plan is approved by the District pursuant to Paragraph 4; or (c) December 31, 2016. Upon the expiration of the Interim Facility Fee payments, the District will either be detached from the Facility or the District will be paying a new rate, which rate will be established through the TAG Plan. In no event will the City be required to continue to receive, treat, store or dispose of the District's wastewater past the expiration of the Interim Facility Fee payments unless the District is paying the new rate provided for in this Agreement. 4. TAG Plan/Future Rates to the District. The Parties agree to create a technical advisory group (the "TAG"), the purpose of which is to provide professional, technical advice and guidance to the Parties regarding long-term future planning and rate making for the Facility. a. Formation of the TAG. The TAG shall consist of three technical advisors: one appointed by the City (the "City TAG Advisor"); one appointed by the District (the "District TAG Advisor"); and one jointly appointed by the City TAG Advisor and the District TAG Advisor (the "Independent Advisor"). The Independent Advisor's role shall include, among other things, a critical analysis of prior recommendations by both Parties' engineers and a critical analysis of any future recommendations by either Party's engineers. In the event the City TAG Advisor and the District TAG Advisor cannot agree on an Independent Advisor by March 3, 2011, the City shall decide who to appoint as the Independent Advisor. Any decision by the City to unilaterally appoint an Independent Advisor shall be made in compliance with the Open Meeting Law requirements of Idaho Code Sections 67-2340 through 67-2347. Either Party may replace its TAG advisor at any time. The Independent Advisor may only be removed from the TAG by mutual agreement of the City and the District; provided, however, that in the event the City unilaterally appoints the Independent Advisor as set forth above, the City shall have the right to replace the Independent Advisor in its sole discretion. No member of the McCall City Council or the District Board of Directors shall also be a TAG advisor. SETTLEMENT AGREEMENT (MCCALL/PLRWSD) - 4 b. Responsibilities. The TAG is responsible for making a written recommendation to the Parties on the following two topics: (1) Both the short-term and long-term manner in which the wastewater treatment, storage and disposal requirements of the customers of the City and the District will be met; and (2) The rate model used to determine charges to users of the Facility, including the District. Development of the rate model will take into account the limitations on rates specified by Idaho law, including, but not limited to: Idaho Code §§ 50-1028 and 50-1032, and the guidance provided in Loomis v. City of Halley, 119 Idaho 434, 807 P.2d 1272 (1991). Further, any rate model developed by the TAG or otherwise, shall take into account all relevant factors as may exist at such time as such rate model is developed, to the full extent necessary to create a fair and equitable apportionment of costs and rates across the entire base of both City and District users of the Facility. c. DEQ and EPA. The TAG is encouraged to coordinate with, and seek advice from, the Department of Environmental Quality (DEQ), the US Environmental Protection Agency (EPA) or other relevant regulatory agencies, but has no authority to bind the City or the District in any way with the DEQ, EPA, or any other public agency. d. Allocation of TAG Costs; Staffing. (1) The City and the District shall separately be responsible for all costs and fees associated with their respective advisors. All hourly fees and per diem expenses of the Independent Advisor shall be shared equally by the Parties; provided, however, that in the event the City unilaterally appoints the Independent Advisor pursuant to Paragraph 4.a., the payment of said hourly fees and per diem expenses shall be advanced by the City and then passed on to the City and District users through the rate structure to be developed during the TAG process. To the extent that engineering or other professional services are required in creating the TAG Plan (defined below), over and above the hourly rate and per diem charge of the Independent Advisor, such engineering or professional services ("Additional TAG Services") shall be contracted for by the SETTLEMENT AGREEMENT (MCCALL/PLRWSD) - 5 City. The payment of the costs associated with the Additional TAG Services shall be advanced by the City and then passed on to the City and District users through the rate structure to be developed during the TAG process. In the event the District elects to detach from the Facility pursuant to Paragraph 4.f.7, the District shall be required to pay its share of the costs identified above through the rate structure developed during the TAG process, but upon actual detachment from the Facility, shall have no further responsibility to pay for said costs. 2) In the event the Independent Advisor requires a contract for his/her/its services, the City will enter into the contract. (3) The Parties will use their best efforts to make their respective staff available to work diligently and cooperatively with the TAG. e. Open Meetings and Public Records Compliance. All meetings of the TAG are subject to the Open Meeting Law requirements of Idaho Code Sections 67-2340 through 67-2347. All records produced or used by the TAG are subject to the Public Records Law requirements of Idaho Code Sections 9-337 through 9-350. The City will make available the resources of the City Clerk's office to assist in compliance with the Open Meeting Law and the Public Records Law requirements. This assistance will include posting meeting notices and agendas, preparing minutes, and archiving documents, all in cooperation with the TAG. f. TAG Plan. The TAG shall submit its written recommendation simultaneously to the City and the District on or before July 29, 2011. The following schedule shall be followed to finalize the TAG Plan: (1) The City shall, within 45 days of receiving the TAG Plan, consider and vote to approve, reject, or request modifications to the recommendation from the TAG. If the TAG's recommendation is not approved by the City, the TAG will be directed to continue its investigation and evaluation of options with a goal of specifically addressing any concerns raised by the City. The TAG shall address the City's concerns in a revised written recommendation no later than 45 days thereafter. The City will again consider and vote on the revised written SETTLEMENT AGREEMENT (MCCALL/PLRWSD) - 6 recommendation from the TAG. This process shall continue until the City approves one of the TAG's recommendations. (2) Upon a TAG recommendation being approved by the City (the "TAG Plan"), the District shall have 45 days from the date of said approval to consider and vote to accept, reject, or request modifications to the TAG Plan. If the District does not respond to the City in writing within the 45 day period, the District will be deemed to have approved the TAG Plan. (3) If the District requests modifications to the TAG Plan, the District shall convey its concerns in writing to the City. The City, in its sole discretion, will then either (a) direct the TAG to attempt to address the District's concerns, or (b) disregard the concerns of the District. If the City directs the TAG to address the District's concerns, the process set forth in Paragraphs 4.f(1) through 4.f(2) shall continue until a TAG Plan is approved by the City and the District. If at any point the City, in its sole discretion, chooses to not act further on any remaining concerns of the District, the City may declare the then -current version of the TAG Plan as the final version. The District shall have 45 days from such a determination by the City to accept or reject the then -current version of the TAG Plan. (4) If approved by the District, the TAG Plan, and the rate model set forth therein, will be deemed binding upon the District. In such event, the District shall begin payment under the rate model set forth in the TAG Plan upon the date established in the TAG Plan. (5) If the District rejects the TAG Plan, or withdraws from the TAG process by providing written notice to the City, the District shall have the right but not the obligation to commence detachment of its collection system from the Facility. In the event the District has failed to detach from the Facility by December 31, 2016, the District shall immediately commence paying the fully charged rate pursuant to the model adopted through the TAG Plan, and will continue to pay said amount thereafter (subject to future adjustments permitted by the terms of this Agreement) until the District's detachment should the District ever detach from the system.. Upon detachment from the Facility, the District SETTLEMENT AGREEMENT (MCCALL/PLRWSD) - 7 shall no longer have any rights or responsibilities related to the Facility and this Agreement shall be deemed terminated; provided however, the agreements set forth in paragraphs 7-13 herein shall survive any such termination of this Agreement. (6) In no event shall any rate approved by the City in either the TAG Plan, or otherwise, impose upon the District any of the costs identified as non -allowable in paragraph 3.a.(1)-(4) herein. Further, any rate model developed by the TAG or otherwise, shall take into account all relevant factors as may exist at such time as such rate model is developed, to the full extent necessary to create a fair and equitable apportionment of costs and rates across the entire base of both City and District users of said facility. (7) In the event that the District elects to detach from the existing Facility pursuant to the terms of this Agreement, such detachment may impact certain currently shared elements of the City's and District's respective collection systems. To the extent not addressed by existing written agreements, the parties shall use their best efforts to reach an equitable agreement regarding such elements. g. Dissolution of the TAG. Upon approval of the final version of the TAG Plan by the City, the TAG shall be dissolved. Additionally, in the event the City has not approved a recommendation by the TAG as set forth in Paragraph 4.f(1) by December 31, 2011, the TAG shall be dissolved and the City shall take whatever actions it deems appropriate to create a future wastewater treatment strategy and associated rate model. For purposes of this Agreement, the City's creation of such a future wastewater treatment strategy and associated rate model shall be deemed a TAG Plan and, upon approval of the same by the City, the District shall have the opportunity to accept or reject it pursuant to Paragraphs 4.f(4) and 4.f(5). In no event will the rate model described in paragraph 4(g) be imposed upon the District prior to December 31, 2016 Further, in no event shall such rate model incorporate or impose upon the District any costs identified as non -allowable in paragraph 3.a.(1)-(4) herein. Further, any rate model developed by the TAG or otherwise, shall take into account all relevant factors as may exist at such time as such rate model is developed, to the full extent necessary to create a fair and equitable SETTLEMENT AGREEMENT (MCCALL/PLRWSD) - 8 apportionment of costs and rates across the entire base of both City and District users of said facility. 5. Future TAG Plans. It is anticipated that, sometime after the TAG Plan is implemented, additional modifications to the Facility will be required that require new facility plans to be pursued and implemented ("Future TAG Plans"). In such events, the process set forth in Paragraph 4 shall control the process; provided, however, that the City shall adjust the date -specific deadlines in Paragraph 4 to reflect the appropriate deadlines for the creation and approval of any Future TAG Plans; provided further that, in no event shall the time periods within which the Parties review and decide whether to accept, ask for modifications, or reject, be less than the time periods in Paragraphs 4.f(1) through 4.f(3). In other words, a new TAG will be formed, a new TAG Plan will be approved by the City, and the District may opt in or opt out. 6. Judicial Confirmation. The Parties agree and affirmatively represent that the resolution of the Lawsuit and the obligations contained in this Agreement are ordinary and necessary obligations of the Parties, and that by executing this Agreement both Parties are protecting the health safety and welfare of their respective constituents. Accordingly, the Parties agree to use their best faith efforts to obtain judicial confirmation of this Agreement pursuant to Idaho Code Section 7-1301, et seq. (Idaho's Judicial Confirmation statutes). 7. Release and Dismissal. Except with respect to the obligations specifically created or acknowledged by or arising out of this Agreement, the Parties agree to a mutual release of all claims known or unknown that were raised or could have been raised in the Lawsuit. Upon entry of an order judicially confirming this Agreement as set forth in Paragraph 6 above, the Parties agree to stipulate to the dismissal of the Lawsuit with prejudice, with each Party to bear its attorney fees and costs associated with the Lawsuit. 8. Conclusive and Binding Nature of Agreement. This Agreement is without recourse and is made without any warranties or representations whatsoever. Each Party acknowledges that, after entering into this Agreement, they may discover different and/or additional facts concerning the subject matter of this Agreement or their understanding of the facts. Each Party hereby expressly assumes such risks and agrees that this Agreement shall, in SETTLEMENT AGREEMENT (MCCALL/PLRWSD) - 9 all respects, be effective and not subject to rescission, cancelation or termination by reason of such additional or different facts or the Parties' understandings of the facts. This Agreement shall be binding upon and inure to the benefit of the Parties hereto, their successors, assigns, heirs, and personal representatives and, except as expressly set forth herein, no inducement or agreement has been made to either of the Parties. 9. Representation by Counsel. The Parties, and each of them, hereby acknowledge that they have been represented by counsel and have made independent investigations and inquires deemed necessary or appropriate in connection with the subject matter of this Agreement prior to the execution hereof. 10. Entire Agreement. This Agreement constitutes the entire agreement between the Parties hereto and supersedes and replaces all prior agreements, negotiations or understandings, written or oral, with respect to the subject matter hereof. Without limiting the generality of the foregoing sentence, this Agreement specifically supersedes and replaces the Term Sheet and the Cooperative Agreement, both of which are hereby deemed terminated, null and void. 11. Future Acts. The Parties, and each of them, agree to do any further acts, or execute and deliver any further document or instruments, as any other Party may reasonably require for the purpose of giving full effect to the provisions of this Agreement. 12. Controlling Law. This Agreement shall be controlled by and construed in accordance with the laws of the State of Idaho. 13. Execution of Agreement. This Agreement may be executed in counterparts, each of which shall be deemed an original and all counterparts together shall constitute and be deemed one and the same instrument. SETTLEMENT AGREEMENT (MCCALL/PLRWSD) - 10 EFFECTIVE as of the day and year written above. City of McCall By: Mayor Date: // Fe-4 7 ? c'// Attest: Clerk Payette Lakes Recreational Water and Sewer District By: Chair Date: Attest: Secretar a. // 7/F1n'Gba SETTLEMENT AGREEMENT (MCCALL/PLRWSD) - 11