HomeMy WebLinkAboutR-2003-130 Wastewater Odor Litigation Settlement AgreementRESOLUTION NO. R-2003- 130
A RESOLUTION authorizing and directing the City Manager of the City of Yakima to
execute a Settlement Agreement for the wastewater odor litigation.
WHEREAS, in 1998, approximately 220 residents of the cities of Union
Gap and Yakima filed administrative claims with the City of Yakima for $75,000
damages each, totaling $16.5 million; and
WHEREAS, the 220 residents subsequently filed a lawsuit in Yakima
County Superior Court, which was eventually expanded into a complex, class action
case involving approximately 3,700 former and current residential property owners
seeking $39 million in damages; and
WHEREAS, after extensive mediation efforts, a settlement has been
reached that will conclude all outstanding claims by the 3,700 member class against the
City arising from the perceived odors from the City's wastewater treatment plant,
which were alleged to have been a nuisance; and
WHEREAS, the City Council of the City of Yakima deems it to be in the
best interests of the citizens of the City of Yakima to execute the attached Settlement
Agreement to conclude this class action litigation, now, therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA:
The City Manager of the City of Yakima is hereby authorized and directed to
execute the attached Settlement Agreement for the wastewater odor litigation
settlement.
ADOPTED BY THE CITY COUNCIL this 7th day of October, 2003.
ATTEST:
City Clerk
(1k)res/wastewater odor settlement IO-03.rp
ry Place, Mayor
SETTLEMENT AGREEMENT
WHEREAS, Representative Plaintiffs Martin Cuevas, Karen Cuevas, Daniel
Martinez, Karen Murphy, Willie Murphy, Darlene Ryan, and Verla Row have brought suit,
individually and on behalf of the residential class certified by the Court against the City of
Yakima in the action presently pending in the Superior Court of Washington, Yakima County,
styled Murphy, et al. v. City of Yakima, et al., Cause No. 99-2-00611-8 (the "Action"), alleging
injury and damage to Representative Plaintiffs and members -of the class of persons and
residential property owners in the vicinity of the City of Yakima's Wastewater Treatment Plant
and adjacent Industrial Sprayfield ("WWTP"); and
WHEREAS, in April 1999, Representative Plaintiffs and Class Members on behalf of
themselves and others similarly situated, filed a class action complaint against defendant City of
Yakima (the "City") and Del Monte Corporation, a Delaware corporation ("Del Monte
Corporation") asserting causes of action for negligence, nuisance, trespass, and inverse
condemnation as a result of the odors originating from the WWTP. Representative Plaintiffs and
Class Members asserted, among other things that, as a result of negligent operation of the
WWTP, including the collection, transportation and storage of biosolids, odors emanating from
the WWTP afflicted the entire Class Area and occurred with such frequency and were of such
intensity and duration as to interfere with the Representative Plaintiffs' and Class Members' use
and enjoyment of their property, adversely impacting property values and causing personal
discomfort, anxiety, stress, headaches, nausea and other adverse health effects; and
WHEREAS, on December 14, 2000, Representative Plaintiffs and Class Members filed a
motion to certify the class against the City and Del Monte Corporation. On April 19, 2001, the
Court granted Plaintiffs' Motion for class certification; and
WHEREAS, on June 15, 2001, the Representative Plaintiffs mailed and published a
notice of pendency of class actions to members of the certified class; and
WHEREAS, the City and Del Monte Corporation deny the allegations made against it in
the Action; and
WHEREAS, the Parties recognize the existence of disputed issues of law and fact
regarding the allegations in the Action; and
WHEREAS, the Parties wish to avoid the expense and risk involved in continued
litigation over the matters alleged in the Action, and instead wish to compromise and settle the
various disputes arising in connection therewith.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, the Parties agree as follows:
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DEFINITIONS
"Action" means Murphy, et al. v. City of Yakima, et al., Yakima County Superior Court
Cause No. 99-2-00611-8.
"Administrative Expenses" means expenses incurred in the administration of this
Settlement as provided herein or as otherwise allowed by the Court.
"Claim(s)" means any administrative or tort claim or any lawsuit filed with or against the
City or Del Monte Corporation with regard to actions or failures to act relating to, arising out of,
concerning or caused by the WWTP up through and including the date of Final Approval.
"Claim(s)" includes, but is not limited to, the City's alleged acts and omissions of negligence and
failure, in the construction, operation, maintenance, and repair of the WWTP up through and
including the date of Final Approval, to comply with the applicable standard of care for the
design, construction and operation of a waste water treatment plant, including but not limited to
the collection, transportation and storage of biosolids; or any other common law, statutory or
regulatory cause of action.
"Class Area" means the area shown on the map attached hereto as Exhibit A, as legally
described on Exhibit B attached hereto. Class Area does not include any property that was
neither zoned for nor used as residential property at any time between June 30, 1990 and October
10, 2003. The foregoing legal description is intended to be a full and complete legal description
of the property shown on Exhibit A attached to this Settlement Agreement. In the event of any
discrepancy between the real property described in the foregoing legal description and the real
property shown on Exhibit A, the description shown on Exhibit A shall control.
"Class Members" means all persons and entities, including minors, who: (a) reside in or
own residential property, or who have resided in and/or owned residential property within the
Class Area at any time between June 30, 1990 and the date of Preliminary Approval of this
Settlement and who have not previously opted out of the class (the "Class").
"Common Fund" means the fund established pursuant to paragraph 2 of this Agreement.
"Plaintiffs' Counsel" means Albert R. Malanca, Kenneth G. Kieffer, John C. Guadnola,
Bradley B. Jones, Timothy L. Ashcraft, Joan C. Foley, and the law firm of Gordon, Thomas,
Honeywell, Malanca, Peterson & Daheim LLP.
"Court" means the Superior Court of Washington, Yakima County, or other Court
properly acquiring jurisdiction over the Action.
"Odors" shall be given the broadest possible interpretation, including without limitation,
any and all airborne odors of any kind to humans, animals, plants, or the environment, and any
effects of odors including any kind of annoyance, discomfort, or adverse effects on body, mind,
spirit, health, property, air, quality of life, enjoyment of life, or other interests, relating to, arising
out of, concerning or. caused by the WWTP prior to Final Approval regardless of whether such
Odors are tangible or intangible.
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"Final Approval" means the date by which all of the following have occurred: (1) the
Court has entered an Order finally approving this Settlement in a form to be agreed upon by the
Parties; and (2) the applicable time period for filing appeals or requests for review of said Order
has passed without any appeals or requests for review being filed, or if appeals or requests for
review are filed, the entry of orders affiiniing said Order or denying review after exhaustion of
all appellate remedies.
"Parties" mean the Representative Plaintiffs, the Class Members, and the City of Yakima.
"Preliminary Approval" of this Settlement means the Court's entry of an order
preliminarily approving this Settlement and authorizing notice to the Class. The Parties shall use
good faith efforts to agree upon the fomi of the order and of the notice. In the event the Parties
cannot agree, they shall both submit their proposed orders and notices to the Court and the Court
shall decide the form of the order and notice.
"Released Parties" shall mean the City of Yakima and Del Monte Corporation, each and
every one of their departments, divisions, agencies, commissions, boards, subdivisions, owners,
officers, directors, employees, attorneys, elected officials, predecessors, heirs, successors and
assigns. It is the intention of the Parties that this term be given the broadest possible
interpretation.
"Representative Plaintiffs" means Martin Cuevas, Karen Cuevas, Daniel Martinez, Karen
Murphy, Willie Murphy, Darlene Ryan, and Verla Row.
"WWTP" means the Yakima Regional Wastewater Treatment Plant, its collection and
transportation facilities, and the former operation of the adjacent Industrial Sprayfields,
composting facility, and outdoor biosolids storage area.
TERMS AND CONDITIONS OF SETTLEMENT
1. Purpose. This Settlement and Settlement Agreement are intended solely for the
purpose of compromising disputed claims and potential claims and avoiding the risk and expense
of continued litigation. This Settlement and Settlement Agreement are not, and shall not be
construed or characterized as, an admission of wrongdoing of any kind on the part of any Party,
nor does any Party admit or concede the validity of any claim or defense asserted by any other
party in the Action.
2. Settlement Amount. The City agrees and stipulates to the entry following Final
Approval of a judgment in the amount of Thirteen Million and No/100 Dollars ($13,000,000)
in favor of Representative Plaintiffs and the Class Members. A copy of the judgment is attached
as Exhibit C. The City shall arrange for payment to the trust account of Gordon, Thomas,
Honeywell, Malanca, Peterson & Daheim, LLP, the sum of Seven Million and No/100 Dollars
($7,000,000) in trust for the Class Members ("The Common Fund"), which, together with the
judgment referenced above and Plaintiffs pursuit of claims against policies of insurance
referenced below, shall constitute full and final Settlement of the Action. These funds shall be
paid on the latter of Final Approval or December 15, 2003, provided, however, that if Final
Approval occurs before December 15, 2003 and the City, using its best efforts, has not
completed financing its payment obligation hereunder, it may extend its payment date an
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additional two weeks to December 29, 2003. The Representative Plaintiffs and Class covenant
not to execute against the Released Parties for any amounts of the judgment in excess of Seven
Million and No/100 Dollars ($7,000,000) except against those insurers who issued policies of
insurance to Yakima between 1997 and 2001.
3. No Assignment of Policies; Continued Prosecution of Insurance Litigation. By
this Settlement, the City is not assigning its insurance policies to the Class and the City may
continue to pursue its claims against its insurers. Plaintiffs and the City shall maintain their
current lawsuits against the City's insurance carriers. The City shall retain full authority and
responsibility for its pending appeal of its lawsuit against its insurers throughout the appellate
process including but not limited to any motions for reconsideration, rehearing en banc and
otherwise. If and only if the City's pending appeal is successful and results in a remand to the
district court for further proceedings, Plaintiffs agree that Plaintiffs' Counsel may elect to assume
responsibility for further prosecution of the action. If Plaintiffs' Counsel so elect, they will
manage both the remanded federal court action and at their sole discretion, the declaratory
judgment action in Yakima County Superior Court; provided, however, that the City may
associate as co-counsel with Plaintiffs' Counsel in the lawsuits and may, at its election, prosecute
the lawsuits at the City's sole cost and expense should Plaintiffs' Counsel decline to do so.
4. Allocation of Insurance Recoveries. Plaintiffs and the City agree that they
will share any proceeds recovered from the City's insurance carriers by settlement, judgment or
otherwise. The proceeds from a resolution of either or both insurance lawsuits will be
collectively allocated as follows:
(a) With respect to the recovery of any "net proceeds" at or under
$1,000,000, the City shall be entitled to the first $500,000 of the net proceeds, which shall be
considered as partial recovery to the City for amounts paid to Plaintiffs in settlement and/or costs
and fees previously incurred, as will all other monies allocated to the City under this paragraph.
The Plaintiffs shall be entitled to the next $500,000 in partial satisfaction of their judgment.
Thereafter, with respect to any recovery of net proceeds between $1,000,000 and $3,000,000, the
Plaintiffs shall recover 80% of the net proceeds and the City shall recover 20%; provided,
however, Plaintiffs' Counsel shall not receive any attorney fees from the City's 20% recovery.
With respect to the recovery of any net proceeds above $3,000,000 the Parties shall split the
recovery equally. Plaintiffs' Counsel shall be entitled to recover attorney fees from any recovery
of net proceeds above $3,000,000 as follows: (1) a 1/3 contingent fee from the City's share, and
(2) whatever fee is approved and set by the Court regarding the Class Plaintiffs' share. "Net
proceeds" is defined as gross proceeds less reasonable costs and expenses actually incurred after
the date the Final Settlement Documents are executed (but not legal fees).
(b) Neither the City nor the Plaintiffs shall settle and compromise their
respective lawsuits without the other's consent unless the settlement exceeds $900,000. As to
any settlement in excess of $900,000, either the City or Plaintiffs may accept the settlement and
bind both Parties, with the settlement proceeds being dispersed as provided in this Agreement.
For settlement proposals by the insurers at or in excess of $1,000,000, either Party shall have the
option to buy out the Party wishing to settle by paying that Party's share of the proposed
settlement amount and may thereafter continue the prosecution of the respective insurance carrier
lawsuit.
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5. Administration. All costs or expenses incurred in administering this Settlement,
including without limitation the cost of providing notice to the Class and any expenses incurred
in connection with the division and distribution of the Common Fund, shall be paid from the
Common Fund. The City shall have no obligation whatsoever to pay any sum for such
administrative costs and expenses, except that each party shall be responsible for its own
attorneys' fees, costs, and expenses incurred in defending the Action, negotiating this
Agreement, and performing any obligations as set forth in this Agreement unless expressly
provided otherwise in this Agreement. Representative Plaintiffs, Class Members, and Plaintiffs'
Counsel shall be solely responsible for complying with any tax laws or other laws relating to
administration or distribution of the Common Fund.
6. Court Approval of Settlement. The Parties shall take all reasonable measures
necessary to secure Final Approval of this Settlement as required by CR 23 or other applicable
legal authority including but not limited to RCW 4.22 et seq. Plaintiffs' Counsel shall promptly
file with the Court a Motion for Preliminary Approval and any necessary supporting papers,
asking the Court to enter an order, following approval by the City Council, in a form to be agreed
upon by the Parties. The Parties shall use their best efforts to agree on a form of the Motion for
Preliminary Approval. The City may file with the Court such additional papers in support of the
Motion for Preliminary Approval as it deems necessary or appropriate, in its sole discretion. If
the Parties cannot agree on the form of a Motion for Preliminary Approval, each party may
submit its own version to the Court. Plaintiffs' Counsel shall, at the appropriate time following
Preliminary Approval, prepare and file with the Court a Motion for Final Approval, and any
necessary supporting papers, asking the Court to enter an Order finally approving the Settlement
("Settlement Order") and Order of Dismissal in a form to be agreed upon by the Parties. The
Parties shall use their best efforts to agree on a form of the Motion for Final Approval. The City
may file with the Court such additional papers in support of the Motion for Final Approval as it
deems necessary or appropriate, in its sole discretion, subject to the provisions set forth above. If
the Parties cannot agree on the form of a Motion for Final Approval, each party may submit its
own version to the Court. In the event Final Approval is not obtained, the Parties shall make all
reasonable efforts to negotiate a new settlement agreement that will meet with approval of the
Court. In the event this Settlement is not approved and the Parties are not able to negotiate a new
one, the Parties shall so notify the Court and proceed with the Action. Any pleadings submitted
or statements made pursuant to this paragraph are settlement communications subject to
Evidence Rule 408. In the event Final Approval is not achieved, the Parties agree that nothing
contained in this Settlement Agreement, Plaintiffs' Counsel's or The City's pleadings or oral
statements submitted pursuant to this paragraph may be used, quoted, referenced, or admitted in
the Action or any other litigation.
7. Fees and Costs of Plaintiffs' Counsel. Plaintiffs' Counsel shall apply to the Court
for an award of fees, expenses and costs, which shall be paid from the Common Fund established
under Paragraph 2 above. Aside from their obligations to pay into the Common Fund the
Settlement Amount referenced in paragraph 2 and pay attorneys' fees as provided in paragraphs
4 and 19, the City shall not have any obligation whatsoever to pay any sum for attorneys' fees,
expenses or costs claimed by Representative Plaintiffs, Class Members and/or Plaintiffs' Counsel
in connection with the Action including but not limited to any costs incurred by Representative
Plaintiffs or Plaintiffs' Counsel. The City shall not oppose the application for award of
reasonable fees, expenses or costs, and any future application for reasonable fees, expenses, or
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costs; provided, however, that this agreement not to oppose such an award does not apply to an
application for fees, expenses or costs sought by any of the Parties for an alleged breach of this
Settlement Agreement.
8. Dismissal of Action. In consideration of the confession of judgment and payment
of the above amount, Representative Plaintiffs and Class Members shall dismiss the Released
Parties with prejudice and without costs to any Party. Plaintiffs' Counsel shall execute the
Stipulation and Order of Dismissal attached hereto as Exhibit D within fifteen (15) days after
Final Approval.
9. Release of All Claims by Representative Plaintiffs and Class Members. Effective
upon Final Approval of this Settlement Agreement, the Representative Plaintiffs, Class Members
and each of them hereby release, discharge, and forever acquit the Released Parties from any and
all claims, demands, damages, actions, causes of action or suits of any kind or nature whatsoever,
as alleged or as could have been alleged in the Action, whether in law or equity, arising out of or
relating in any way to (1) Odors; or (2) the allegation that Representative Plaintiffs and/or Class
Members have been damaged by operation of the WWTP as a result of residing or owning
residential property in the Class Area prior to Final Approval; or (3) operation of the WWTP
prior to Final Approval, including, without limiting the generality of the foregoing, any and all
claims for nuisance, negligence, inverse condemnation, strict liability, contribution, indemnity,
trespass, property damages, loss of use and enjoyment, and/or diminution of property values,
attorney fees, costs under any statutory or regulatory authority relating to Odors; penalties or
other relief resulting from violations of permits or failure to comply with applicable laws,
regardless of whether any such matters are claimed under theories of nuisance, trespass,
negligence, strict liability, inverse condemnation, contribution, indemnity, or any other common
law, statutory or regulatory cause of action, and regardless of whether defined as a continuing
tort or otherwise. This full and final release is intended to provide the broadest protection
possible from claims and damages as a result of acts, omissions or occurrences relating to the
WWTP on or before the date of Final Approval, including all causes of action therefore against
the Released Parties. This release is specifically intended to cover and include, without
limitation, any and all claims, civil or otherwise, past or present, which can or may ever be
asserted by the Representative Plaintiffs, each and every Class Member, and by their respective
agents, estates, marital communities, dependents, successors, assigns (including, but not limited
to subsequent purchasers, lessees and renters of property owned by Class Members within the
Class Area), lien holders, or other entities, against the Released Parties arising out of or relating
in any way to the matters described above that are based on acts, omissions or occurrences on or
before the date of Final Approval that resulted or are alleged to have resulted in Odors or effects
of Odors. By this settlement, Representative Plaintiffs and each and every Class Member are
also releasing, on behalf of themselves, and their respective agents, estates, marital communities,
dependents, successors, assigns (including, but not limited to subsequent purchasers, lessees and
renters of property owned by Class Members within the Class Area) lien holders and other
entities, any inverse condemnation or "takings" claims concerning diminished property values
within the Class Area arising out of the construction, operation, maintenance, and repair of the
WWTP prior to Final Approval and any alleged actions or failures to act by the City concerning
the WWTP prior to Final Approval. No subsequent claim for inverse condemnation or takings of
any interest in property located within the Class Area, may be made by any of the Representative
Plaintiffs, any Class Member and any of their respective agents, estates, marital communities,
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dependents, successors, assigns (including, but not limited to subsequent purchasers, lessees and
renters of property owned by Class Members within the Class Area) lien holders and other
entities, concerning the operation of the WWTP unless there is additional governmental action
by the City relating to the WWTP causing Odor impacts and emissions exceeding the degree and
level existing from October 3, 2000 to the date of Final Approval (including normal operational
events such as intermittent upset conditions), which also results in a measurable and provable
decline in market value separate and apart from any measurable or provable decline in market
value that has occurred through the date of Final Approval. Representative Plaintiffs and each
Class Member acknowledge and agree that this Settlement Agreement will be recorded with the
Yakima County Auditor's Office.
10. Cooperation. As partial consideration for this Settlement, the Parties agree to
cooperate in the following manner:
(a) The City will support the Representative Plaintiffs and Class Members'
Motions for Preliminary Approval and Final Approval of this Settlement. The City may file with
the Court such pleadings and papers in support of said Motions as it deems necessary or
appropriate, in its sole discretion. All pleadings submitted and statements made by the City with
regard to this provision shall be subject to the terms of paragraph 6.
(b) The City will cooperate with Representative Plaintiffs, Class Members and
Plaintiffs' Counsel in their pursuit of insurance proceeds from various policies of insurance
issued to the City between 1997 and 2001. The City and its employees and Counsel agree to
make themselves reasonably available for discovery proceedings and trial in the prosecution by
Representative Plaintiffs and Class Members of any and all causes of action concerning the
insurance policies whether in Class Members' own lawsuit or upon Plaintiffs' Counsel's
acceptance of the prosecution of the City's pending lawsuit as described in paragraph 3. The
City will also make available to Class Counsel all relevant and nonprivileged documents relating
to the pursuit of insurance claims against the City's policies.
(c) The City shall cooperate with Plaintiffs' Counsel in regard to Plaintiffs'
Counsel establishing, creating, updating or amending a database of Yakima County or City
records for the purpose of mailing notice to the Class and implementing a plan of distribution to
all Representative Plaintiffs and Class Members provided that such cooperation does not result in
significant use of the City's financial resources or personnel.
11. Effect on Claims.
(a) Effective upon Final Approval, every Claim of each Representative
Plaintiff and Class Member against the Released Parties shall be conclusively compromised,
settled and released and each such Representative Plaintiff and Class Member shall be barred
from initiating, asserting or prosecuting any Claim against the Released Parties, except to the
extent permitted by this Settlement Agreement and the Stipulation and Order of Dismissal
attached as Exhibit D.
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(b) Any checks issued to the Plaintiffs, Representative Plaintiffs and Class
Members must contain language, approved by the Parties, to the effect that negotiation,
endorsement or deposit of the check constitutes a release.
(c) The Parties agree that the Notice of Settlement and the Final Approval will
contain language, to be agreed on by the Parties, to the effect that the Final Approval of the
Settlement will be binding upon all Class Members and will extinguish and release all Claims, as
set forth in paragraph 9 herein. The Notice shall also include language addressing disclosure
obligations under Washington law. The language shall inform Class Members of their duty to
disclose information material to a buyer's decision to purchase property and encourage class
members to disclose that their property is within the Class Area and that compensation was paid
for alleged property damages and nuisance from Odors caused by the WWTP.
12. Reporting Obligations. The Representative Plaintiffs, Class Members and
Plaintiffs' Counsel shall provide to the City copies of a final disbursement statement identifying
the names, addresses, and amounts disbursed to each Representative Plaintiff and Class Member.
13. Use of Settlement Agreement.
(a) The parties to this Settlement Agreement, including Representative
Plaintiffs or any Class Member, shall not seek to introduce and/or offer the terms of the
Settlement Agreement, any statement, transaction or proceeding in connection with the
negotiation, execution or implementation of this Settlement Agreement, any statements in
the documents appended to this Settlement Agreement, stipulations, agreements,
admissions made or entered into in connection with any fairness hearing or any finding of
fact or conclusion of law made by the Superior Court or otherwise rely on the terms of
this Settlement Agreement, in any judicial or administrative proceeding, except as
provided in paragraphs 3, 4 and 10(b) or insofar as it is necessary to enforce the terms of
this Settlement Agreement.
(b) Neither this Settlement Agreement nor any exhibit hereto nor any
statement, transaction or proceeding in connection with the negotiation, execution or
implementation of this Settlement Agreement is intended to be or shall be construed as or
deemed to be evidence of an admission or concession by the Released Parties of any
liability or wrongdoing, or of the truth of any allegations asserted by any Representative
Plaintiff or any Class Member against them, or as an admission by the Representative
Plaintiffs or any Class Member of any lack of merit in their claims and no such statement,
transaction or proceeding shall be admissible in evidence for any purpose, except for
purposes of obtaining approval of this Settlement Agreement in this proceeding or pursuit
of claims against the City's insurers as provided in paragraphs 3, 4 and l0(b).
14. Parties Bound. This Settlement Agreement shall be binding on the Parties hereto
and each of their heirs, legal representatives, successors, and assigns, and inures to the benefit of
the Parties and Released Parties and their heirs, legal representatives, successors and assigns.
The Representative Plaintiffs, by approval of this Settlement Agreement by the Court, have full
authority to enter into this Settlement Agreement on their behalf and behalf of each Class
Member and to take steps reasonably necessary to achieve Final Approval, as fully to all intents
8
and purposes as each Class Member might or could do if personally present and a party to this
Settlement Agreement, and the acts of the Representative Plaintiffs on behalf of the Class
Members are, upon approval by the Court of this Agreement, ratified and confirmed by each
Class Member.
15. No Third Party Beneficiary. No provision of this Settlement Agreement or any
exhibit thereto is intended to create any third -party beneficiary to this Settlement Agreement.
16. Integration. This written agreement contains the entire understanding among the
Parties in connection with its subject matter, and supersedes and replaces all prior negotiations,
agreements, or representations by or among the parties, whether oral or written. Each Party
acknowledges that no other Party, or any agent or attorney of any Party, has made any promise,
representation, or warranty whatsoever, express or implied, other than those expressly stated
herein, concerning the subject matter hereof to induce the other Party or Parties to execute this
document. Each Party acknowledges that in executing this document he, she, or it is not relying
on any promise, representation or warranty other than those expressly stated herein.
17. Choice of Law. The interpretation and enforcement of this Settlement Agreement
shall be governed by the laws of the State of Washington.
18. Construction of Settlement Agreement. This Settlement Agreement has-been
drafted by mutual negotiations among the parties. It shall be construed according to the fair
intent of the language as a whole, and not for or against any party. The headings of the sections
and paragraphs of this Agreement are included for convenience only and shall not be deemed to
constitute part of this Agreement or to affect its construction.
19. Attorneys' Fees. In the event any party hereto, or his, her, or its authorized
representative, successor, or assign, shall institute suit to enforce this Settlement Agreement or
for any breach thereof, the substantially prevailing party in such suit or proceeding shall be
entitled to an award of his, her, or its reasonable costs, expenses and attorneys' fees incurred,
both at the trial and appellate court levels, before and after judgment.
20. Counterparts. This Settlement Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
21. Mediation and Arbitration. The Parties agree that Thomas V. Harris shall mediate
disputes arising from the Memorandum of Understanding and this Settlement Agreement. If
mediation fails, the Parties reserve the right to use other alternative dispute resolution processes
or seek court. intervention.
DATED this % day of 5 k
Martin Cuevas, Representative Plaintiff
9
, 2003.
6AP3
Karen Cuevas, Representative Plaintiff
ROM :FREEDOM TRUCK CENTER
FAX NO. :5095751255
Daniel Martinez, Representative Pla ff
Willie Murphy, Repres
aintiff
Vella Rovv, Representative Plaintiff
Add Acknowledgements for the signatures of
tie Plaintiff Representatives
TROMAS, HONEYWELL,
MALA CA, PETERSON & DAHEIM LLP
4
• Malanca
for Plaintiffs
Agrk
�. 11 2003 11:56AM P2
Murphy,
resentative
laintiff
arlene Ryan, Representa '- e Plaintiff
10
Daniel Martinez, Representative Plaintiff
Willie Murphy, Repres,,- a i e ' aintiff
Verla Row, Representative Plaintiff
Add Acknowledgements for the signatures of
the Plaintiff Representatives
GORDON, THOMAS, HONEYWELL,
MALANCA, PETERSON & DAHEIM LLP
Albe
Atto
. Malanca
s for Plaintiffs
fvy
Ka n Murphy, presentative laintiff
R�
77OA 4A. dr\-.
arlene Ryan, Representatt e Plaintiff
10
11/11/03 TUE 12:31 FAX 206 623 7022
CITY OF YAKIMA
By:
Richard Zais
' City Manager
By:
Raymond Paolella
Yakima City Attorney
r Ci & .7r,A111+m
DEL MONTE CORPORATION
cott Ri an, Assistant Secretary
BROWN REAVIS & MANNING, PLLC
By:
Stephen J. Tan
Attorneys for Del
ante Corporation
KA25739W00381THWMTHW A21N-
PRESTON GATES & ELLIS, LLP
By:
Thomas H. Wolfendale
Attorneys for City of Yakima
DANIELSON HARRIGAN LEYH &
TOLLEFSON, LIP
By:
Timothy G. Leyh
Attorneys for City of Yakima
11/11/03 TUE 12:31 FAX 206 623 7022 r U sc>; anaii,L
CITY OF YAKIMA
Richard Zais
City Manager
By:
Raymond Paolella
Yakima City Attorney
PRESTON GATES & ELLIS, LLP
By.
Thomas H. Wolfendale
Attorneys for City of Yakima
DEL MONTE CORPORATION DANIELSON HARRIGAN LEYH &
TOLLEFSON, LLP
By:
Scott Rickman, Assistant Secretary
BROWN REAVIS & MANNING, PLLC
By:
Stephen J. Tan
Attorneys for Del Monte Corporation
K125739L000391TI W\TNW A21FY
• 11
By:
Timoth, . Leyh
Attorneys for City of Yakima
C `ral Ave
La Fo
Wils
Dal
E_Nob Hill
\`,\\\\ EXHIBIT A
EM
asiewater_Facility
I:ocal De: Tratamiento
de Agua Usada
Yakima Class Area
Area del Clase de Yakima
Zone 1
Zone 2
Zone 3
The class area shown on this map
does not include any property that was
neither zoned for nor used as residential
property at any time between June 30, 1990
and October 10, 2003. In the event of any
discrepancy between this map and
Exhibit B to the Settlement Agreement
this map shall control.
\s,co
El area de clase mostrada en mapa
no incluye ninguna propiedad que no
estaba clasificada ni usada como propiedad
residencial en cualquier moment()
entre junio 30, 1990 y octubre 10, 2003.
En el caso de una discrepancia
entre esta mapa y la Prueba B con el
Acuerdo de Resolucibn, tiene
control esta mapa.
0 0.2 0.4 Miles
Mundy Associates LLC (10/2003)
98-1203
WAh
EXHIBIT A
•
Area 1
Area
[i Area 3
Class Parcels
0
0.2
0.4 Miles
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EXE I FHIT B
CLASS AREA LEGAL DESCRIPTION
That portion of the City of Yakima and the City of Union Gap, Washington, described as
follows:
The East half of the Southwest quarter of Section 29 and the East half of
the West half of Section 32, Township 13 North, Range 19 East, W.M.;
AND that portion of the Southwest quarter of the Southwest quarter of'
Section 32, Township 13 North, Range 19 East, W.M., lying Easterly of
Primary State Highway No. 3 (now South First Street).
AND that portion of the Southeast quarter of said Section 29 and the East
half of said Section 32 lying Westerly of Interstate 82;
AND that portion of Section 5, Township 12 North, Range 19 East, W.M. lying
Westerly of Interstate 82;
AND that portion of the Northeast quarter of Section 6, Township 12 North,
Range 19 East, W.M. lying East of the following described line:
Beginning at a point on the North line of said Section 6 being 500.09 feet
West of the Northeast corner thereof; thence Southerly to the Northwest
corner of Tract "D" of the amended PLAT OF REBECCA LANE, as recorded in
Volume "Y" of Plats, page 14, records of Yakima County, Washington; thence
Southerly along the Westerly line of said Plat to the Northwest corner of
Lot 6 of the PLAT OF NORTHWEST GARDENS, as recorded in Volume "W" of Plats,
page 13, records of Yakima County, Washington; thence Southerly along the
West line thereof and the Westerly line extended to the Northwest corner of
Block 40 of the PLAT OF S. LAUBER'S ADDITION to Yakima City W.T. as recorded
in Volume "A" of Plats, page 1, and recorded in Volume "C" of Plats, page
47, records of Yakima County, Washington;. thence South along the West line
thereof to the South line of said Northeast quarter and the terminus of the
line herein described;
AND that portion of the Southeast quarter of Section 6, Township 12 North,
Range 19 East, W.M., lying Easterly of the following described line:
Beginning at a point 1100 feet West of the Northeast comer of said
Subdivision; thence South parallel with the East line of said Subdivision to
the Easterly right of way line of the Northern Pacific Railroad; thence
Southerly along said right of way line to the South line of said Section 6
and the terminus of the line herein described;
AND that portion of the Northeast quarter of Section 7, Township 12 North,
Range 19 East, W.M., lying Easterly of the Northern Pacific Railroad right
of way line.
AND all that portion of Section 8, Township 12 North, Range 19 East, W.M.,
lying Easterly of the Easterly right of way line for the Northern Pacific
Railroad and Westerly of the Interstate 82 and Northerly of the following
described line:
Beginning at the Southwest corner of Block "K" of the PLAT OF MCNEELY
TRACTS, as recorded in Volume "H" of Plats, page 24, records of Yakima
County, Washington; thence Easterly along said Block "K" and said Block "K"
extended to the Easterly right of way line of Main Street; thence Southerly
along said right of way line to a point 449.4 feet South of the South line
of the Northwest quarter of the Northwest quarter of said Section 8, as
shown on the PLAT OF MCNEELY TRACTS; thence Easterly parallel to the said
South line to the centerline of Spring Branch Creek; thence Northerly along
said Spring Branch Creek to a point on the North line of the Westerly
extension thereof, of Lot 25, of the PLAT OF HOLIDAY MOBILE TOWN PARK NO.
2, according to the official plat thereof, as recorded in Volume "Y" of Plats,
page 6, under Auditor's File No. 2412924; thence Easterly along said North
line of said Lot 25 to a point situate 100 feet Westerly of the Northeast
corner thereof; thence South 320 feet to the Southwest corner of Lot 2, of
Short Plat recorded under Auditor's File No. 7188680; thence Easterly along
the South line of said Lot 2 and the South most line of the PLAT OF HOLIDAY
MOBILE TOWN PARK NO. 3, as recorded in Volume "DD" of Plats, page 6, records
of Yakima County, Washington and the South line extended to the Easterly
right of way line of Freeway Avenue; thence North 30 feet to the Southwest
corner of Lot 12 of said PLAT OF HOLIDAY MOBILE TOWN PARK NO. 3; thence
Easterly along the South line of said Lot 12 to the Westerly right of way
line of Interstate 82, and the terminus of the line herein described.
Class Area does not include any property that was neither zoned for nor used as
residential property at any time between June 30, 1990 and October 10, 2003. The
foregoing legal description is intended to be a full and complete legal description of the
property shown on Exhibit A attached to this Agreement. In the event of any discrepancy
between the real property described in the foregoing legal description and the real
property shown on Exhibit A of the Settlement Agreement the description shown on
Exhibit A shall control.
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SUPERIOR COURT OF THE STATE OF WASHINGTON
FOR YAKJMA COUNTY
WILFRED and KAREN MURPHY, et al.,
Plaintiffs,
v.
CITY OF YAKIMA, a Washington municipal
corporation, and WASTEWATER DIVISION
OF THE DEPARTMENT OF ENGINEERING
AND UTILITIES, a discrete governmental
agency or unit of the City of Yakima, and DEL
MONTE CORPORATION, a New York
corporation,
Defendants.
Judgment Creditor:
NO. 99-2-00611-8
JUDGMENT AGAINST THE CITY OF
YAKIMA
ASSIGNED TO THE HONORABLE
SUSAN L. HAHN
JUDGMENT SUMMARY
Representative Plaintiffs and Class Members, as defined
in the Court Order entered in this action on April _,
2001.
Attorneys for Judgment Creditor: Gordon, Thomas, Honeywell, Malanca, Peterson &
Daheim LLP
Albert R. Malanca
John C. Guadnola
Kenneth G. Kieffer
Bradley B. Jones
Timothy L. Ashcraft
Judgment Debtor:
JUDGMENT - 1 of 3
(NO. 99-2-0061 1-8)
[1240135 v31.doc1
City of Yakima
EXHIBIT C
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2100
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401-1157
(253) 620-6500 - FACSIMILE (253) 620-6565
Amount of Judgment: $13,000,000.00
Interest Owed To Date: -0-
Taxable Costs And Fees: -0-
This matter came before the Court pursuant to and in accordance with that certain
Settlement Agreement given final approval by the Court on , 2003. The Court
having presided over this matter since its filing, having reviewed and approved the Settlement
Agreement, and being fully advised in the premises, it is hereby
ORDERED that the Plaintiffs and Class Members be and the same hereby are granted
JUDGMENT in the amount of $13,000,000.00 (Thirteen Million Dollars) against the City of
Yakima.
DONE IN OPEN COURT this day of , 2003.
The Honorable Susan L. Hahn, Superior Court Judge
Presented By:
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
Bradley B. Jones, WSBA 17197
John C. Guadnola, WSBA No. 08636
s for Plaintiffs and Class Members
JUDGMENT - 2 of 3
(NO. 99-2-00611-8)
[1240135 v31.doc]
EXHIBIT C
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2100
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401.1157
(253) 620-6500 - FACSIMILE (253) 620-6565
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PRESTON GATES & ELLIS
Thomas H. Wolfendale, WSBA 03776
and
DANIELSON HARRIGAN & TOLLEFSON
Timothy Leyh, WSBA 14853
By
Attorneys for the City of Y
BROWN REAVIS & MANNING
Stephen J. Tan
By:
Attorneys for Del Monte Corporation
JUDGMENT - 3 of 3
(NO. 99-2-00611-8)
[1240135 v31.doc]
EXH R IT
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2100
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401-1157
(253) 620-6500 - FACSIMILE (253) 620-6565
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SUPERIOR COURT OF THE STATE OF WASHINGTON
FOR YAK.IMA COUNTY
WILFRED and KAREN MURPHY, et a1.,
Plaintiffs,
v.
CITY OF YAKIMA, a Washington municipal
corporation, and WASTEWATER DIVISION
OF THE DEPARTMENT OF ENGINEERING
AND UTILITIES, a discrete governmental
agency or unit of the City of Yakima, and DEL
MONTE CORPORATION, a New York
corporation,
Defendants.
NO. 99-2-00611-8
STIPULATION AND ORDER OF
DISMISSAL
ASSIGNED TO THE HONORABLE
SUSAN L. HAHN
HEARING DATE: October 10, 2003
Pursuant to the stipulation of the parties to the above -captioned action, as evidenced
by the signatures of their respective counsel below, and in accordance with the Settlement
Agreement given final approval by this Court on , 2003, it is hereby
ORDERED, ADJUDGED AND DECREED as follows:
1. Except to the extent necessary to permit the Court to exercise the continuing
jurisdiction described below, and without impacting the validity or enforceability of the
Judgment entered against the City of Yakima in this matter or the ability of Representative
STIPULATION AND ORDER OF DISMISSAL - 1 of 4
(NO. 99-2-00611-8)
[1240129v6]
EXHIBIT D
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & OAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2100
POST OFFICE BOX 1157
TACOMA, WASHINGTON 96401.1157
(253) 620-6500 - FACSIMILE (253) 620-6565
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Plaintiffs and Class Members to recover on unsatisfied portions of the Judgment above and
beyond that subject to execution against the City of Yakima and Del Monte Corporation, a
New York corporation, all "claims" of Plaintiffs and Class Members (as "claims" is defined in
the Settlement Agreement) shall be and the same hereby are DISMISSED WITH
PREJUDICE and without costs.
2. Notwithstanding the foregoing dismissal of claims against the City and Del
Monte Corporation, this Court retains jurisdiction over this matter for the following purposes:
(a) determining the reasonable fees and costs to be awarded to Plaintiffs'
counsel;
(b) approving a method of allocating net settlement proceeds among class
members and a procedure for administering claims submitted by class
members;
(c) overseeing the administration of claims submitted by class members and,
to the extent permitted or required by the approved procedure, resolving
disputes about the allowance, disallowance or amount of any such claims ;
and
(d) overseeing the distribution of settlement funds to class members.
3. This Court's retained jurisdiction shall extend to any and all monies recovered
on behalf of the Class, whether by way of settlement or enforcement of a judgment, from any
of the City's insurers.
4. The Judgment entered in this matter pursuant to and in accordance with the
Settlement Agreement given final approval by the Court on , 2003, is and
STIPULATION AND ORDER OF DISMISSAL - 2 of 4
(NO 99-2-00611-8)
[1240129 v6)
EXH1BIT 0
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2100
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401-1157
(253) 620-6500. FACSIMILE (253) 620-6565
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shall remain in full force and effect in accordance with its terms; provided, however, that the
City of Yakima shall not be subject to execution of judgment in excess of Seven Million
Dollars ($7,000,000.00) as set forth in the Settlement Agreement. Neither the dismissal with
prejudice of claims against the City of Yakima and Del Monte Corporation nor any other
provision of this Order shall have any impact of any nature whatsoever on such Judgment. •
5. This Order shall not limit, prejudice or in any way affect any action brought or
to be brought by the City of Yakima or by Representative Plaintiffs or Class Members for the
purpose of recovering proceeds of insurance policies issued in favor of the City of Yakima.
The City shall remain a party to this action to the extent necessary to prevent any such
limitation, prejudice or other effect but the City's status as a party shall not in any way affect
the dismissal with prejudice of all claims the Plaintiffs and Class Members brought or could
have brought against it in this action.
DONE IN OPEN COURT this day of , 2003.
The Honorable Susan L. Hahn, Superior Court Judge
STIPULATION AND ORDER OF DISMISSAL - 3 of 4
(NO 99-2-006] 1-8)
[1244129 v6]
EXHIBIT ID
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2100
POST OFFICE 80X 1157
TACOMA. WASHINGTON 98401-1157
(253) 620.6500 - FACSIMILE (253) 620-6565
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The parties to the above -captioned action, by and through their respective attorneys of
record, hereby stipulate and agree to entry of the foregoing Order of Dismissal.
GORDON, THOMAS, HONEYWELL,
MALANCA, PETERSON & DAHEIM LLP
Albert R. Malanca, WSBA 01226
John C. Guadnola, WSBA 08636
Kenneth G. Kieffer, WSBA 10850
Bradley B. Jones, WSBA 17197
Timothy L. Ashcrafl, WSBA 26196
ys for Plaintiffs and Class Members
Dated: kJ/et , 2003.
STIPULATION AND ORDER OF DISMISSAL - 4 of 4
(NO. 99-2-00611-8)
[1240129 v6]
PRESTON GATES & ELLIS
Thomas H. Wolfendale, WSBA 03776
and
DANIELSON HARRIGAN &
TOLLEFSON
Timothy Leyh, WSBA 14853
Attorneys for the City of Y
Dated: O 9' , 2003.
BROWN REAVIS & MANNING
Stephen J. Tan, WSBA 22756
By:
Attorneys for Del Monte Corporation
Dated: , 2003.
MINT
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2100
POST OFFICE BOX 1157
TACOMA. WASHINGTON 08401-1157
(253) 620-6500 - FACSIMILE (253) 620-6565
Section B
Wastewater Rate Increase
ORDINANCE NO. 2003=
AN ORDINANCE relating to wastewater rates, fees, and
charges; adjusting various wastewater rates, fees, and
charges; amending Sections 7.60.020, 7.60.025, 7.60.035,
and 7.60.105 and adding section 7.60.115 of the Yakima
Municipal Code; and providing for related matters.
WHEREAS, the City of Yakima (the "City") is authorized by Title 35 RCW to acquire,
construct, own, operate, and provide financing for waterworks and systems of sewerage, and to
establish rates, fees, and charges therefore; and
WHEREAS, the City Council determines that it is in the best interests of the citizens of the
City that ordinances related to such systems of sewerage, wastewater rates, fees, charges, and related
matters be amended as set forth in this Ordinance; and
WHEREAS, the City Council determines that the rates, fees, and charges contained in this
Ordinance are fair, just, and reasonable;
NOW, THEREFORE, BE IT ORDAINED BY THE CITY OF YAKIMA
Section 1, Section 7.60.005 of the Municipal Code reads as follows:
7.60.005 Definitions.
1. "Biochemical oxygen demand" (BOD) shall have the same meaning as in Chapter
7.65.
2. "Industrial discharger" shall have the same meaning as in Chapter 7.65.
3. "Industrial wastewater" shall have the same meaning as in Chapter 7.65.
4. "Minor industrial user" (MIU) shall have the same meaning as in Chapter 7.65.
5. "Sewer" shall have the same meaning as in Chapter 7.65.
6. "Significant industrial user" (SIU) shall have the same meaning as in Chapter 7.65.
7. "Suspended solids" (SS) shall have the same meaning as in Chapter 7.65.
8. "Total suspended solids (TSS) shall have the same meaning as suspended solids.
1
OCTOBBR 2003 RA'Z'E ORDINANCES
9 "Wastewater" shall have the same meaning as in Chapter 7.65.
10. "Wastewater system" shall have the same meaning as "POTW" or "publicly owned
treatment works" in Chapter 7.65. The term includes all sewers and wastewater
treatment plants.
I I. "Wastewater treatment plant" shall have the same meaning as in Chapter 7.65.
Section 2. Section 7.60.010 of the Municipal Code reads as follows:
7.60.010 City to fix and collect wastewater rates and charges.
A. The public health, safety and welfare require that the city of Yakima fix and collect
wastewater rates and charges upon, and _measured by either the quantity of water supplied to the
premises or, if metered, the quantity of wastewater discharged into the wastewater sewer system in
the city of Yakima and in areas outside the corporate limits of the city, for the carrying and
discharge of all wastewater into the wastewater system of the city of Yakima as presently maintained
and operated, together with additions and betterments thereto and extensions thereof, which rates
and charges are fixed by this chapter; provided, that the specifying of service rates and charges by
this chapter shall not affect the financing of construction of sewers and trunk sewers pursuant to the
local improvement district process, the imposition of a wastewater connection charge, or other
alternate means of financing such construction; provided further, the adoption of rates for service to
property outside the corporate limits of the city does not constitute an undertaking by the city to
serve any or all such property without compliance with other laws, regulations and policies of the
city pertaining to the furnishing of city sewer service outside city corporate limits.
B. Biennial Review. In accordance with federally mandated Environmental Protection
Agency requirements and to satisfy bond covenants, the city shall review not less often than every
two years the wastewater contribution of users and user classes, the total cost of operation and
maintenance of the wastewater system and the user charge system. The charges for users or classes
of users shall be revised as required.
Section 3. Section 7.60.020 of the Municipal Code is hereby amended to read as
follows:
7.60.020 Owner (inside city) retail wastewater service charge.
A. Wastewater Service Charge. There shall be charged to and collected from all
premises within the city served by the city wastewater system a wastewater service charge composed
of a ready -to -serve charge and a volume charge based on either the quantity of water supplied to the
premises or, if metered, the quantity of wastewater discharged into the wastewater sewer system;
PROVIDED that in no event shall the total wastewater service charge be less than the minimum
charge indicated below:
2
OCTOBER 2003 RATE ORDINANCES
Minimum charge effective
July 1Nov 10, 2003
$12.0513.01 /month
(1) Wastewater Service Charge --Schedules. The wastewater service charge shall
be calculated and charged according to the following schedules:
(a) Ready -to -Serve Charges. For all customers other than multiple -unit
residential customers:
For multiple -unit residential customers, the monthly ready -to -serve charge shall be based on the
number of accounts plus the number of dwelling units, according to the following:
Ready -to -serve charge effective
July INov 10, 2003
(66.77/account) + ($5.78/24dwelling unit)
(b) Volume Charge. For all customers, the volume charge shall be
determined by the following:
3
OCTOBER 2003 RATE ORDINANCES
Charges
July INov
effective
10, 2003
Water Meter Size
(Inches)
Monthly charge
Bimonthly charge
3/4
$12.0513.01
$21.1026.02
1
15.3016.52
30.6033.04
1-1/2
21.34
39.5212.68
-1-9
2
31.8134.35
63.6268.70
3
120.50130.10
211.00260.20
4
153.10165.62
306.80331.24
6
230.16248,49
160.32496,98
8
317.61342.94
635.28685.88
10
635.28685.89
X61.371.78
For multiple -unit residential customers, the monthly ready -to -serve charge shall be based on the
number of accounts plus the number of dwelling units, according to the following:
Ready -to -serve charge effective
July INov 10, 2003
(66.77/account) + ($5.78/24dwelling unit)
(b) Volume Charge. For all customers, the volume charge shall be
determined by the following:
3
OCTOBER 2003 RATE ORDINANCES
Volume charge effective
July-1<Nov 10, 2003
$2.11228 per 100 cubic ft of water consumption
or, if metered, quantity discharged
B. Strong Waste Surcharge. For customers located inside the city discharging
¢� }, hundred
�__ � ..,.7117..« of biochemical oxygen
DPlI
wastewater which contains more than threw hund.. 'd parts per million gsioch eeeicai oxe
demand (BOD) and/or total suspended solids (TSS), there shall be a surcharge, in addition to the
ready -to -serve charge and the volume charge, which shall be calculated utilizing the national average
values of BOD and TSS concentrations typical to each classification under the Standard Industrial
Code or by actual concentrations verified by the city. If the customer chooses, at its expense, to
install a sampling station, the strong waste charge shall be calculated based upon actual
concentrations. Any testing done by the city may be charged at the rates set forth in section
7.60.105 of this title. The following formula shall be utilized to calculate the strong waste charge:
Monthly surcharge = (unit costs per pound of BOD or TSS) times (weight of one
gallon of water) times (customer's monthly volume in one hundred cubic feet divided by one
thousand three hundred thirty-seven) times (customer's concentration of BOD or TSS in
parts per million per the national average values] or (verified concentrations] minus three
hundred).
In the foregoing formula, the applicable values are as follows:
Section 4,
follows:
Section 7.60.025 of the Municipal Code is hereby amended to read as
740.025 Non -owner (outside city) retail wastewater service charge.
4
OCTOBER 2003 RATE ORDINANCES
Effective
July 1Nov
Effective
January 1,
Effective
January 1,
Effective
January 1,
10, 2003
2004
2005
2006
Unit cost per pound for BOD
SO. 20.294
$872890.312
$04880.332
$933080.332
Unit cost per pound for TSS
$972230.241
$0.2650.286
X0.339
$0.3140.339
Weight of one gallon of water
8.34
8.34
8.348.34
pounds
I pounds
pounds
! pounds 1
Section 4,
follows:
Section 7.60.025 of the Municipal Code is hereby amended to read as
740.025 Non -owner (outside city) retail wastewater service charge.
4
OCTOBER 2003 RATE ORDINANCES
A. Wastewater Service Charge. There shall be charged to and collected from all
premises outside the city served by the city wastewater system a wastewater service charge
composed of a ready -to -serve charge and a volume charge based on domestic water consumption;
provided that in no event shall the total wastewater service charge -be less than the minimum charge
indicated below:
Minimum charge effective
July -1 -Nov 10, 2003
$18.8219.78/month
(1) Wastewater Service Charge --Schedules. The wastewater service charge shall be
calculated and charged according to the following schedules:
(a) Ready -to -Serve Charge. For all customers other than multiple -unit
residential customers:
5
OCTOBER 2003 RATE ORDINANCES
Charges effective
3+14t—}Nov 10, 2003
Water Meter Size
(inches)
Monthly charge
Bimonthly charge
3/4
$18.8219.78
$37.6439.56
1
2319025.12
478050.24
1-1/2
3078632.44
61.7264.88
2
19.6852.22
99.36104.44
3
188.2091 7.80
376.10395 60
4
239.58251.80
479-46503.60
6
3-546377.80
718.9275.5.60
8
196.10521.40
992.201 042 80
10
991491.042.80
1,984.3 82.085.60
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OCTOBER 2003 RATE ORDINANCES
For multiple -unit residential customers, the monthly ready -to -serve charge shall be based on the
number of accounts plus the number of dwelling units, according to the following:
Ready -to -serve charge effective
Nov 10, 2003
($97-7910.29/account) + ($9-039.49/dwelling unit)
(b) Volume Charge. For all customers, the volume charge shall be
determined by the following:
Volume charge effective !
ulylNov 10, 2003
$3.53 per 100 cubic ft. of water
consumption or, if metered, quantity discharged
B. Strong Waste Surcharge. For customers located outside the city discharging wastewater
which contains more than three hundred parts per million of biochemical oxygen demand (BOD)
and/or total suspended solids (TSS), there shall be a surcharge, in addition to the ready -to -serve
charge and the volume charge, which shall be calculated utilizing the national average values of
BOD and TSS concentrations typical to each classification under the Standard Industrial Code or
by actual concentrations verified by the city. If the customer chooses at its expense to install a
sampling station, the strong waste charge shall be calculated based upon actual concentrations. Any
testing done by the city may be charged at the rates set forth in section 7.60.105 of this title. The
following formula shall be utilized to calculate the strong waste charge:
Monthly surcharge = (unit costs per pound of BOD or TSS) times (weight of one gallon of
water) times (customer's monthly volume in one hundred cubic feet divided by one thousand three
hundred thirty-seven) times (customer's concentration of BOD or TSS in parts per million per [the
national average values] or [verified concentrations] minus three hundred).
In the foregoing formula, the applicable values are as follows:
6
OCTOBER 2003 RA'Z'E ORDINANCES
Effective
1 No' 10, 2003
Juav
Unit cost per pound for BOD
$0.3150.537
Unit cost per pound for TSS
$075040.522
6
OCTOBER 2003 RA'Z'E ORDINANCES
Weight of one gallon of water
8.34 pounds
Section 5. Section 7.60.030 of the Municipal Code reads as follows:
7.60.030 Wastewater charge added to and payable with water bill.
The wastewater service charge provided for in this chapter shall be payable at the office of the
treasurer of the city, and shall be billed for and payable at the same time as the water bill for the
premises is payable; and payment for water service shall not be accepted unless payment of the
wastewater service charge is made at the same time. The same shall be payable bimonthly and shall
be added to city water bills as a separate charge thereon.
Section 6,
follows:
7.60.035
Section 7.60.035 of the Municipal Code is hereby amended to read as
Septage and exceptional wastewater disposal charges.
A. Septage Wastewater Disposal Charge. For septage wastewater disposed
pursuant to Chapter 7.63, the following charge shall apply:
Charge effective
Juin-l-Nov 10, 2003
$0-.--32-40 337/gal.
B. Exceptional Wastewater Disposal Charge. For exceptional wastewater disposed pursuant to
Chapter 7.63, the charge shall be calculated by reference to the following formula:
Exceptional wastewater Charge = (Treatment Costs) + (Receiving Costs) + (Testing Costs)
(1) Treatment costs. Treatment costs shall be determined by reference to the
following formula:
Treatment costs = ((UBOD/TSS) x (WW) x (V/1,337) x (CBOD/TSS)1 + RUV) x
(V)-1 where:
V = Volume discharged (in one hundred cubic feet);
CBOD/ TSS = Concentration of BOD or TSS (in parts per million); and
7
OCTOBER 2003 RA'I'L ORDINANCES
the n ng values are as follows:
ua�, a�.rataiuiuFy values follows:
Abbreviation
Meaning
Value Effective
Nov 10, 2003
May 21. 2004
UBOD/TSS
Unit cost per pound of BOD or TSS
$044-50.537 (BOD)
$0.5040.522 (TSS)
tW>
W • •
Weight of one gallon of water
_ _
8.34 poua cls
UV
Unit cost per one hundred cubic feet
of volume
$0.2580.271
(2) Receiving Costs. Receiving costs shall be calculated by the wastewater
manager and based on actual or estimated staff time, materials, and related costs
incurred in connection with receiving the particular waste at issue.
(3) Testing Cost. The costs of any testing are set forth in Section 7.60.105.
The wastewater manager shall have final authority over what tests shall be required
for any discharge.
C. The amount of the disposal fee, at the rate specified in subsections A or 13 of this
section, shall be based upon the actual quantity measured and discharged. Measurement shall be
through methods and instruments as determined by the city.
Section 7. Section 7.60.050 of the Municipal Code reads as follows:
7.60.050 Meters required --Penalty for violations --Rates for metered and
unmetered premises.
A. Meters Required --Penalty. Commencing September 1, 1977, all premises thereafter
newly connected or reconnected to the wastewater system shall have a meter, approved by the city
wateriirri-igation manager, installed to measure either the quantity of water supplied to the premises
or the quantity of wastewater discharged into the wastewater system; and it shall be unlawful for
any person, firm or corporation to thereafter connect any premises so as to be served by the
wastewater system without installing a meter as required by this subsection.
Any person, firm or corporation who connects any premises so as to be served by the wastewater
system in violation of this subsection shall upon conviction thereof be subject to a fee not exceeding
two hundred fifty dollars or subject to imprisonment in the city jail facility for a term not exceeding
ninety days.
8
OCTOBER 2003 RATE ORDINANCES
B. Rates for Metered Premises. All premises served by either city domestic water
service or by some other source of domestic water, and which have meters to measure all water
supplies which are ultimately discharged into the city wastewater system shall pay wastewater
service charges according to the rates specified in Section 7.60.020 or 7.60.025 of this chapter, and
all premises which have meters to measure the quantity of wastewater discharged into the
wastewater system shall likewise pay wastewater service charges according to the rates specified in
Section 7.60.020 or 7.60.025 of this chapter.
C. Rates for Unmetered Premises. Premises with existing connections to the city
wastewater system, but which have no meter to measure either the domestic water supplied to the
premises or the wastewater discharged therefrom, shall be charged a wastewater service charge
according to rates specified in Section 7.60.020 or 7.60.025 of this chapter in an amount
determined by the wastewater manager to be the average charge for wastewater service to similar
premises.
Section 8. Section 7.60.055 of the Municipal Code reads as follows:
7.60.055 Each premises an individual consumer.
For purposes of computing the wastewater service charge imposed by Sections - 7.60.020 or
7.60.025, and Section 7.60.050 of this chapter, each one -family dwelling unit and each dwelling
unit in a two-family dwelling or in a multiple dwelling, as all those terms are defined in Title 12,
Zoning, of the city of Yakima Municipal Code, shall constitute one individual consumer. Further,
for purposes:of those sections, each separate mobile home site within a mobile home court, park or
other mobile home complex shall constitute one individual consumer; provided, an automobile
trailer court as defined in Title 12, Zoning, of the city of Yakima Municipal Code, rather than each
separate trailer site therein,'shall constitute an individual consumer for purposes of those sections.
Each such consumer constitutes a premises to which the minimum wastewater service rate is
applicable, and there shall be no deductions for vacant premises.
Section 9. Section 7.60.060 of the Municipal Code reads as follows:
7.60.060 Water not used or lost --Minimum charge not to be reduced.
Where the use of water is such that a portion of all water used is lost by evaporation, irrigation,
sprinkling or other cause, or is used in manufactured goods and commodities, and the person in
control provides proof of this fact and -installs a meter or other measuring device approved by the
city water/irrigation manager to enable measurement of the amount of water so used or lost, no
charge shall be made for wastewater because of water so used or lost, except that in no case will the
minimum charge be adjusted or reduced. Direct discharge of wastewater to fresh water or to points
other than the city sewer system shall not be cause for adjustment or reduction of the wastewater
service charge.
9
OCTOBER 2003 RATE ORDINANCES
Section 10. Section 7.60.070 of the Muinicipal Code reads as follows:
7.60.070 Water used for irrigation not to be charged as wastewater.
It is the intent of this chapter that the portion of water used exclusively for irrigation be not
charged correspondingly for wastewater. Upon application, where it can be shown to the
satisfaction of the city wastewater manager that the higher charges for wastewater during the
summer months are due to water used for irrigation, the wastewater charge for summer period may
be adjusted to the winter months' charges.
Section 11. Section 7.60.080 of the Municipal Code reads as follows:
7.60.080 Home Kidney Dialysis
Horne Kidney Dialysis. A residential customer who undergoes kidney dialysis at his or her
home, or whose home is also the home of a different person who undergoes home kidney dialysis,
shall not be required to pay utility charges for domestic water service or sewer service for the
quantity of water that is necessary for the home dialysis. In order to be excused from utility charges
under this subsection, the residential customer must present to the customer services division
written documentation from a recognized kidney dialysis center certifying that the person requires
dialysis and the quantity of water needed for that person's dialysis.
Section 12. Section 7.60.090 of the Municipal Code reads as follows:
7.60.090 Procedure for paying wastewater service charges--Delinquency--
Imposition of priority lien.
All charges for wastewater service shall be due and payable at the office of the city treasurer on
or before the fourteenth day after the bill therefore is rendered, and if unpaid shall become
delinquent twenty-one days after the due date. Any wastewater service charge which becomes
delinquent shall immediately become a lien upon the premises, and if unpaid for sixty days after the
date payment was due, shall bear interest at the rate of eight percent per annum from the date
payment was due, and such lien may be foreclosed by the city as provided by state law. The lien
shall be superior to all other liens and encumbrances except general taxes and local and special
assessments.
Section 13. Section 7.60.100 of the Municipal Code reads as follows:
7.60.100 Additional collection method --Water service suspension --Notice and
hearing procedure.
A. As an additional and concurrent method of collection of any such delinquent
wastewater rate or charge, the customer service manager may suspend the water service or supply
10
OCTOBER 2003 RATE ORDINANCES
from the premises to which such charge for wastewater has attached until such rates and charges are
paid.
B. No water service shall be suspended until a written notice has been served upon or
mailed to the customer at least seven days prior to suspending service. Such notice shall state the
date on which service is to be suspended, the amount of delinquent wastewater charges, and that a
customer may request in writing a hearing before the customer service manager or his designee to
contest the suspension, provided such request is received by the customer service manager or his
designee before the date service is to be suspended.
C. Upon timely receipt of a request for hearing, the customer service manager or his
designee shall conduct a hearing, and the customer requesting the hearing shall be notified in
writing by the customer service manager or his designee of the time, date and place of such hearing.
Pending the outcome of a hearing, no service shall be suspended.
D. When water service has been suspended for nonpayment of a wastewater charge,
water service shall not be resumed until all delinquent service charges have been paid, together with
an additional fifteen -dollar reconnection charge.
E. In the event the occupant of a premises is someone other than the customer, the
occupant or, in the case of a multiple dwelling, the manager or person in charge shall be notified in
writing of the date of the suspension of service and the amount of delinquency at the same time
such customer is so notified.
Section 14. Section 7.60.105 of the Municipal Code is hereby amended to read as
follows:
7.60.105 Rates, charges and fees for pretreatment program.
A. It is the purpose of this section to provide for the payment of rates, charges, and fees
for certain discharges to the wastewater system, to compensate the city for the cost of administration
of the pretreatment program established in Chapter 7.65. Connection charges for dischargers
subject to Chapter 7.65 are as set forth in Chapter 7.58 of this Code.
B. Rates, Charges and Fees to be Published. The wastewater manager shall maintain a
schedule of current rates, charges and fees, shall post such schedule conspicuously, and shall make
copies available to interested persons. Upon request, the wastewater manager shall prepare an
estimate of annual rates, charges and fees for a significant industrial user.
C. Base Rate for Minor Industrial Users. Commencing on the effective date of the
ordinance codified in this section and manager until amended pursuant to subsection E of this
section, minor industrial users (as defined in Chapter 7.65) shall pay a base rate for pretreatment
service of $63.0068.04/month.
11
OCTOBER 2003 RATE ORDINANCES
Significant industrial users shall not be subject to a Kase rare.
D. Charges and Fees for Related Services. Commencing on the effective date of the
ordinance codified in this section and until amended pursuant to subsection E below, significant
industrial users shall pay the sampling and laboratory testing charges and fees provided below for
those specific services described or listed below. All customers shall also be subject to the
sampling, laboratory testing, and flat rate charges and fees provided below, in addition to any base
rate provided for in subsection C, but only for those services requested by the customer or provided
as part of a required compliance inspectio :.
(1) Sampling Charge. The sampling charge includes sampler set-up, pick-up, and
statistical analysis, as well as billing program charges from the customer service
manager. The sampling charge is based on the length of the sampling period,
pursuant to the following schedule:
Sampling Period
Charge
effective
Jul) 1NoN
—Charge
effective
January 1
2004
Charge
effective
January 1,
2005
Charge
effective
January 1,
2006
10. 2003
First day
$
$
$
$
210 83
218.05
2x-50
263-1.6
260.10
$
267.90
275.94
284.22
Each subsequent day in the
same sampling period.
$
$
$
$
39.51
n3.2S
9679.3
98.93
+at:90
100 71
103.73
106.84
110.05
(2) Laboratory Testing Fees. A laboratory testing fee is assessed for each type of
test conducted on each sample. Fees are assessed pursuant to the following
schedule.
Test -
Charge
Effective
Jul} 1No'
Charge
Effective
January 1,
Charge
Effective
January 1,
Charge
Effective
January1,
10, 2003
2004
2005
2006
BOD -Biochemical Oxygen
Demand
$
$
$
38 81
4
I 39.97
36.58
4-7.68
39.51
40.70
41.92
43.17
12
OCTOBER 2003 RATE ORDINANCES
TSS -Total Suspended
Solids
$
39.51
$
40.70
S
41.92
$
43.17
36.58
38.81
39.97
37.68
pH
+9.49
8-84
-19799
+8-•29
19.75
20.34
20.95
21.58
BOD Soluble
58.21
54.87
56.52
159796
59.26
61.04
62.87
64.76
COD
$
S
$
$
39.51
40.70
41.92
43.17
38.81
39.97
36.58
37.68
COD Soluble
59.26
61.04
62.87
64.76
4-,8r2(4
51).95
54.86
15644
TDS
39.51
40.70
41.92
43.17
36.58
37.68
39.97
38.81
Alkalinity (Carbonate)
19.75
20.34
20.95
21.58
1849
18.81
19.40
19139
Ammonia (Ion Selective
Probe)
19.75
20.34
20.95
21.58
-1-849
18.8 4
19.40
+9-99
Chlorine Residual
(Colorimetric)
19.75
20.34
20.95
21.58
18.8 4
19.40
-1-9799
18.29
Dissolved Oxygen (Azide)
19.75
20.34
20.95
21.58
18.29
18.81
X749
19199
Dissolved Oxygen
(Membrane)
19.75
20.34
20.95
21.58
4-849
18.8.1
-19..441
.1-9799
13
OCTOBER 2003 RA'Z'E ORDINANCES
Fecal Coiiiorm
59.26
1
61.04
62.87 i
(476
59.95
54.86
.56.:--.74
3848
FOG -Fats. Oils & Grease
77.60
79.93
86.34
711,-3-#
79.01
81.38
83.82
MPN
5
3°8.93
199.r,8
431.69
.7,::,5 7/
395.06
37 73
406.91
419.12
Nitrate
39.51
40.70
41.92
43.17
39.97
38.81
37.68
1 Nitrite
39.51
40.70
1
41.92
43.17
39.97
38.81
36.58
3 7.6 8
Organic/Volatile Acids
19.75
20.34
20.95
21.58
4-9799
19.40
1-849
18.81
Total Volatile Solids
c
s
43.17
39.51 40.70 41.92
39.97
3649 37.68 38.81
BNA (b)
Semi volatiles
Market Market cost' Marto
cost (a) (a) cost (a)
Market
cost (a)
BTEX (b)
234.56
253.33
214.66 221.10
231.83 238.78
227.73
245.95
Metals
293720
316.66
268 32 275.37
289.79, 298.48
284.61,
307.44
Metals Graphite Furnace
398.53
110.-18
443.33
375.65 386.92
405.71 417.88
430.42
645.01
696.66
626.25
Pesticides/PCB's
590.30 688.01
637.54 656.67
676.37
Market
cost (a)
Market Market cost
cost (a) (a)
Market
cost (a)
TPH (b)
14
OCTOBER 2003 RATE ORDINANCES
Volatile Organics
Charge
Effective
1No
Charge
Effective
January
1,
2004
Charge
Effective
January 1,
2005
Charge
Effective
January 1,
2006
231.83
238.78
245.95
253.33
$
$
221.10
227.73
.24446
211.66
458.9.5
432.60
Notes:
(a) This testing is conducted by an outside laboratory. The actual fee
will be based on the actual cost of the test performed, plus any related costs
and taxes incurred.
(b)Glossary:
BNA: Base Neutral Acids (Semivolatile Organic compounds).
BM:Benzene, Toluene, Ethylbenzene, and Zylene-Highly volatile
hydrocarbons.
TPH: Total Petroleum Hydrocarbons (includes oils, gasoline, diesel, and
other fuels).
(3) Other related services are assessed on each of certain transactions or
services, pursuant to the following schedule:
Transaction or Service
Charge
Effective
1No
Charge
Effective
January
1,
2004
Charge
Effective
January 1,
2005
Charge
Effective
January 1,
2006
Jule
10,2003
Discharge Authorization
LS
$
$
$
$
472.71
(a)
445.58
458.9.5
432.60
467.21
481.23
495.66
510.53
Compliance Inspection
HR
156.57
161.26
147.58
152.01
15 9.3 9
164.17
169.10
174.17
Dye testing
HR
159.39
164.17
169.10
174.17
156.57
161.26
147.58
152.01
Smoke testing
HR
57.37
-5'9799
54 08
55 70
58.41
60.16
61.97
63.83
TV (new construction)
= LF
-1-77; 1.87
1 781.93
-1-841.98
1.892.04
TVing (location)
HR
298.31
307.26
281.19
289.63
303.69
312.80
322.18
331.85
15
OCTOBER 2003 RA1'E ORDINANCES
Notes:
( a) Includes only the first 50,000 gallons of flow. See Chapter 7.65.
E. Amendment of Base Rates, Charges and Fees.
1. The base rate or rates ("rates" for purposes of this subsection) set forth in
subsection [[�� section maytip_ amended CM..... time time by ordinance of the
subsection C of this amende�.i from to by of the
city council. Any such amendment shall be based upon changes in the city's cost of
providing wastewater pretreatment service as reflected in the city's annual budget
The base rates set forth in subsection C of this section are to be billed at 75% for
customers located within the city limits. Other customers will be billed at 100% of
base rates. These percentages may be amended by ordinance of the city council.
2. The charges and fees set forth in subsection D of this section may be
amended from time to time by ordinance of the city council upon recommendation
of the wastewater manager. Such amendments shall be based on changes in the
costs of providing sampling, laboratory and miscellaneous wastewater pretreatment
services. In determining whether there has been a change in the costs of providing
service, the city council may consider the city's expenses associated with obtaining
services from private laboratories and other third persons, and the city's own
administrative and other costs. The charges and fees set forth in subsection D of
this section are to be billed at 75% for customers located within the city limits.
Other customers will be billed at 100% of the charges and fees set forth in
subsection D. These percentages may be amended by ordinance of the city council.
F. Money to be Credited to Wastewater Operating Fund. All moneys collected
pursuant to this part shall be paid into and credited to the wastewater operating fund as provided in
Chapter 3.101.
Section 15. Section 7.60.115 of the Municipal Code is added and reads as follows:
7.60.115 Sunset Clause.
Effective January 1, 2024. Wastewater Rates for all retail customers shall be reduced by the
percentage established by dividing S886.666 by the total gross revenue received from all retail
customers during the previous fiscal year.
16
OCTOBER 2003 RA'1'Ir ORDINANCES
Section 44 16. Section 7.60.120 of the Municipal Code reads as follows:
7.60.120 Severability.
If any section, clause, or phrase of this ordinance is declared unconstitutional or invalid for any
reason, such decision will not affect the validity of the remaining portions of this ordinance, which
shall continue in full force and effect.
Section -1-617. This ordinance shall be in full force and effect (30) calendar days after its
passage, approval and publication as provided by law and by the City Charter.
PASSED BY THE CITY COUNCIL, signed and approved this day of
October, 2003.
ATTEST:
City Clerk
Publication Date;
Effective Date;
17
OCTOBER 2003 RATE ORDINANCES
Mary Place, Mayor
Section C
Bond Ordinance
CITY OF YAKIMA, WASHINGTON
WATER AND SEWER REVENUE BONDS, 2003
AN ORDINANCE of the City of Yakima, Washington, authorizing the
issuance and sale of water and sewer revenue bonds of the City in the
principal amount of not to exceed $17,700,000 in one or more series to
finance the settlement costs of the odor litigation and certain capital
improvements to the City's water and sewer system; and fixing the terms
and covenants of such bonds.
Passed On October 7, 2003
Prepared by:
PRESTON GATES & ELLIS LLP
925 Fourth Avenue, Suite 2900
Seattle, Washington 98104-1158
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
Section 1.1 Definitions 2
ARTICLE II FINDINGS
Section 2.1 Approval of Plan and System.............................................................................11
Section 2.2 Parity Conditions 11
ARTICLE III ISSUANCE OF 2003 BONDS
Section 3.1 Issuance of the 2003 Bonds 12
Section 3.2 Registration, Exchange and Payments 13
Section 3.3 Execution and Authentication of Bonds 17
Section 3.4 Lost or Destroyed Bonds 18
Section 3.5 Form of 2003 Bonds 19
ARTICLE IV REDEMPTION OF 2003 BONDS
Section 4.1 Redemption Prior to Maturity 19
Section 4.2 Notice of Redemption 19
Section 4.3 Effect of Redemption 20
Section 4.4. Amendment of Notice Provisions 20
Section 4.5 Purchase of 2003 Bonds 20
ARTICLE V FUNDS AND ACCOUNTS; DEFEASANCE
Section 5.1 Revenue Fund; Priority of Payments 21
Section 5.2 Bond Fund 22
Section 5.3 Defeasance 29
ARTICLE VI PARTICULAR COVENANTS OF THE CITY
Section6.1 Rate Covenant29
Section 6.2 Maintenance and Operation 30
Section 6.3 Sale or Disposition ofthe System 30
Section 6.4 Liens or Encumbrances 31
Section 6.5 Insurance 32
Section 6.6 Books and Accounts 33
Section 6.7 Additions and Improvements33
Section 6.8 Tax Covenants 34
-i-
P•\DG\DG02E 03/10/02
ARTICLE VII ADDITIONAL BONDS
Section 7.1 Additional Bonds 34
Section 7.2 Pledge Effected by Ordinance 37
ARTICLE VIII DEFAULTS AND REMEDIES
Section 8.1 Events of Default 39
Section 8.2 Formation of Bondowners Committee 40
Section 8.3 Books of City Open to Inspection 41
Section 8.4 Suits at Law or in Equity 42
Section 8.5 Direction of Actions of Bondowners Committee by Majority Owners 43
Section 8.6 Suits by Individual Bondowners 44
Section 8.7 Waivers of Default 45
Section 8.8 Remedies Granted in Ordinance Not Exclusive 45
ARTICLE IX BONDOWNERS MEETINGS
Section 9.1 Call of Bondowners Meetings 46
Section 9.2 Notice to Bondowners 46
Section 9.3 Proxies; Proof of Ownership of Parity Bonds 47
Section 9.4 Execution of Instruments by Bondowners 47
Section 9.5 Appointment of Officers at Bondowners Meetings 48
Section 9.6 Quorum at Bondowners Meetings 49
ARTICLE X AMENDMENTS TO ORDINANCE
Section 10.1 Amendments 49
Section 10.2 Obtaining Approval of Amendments at Bondowners Meeting 51
Section 10.3 Alternate Method of Obtaining Approval of Amendments 53
Section 10.4 Amendment of Ordinance in Any Respect by Approval of All
Bondowners 54
Section 10.5 Exclusion of Bonds Owned by City 54
Section 10.6 Endorsement of Amendment on Bonds 55
ARTICLE XI MISCELLANEOUS
Section 11.1 Undertaking to Provide Ongoing Disclosure 55
Section 11.2 Severability 59
Section 11.3 General Authorization_ 59
Section 11.4 Prior Acts 59
Section 11.5 Effective Date 59
Exhibit A Description of Project
Exhibit B Form of 2003 Bonds
P \DG\DG02E 03/10102
ORDINANCE NO. 2003 -
AN ORDINANCE of the City of Yakima, Washington, authorizing the
issuance and sale of water and sewer revenue bonds of the City in the
principal amount of not to exceed $17,700,000 in one or more series to
finance the settlement costs of the odor litigation and certain capital
improvements to the City's water and sewer system; and fixing the terms
and covenants of such bonds.
WHEREAS, the City of Yakima, Washington (the "City") now owns, operates and
maintains a water supply and distribution system and a sewerage collection and disposal system,
which water and sewerage systems have been combined for purposes of financing in the manner
provided by law (the "System"); and
WHEREAS, it is in the best interest of the City to finance the settlement of the odor
litigation and to undertake certain capital improvements to the System (as further described
herein, the "Project"); and
WHEREAS, the City Council hereby finds that it is in the best interests of the City that
the Bonds be offered in one or more series as further provided in a resolution of the City; and
WHEREAS, the City has issued its Water and Sewer Revenue Refunding Bonds, 1996
(the "1996 Bonds") and its Water and Sewer Revenue and Refunding Bonds, 1998 (the "1998
Bonds") (coilectiveiy, the "Parity Bonds"); and
WHEREAS, each of the ordinances authorizing the Outstanding Parity Bonds provides
that bonds may be issued on a parity with the lien on Gross Revenues of the System of such
Parity Bonds; and
WHEREAS, to finance the odor litigation settlement and pay costs of the Project, it is
deemed necessary and advisable that the City issue its Water and Sewer Revenue Bonds, 2003,
in the aggregate principal amount of not to exceed $17,700,000;
NOW, THEREFORE, BE IT ORDAINED BY the City of Yakima, Washington, as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this ordinance:
"Accreted Value" means with respect to any Capital Appreciation Bonds (A) as of any
Valuation Date, the amount set forth for such date in any ordinance authorizing such Capital
Appreciation Bonds and (B) as of any date other than a Valuation Date, the sum of (1) the
Accreted Value on the preceding Valuation Date and (2) the product of (a) a fraction, the
numerator of which is the number of days having elapsed from the preceding Valuation Date and
the denominator of which is the number of days from such preceding Valuation Date to the next
succeeding Valuation Date, calculated based on the assumption that Accreted Value accrues
during any semiannual period in equal daily amounts on the basis of a year of 12 30 -day months,
times (b) the difference between the Accreted Values for such Valuation Dates.
"Additional Bonds" means any revenue bonds, revenue warrants or other revenue
obligations that may be issued in the future on a parity of lien with the 1996 Bonds, the 1998
Bonds, the 2003 Bonds and any other Parity Bonds.
"Annual Debt Service" means for any specified Fiscal Year:
(1) with respect to any Outstanding Parity Bonds, the amounts required to be
deposited during that period in the Bond Fund (excluding the Reserve Fund therein);
(2) with respect to any Outstanding Capital Appreciation Bonds, the principal amount
thereof shall be equal to the Accreted Value thereof maturing or scheduled for payment in such
period, and no other interest shall be included;
-2-
P\DG\DG02E 03/10/02
(3) with respect to any Outstanding Fixed Rate Bonds, an amount equal to (A) the
principal amount of such Fixed Rate Bonds due or subject to mandatory redemption during such
period and for which no sinking fund installments have been established, (B) tiie amount of any
payments required to be made during such period into any sinking fund established for the
payment of any such Fixed Rate Bonds, plus (C) all interest payable during such period on any
such Fixed Rate Bonds Outstanding and with respect to Fixed Rate Bonds with mandatory
sinking fund requirements, calculated on the assumption that mandatory sinking fund
installments will be applied to the redemption or retirement of such Fixed Rate Bonds on the
date specified in the ordinance authorizing such Fixed Rate Bonds; and
(4) with respect to Outstanding Variable Rate Bonds, the principal for any period and
interest on such Variable Rate Bonds during such period computed on the assumption that the
amount of Variable Rate Bonds Outstanding as of the date of such computation would be
amortized (i) in accordance with the mandatory redemption provisions, if any, set forth in the
ordinance authorizing the issuance of such Variable Rate Bonds, or if mandatory redemption
provisions are not provided, during a period commencing on the date of computation and ending
on the date 30 years after the date of issuance (ii) at an interest rate equal to the yield to maturity
set forth in the Revenue Bond Index (40 -year Bond) published in the edition of The Bond Buyer
(or comparable publication or such other similar index selected by the City in good faith)
selected by the City and published within ten days prior to the date of calculation or (iii) to
provide for essentially level annual debt service of principal and interest over such period; and
for the purpose of calculating the principal and interest on Variable Rate Bond.', in any Fiscal
Year, such Variable Rate Bonds shall be assumed to mature on the stated maturity date or
mandatory redemption date thereof.
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"Assessment Income" means the principal of and interest on special assessments levied
in any local improvement district or utility local improvement district which are pledged to be
paid into the Bond Fund. In the case of assessments payable in installments, Assessment Income
shall be allocated to the years in which it would be received if the unpaid balance of each
assessment roll were paid in the remaining number of installments with interest on the declining
balance at the times and at the rate provided in the ordinance confirming the assessment roll.
"Assessments" means any special assessments which may be levied in any local
improvement district or utility local improvement district of the City created for the acquisition,
construction or installation of additions and improvements to or extensions of the System,
including any installment of assessments and any interest or penalties which may be due thereon,
if such assessments are pledged to be paid into the Bond Fund. The word "Assessments" shall
include any installments of assessments and any interest or penalties which may be due thereon.
"Average Annual Debt Service" means the amount determined by dividing (a) the sum of
all interest and principal to be paid on outstanding Bonds from the date of determination to the
last maturity date of such Bonds, by (b) the number of Fiscal Years or calendar years from and
including the Fiscal Year or calendar year in which the determination is made to the last Fiscal
Year or calendar year in which the sum of (i) the principal amount of Serial Bonds maturing in
such Fiscal Year plus (ii) the Sinking Fund Requirement for such Fiscal Year, exceeds 4% of the
principal amount of Bonds outstanding as of the date of determination.
"Bond Fund" means the Water and Sewer Revenue Bond Fund created by Ordinance
No. 3380.
"Bond Registrar" means the fiscal agency of the State of Washington in New York, New
York, for the purposes of registering and authenticating the Bonds, maintaining the Bond
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Register, effecting transfer of ownership of the Bonds and paying interest on and principal of the
Bonds.
Bonds hereafter
to which "Capital Appreciation Bonds" means any Parity Bonds hereafter issued as which
interest is payable only at the maturity or prior redemption of such Bonds. For the purposes of
(i) receiving payment of the redemption price, if any, of a Capital
Appreciation Bond that is redeemed prior to maturity, or
(ii) computing the principal amount of Parity Bonds held by the owner of a
Capital Appreciation Bond in giving to the City or the Bond Registrar any notice, consent,
request, or demand for any purpose whatsoever, the principal amount of a Capital Appreciation
Bond shall be deemed to be its Accreted value.
"City" means the City of Yakima, Washington, a municipal corporation duly organized
and existing under and by virtue of the laws of the State of Washington.
"Code" means the Internal Revenue Code of 1986, as amended, as the same may be
amended from time to time, and the regulations promulgated thereunder.
"Commission" means the Securities and Exchange Commission.
"Costs of Maintenance and Operation" means all normal operating expenses, current
maintenance expenses, expenses of reasonable upkeep and repairs, insurance and administrative
expenses and reasonable pro -rata budget charges for services provided to the System by City
departments, but excluding depreciation, payments for debt service or into reserve accounts,
costs of capital additions to or replacements of the System, municipal taxes, or payments to the
City in lieu of taxes.
"Council" means the legislative body of the City as the same shall be duly and regularly
constituted from time to time.
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"Coverage Requirement" means (a) for any period during which Assessments may be
paid without becoming delinquent, the sum of (i) the product of Average Annual Debt Service
on all Parity Bonds then outstanding times a fraction, the numerator of which is the aggregate
principal amount of nondelinquent Assessments which remain to be paid into the Bond Fund
plus the principal amount of Assessments previously paid into and then on hand in the Bond
Fund, and the denominator of which is the aggregate principal amount of Parity Bonds then
Outstanding, plus (ii) 1.25 times the product of Average Annual Debt Service on all Parity
Bonds then Outstanding times the difference of one minus the fraction calculated pursuant to
(i) above; or (b) for any other period, the product of 1.25 times Average Annual Debt Service on
all Parity Bonds then Outstanding.
"DTC" means The Depository Trust Company, New York, New York.
"Fiscal Year" means the Fiscal Year used by the City at any time. At the time of the
adoption of this ordinance, the Fiscal Year is the 12 -month period beginning January 1 of each
year.
"Fixed Rate Bonds" means those Parity Bonds other than Capital Appreciation Bonds
issued under an ordinance in which the rate of interest on such Fixed Rate Bonds is fixed and
determinable through their final maturity or for a specified period of time. If so provided in the
ordinance authorizing their issuance, Fixed Rate Bonds may bear a fixed and determinable
interest rate for only a portion of their term.
"Government Obligations" has the meaning given in RCW 39.53 as now or hereafter
amended.
"Gross Revenues" means all earnings, revenue and moneys received by the City from or
on account of the operations of the System from any source whatsoever.
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"Interest Commencement Date" means, with respect to any Capital Appreciation Bonds,
the date specified in any ordinance authorizing such Capital Appreciation Bonds (which date
Bonds)
� _ r. which
must be prior to the maturity date for such Capital Appreciation Bonds) after interest
accruing on such Capital Appreciation Bonds shall be payable semiannually, with the first such
payment date being the applicable interest payment date immediately succeeding such interest
Commencement Date.
"Letter of Representations" means the Blanket Issuer Letter of Representations from the
City to DTC.
"Maximum Interest Rate" means, with respect to any particular Variable Rite Bond, a
numerical rate of interest, which shall be set forth in any ordinance authorizing such Bond, that
shall be the maximum rate of interest such Bond may at any time bear.
"MSRB" means the Municipal Securities Rulemaking Board or any successors to its
functions.
"Net Revenues" means the Gross Revenues of the System less the Costs of Maintenance
and Operation.
"NRMSIR" means a nationally recognized municipal securities information repository.
"1996 Bonds" means the City's Water and Sewer Revenue Refunding Bonds, 1996,
issued pursuant to Ordinance No. 96-40 and Outstanding in the principal amount of $1,860,000.
"1998 Bonds" means the City's Water and Sewer Revenue and Refunding Bonds, 1998,
issued pursuant to Ordinance No. 98,31 and currently Outstanding in the principal amount of
$6,260,000.
"Outstanding" means, in connection with any Parity Bonds, as of the time in question, all
such bonds issued except bonds theretofore paid and cancelled or having matured or been called
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for redemption, payment has been provided therefor, or bonds that have been defeased in
accordance with their authorizing ordinance and state law.
"Parity Bonds" means any Outstanding revenue bonds, revenue warrants or other revenue
obligations issued by the City that have a lien upon the Gross Revenues of the System to pay and
secure the payment of the principal thereof and interest thereon equal to the lien created upon the
Gross Revenues of the System to pay and secure payment of the principal of and interest on the
2003 Bonds. Parity Bonds includes the 1996 Bonds, the 1998 Bonds and the 2003 Bonds.
"Permitted Investments" means any legal investments for funds of the City.
"Professional Utility Consultant" means the independent person(s) or firm(s) selected by
the City having a favorable reputation for skill and experience with facilities of comparable size
and character to the System in such of the following as are relevant to the purposes for which
they are retained: (a) engineering and operations and (b) the design of rates.
"Project" means the capital improvements to the System described in Exhibit A, attached
hereto, together with all costs incurred in the issuance of the 2003 Bonds, and all other costs
incurred in connection with the Project.
"Qualified Insurance" means any noncancellable municipal bond insurance policy or
surety bond issued by any insurance company licensed to conduct an insurance business in any
state of the United States (or by a service corporation acting on behalf of one or more such
insurance companies), which insurance company or companies, as of the time of issuance of
such policy or surety bond, are currently rated in the highest rating category by Moody's
Investors Service, Inc. or Standard & Poor's Ratings Service or their comparably recognized
business successors.
"Rate Stabilization Account" means the account authorized to be created by Section 5.1.
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f- Investors
Inc.,a .a.. .1
"Rating Agency" means, as of any date, Moody's investors Service, IncStandard &
Poor's Ratings Service or any other nationally recognized securities rating agency.
"Reserve Fund" means the Reserve Fund created for the parity bonds.
"Reserve Fund Requirement" means the lesser of (i) the maximum Annual Debt Service
during any Fiscal Year on a series of Parity Bonds; (ii) 125% of the Average Annual Debt
Service on all Outstanding Parity Bonds of such series; or (iii) 10% of the stated principal
amount of such series of Parity Bonds. In the case of Variable Rate Bonds, the interest rate
thereon shall be calculated on the assumption that such Variable Rate Bonds will bear interest at
a rate equal to the higher of (a) the rate most recently reported by The Bond Buyer as The Bond
Buyer's Index for long-term revenue bonds or (b) a rate equal to x+y where x represents the
average rate of interest borne by such Variable Rate Bonds in the twelve months preceding the
date of calculation or in the case of newly issued Variable Rate Bonds the ;n;+;a1 rate of interest
borne by such Bonds and y represents one-half the difference between the Maximum Interest
Rate applicable to such Variable Rate Bonds and x; provided that in no event shall such assumed
Variable
ariabie Cate exceed the Maximum Interest Rate and provided further that if on such date of
calculation the interest rate on such Bonds shall then be fixed to maturity, the interest rate used
for such specified period for the purpose of the foregoing calculation shall be such actual interest
rate.
"Revenue Fund" means the Water and Sewer Operating Funds of the City heretofore
established.
"Rule" means the Commission's Rule 15c2-12 under the Securities and Exchange Act of
1934, as the same may be amended from time to time.
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"Sale Resolution" means the resolution or resolutions to be adopted by the Council
setting the final terms of the 2003 Bonds.
"Serial Bonds" means Parity Bonds other than Term Bonds.
"SID" means a state information depository for the State of Washington (if one is
created).
"Sinking Fund Requirement" means, for any Fiscal Year, the principal amount and
premium, if any, of Term Bonds required to be purchased, redeemed or paid at maturity for such
Fiscal Year as established by the ordinance or resolution authorizing the issuance of such Term
Bonds.
"System" means the combined water and sewerage system of the City as it now exists,
and as it may be later added to, extended and improved for as long as any Parity Bonds remain
Outstanding.
"2003 Bonds" means the City's Water and Sewer Revenue Bonds, 2003, in one or more
series in the aggregate principal amount of not to exceed $17,700,000 authorized by this
ordinance.
"Term Bonds" means Parity Bonds of any principal maturity that are subject to
mandatory redemption or for which mandatory sinking fund payments are required.
"Valuation Date" means with respect to any Capital Appreciation Bonds the date or dates
set forth in any ordinance authorizing such Capital Appreciation Bonds on which specific
Accreted Values are assigned to the Capital Appreciation Bonds.
"Variable Interest Rate" means a variable interest rate or rates to be borne by Parity
Bonds or any one or more maturities within an issue of Parity Bonds. The method of computing
such variable interest rate shall be specified in the ordinance authorizing such Parity Bonds.
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Such variable interest rate shall be subject to a Maximum Interest Rate and there may be an
initial rate specified, in each case as provided in such ordinance, or a stated interest rate that may
be changed from time to tiIhe as provided 111 such ordinance. JUGll U1 U111a111 G J11411 aiJV JpGc11y
either (i) the particular period or periods of time or manner of determining such period or periods
of time for which each value of such Variable Interest Rate shall remain in effect or (ii) the time
or times upon which any change in such Variable Interest Rate shall become effective.
"Variable Rate Bonds" for any period of time means Parity Bonds which during such
period bear a Variable Interest Rate; provided that Parity Bonds the interest rate on which shall
have been fixed for the remainder of the term thereof shall no longer be Variable Rate Bonds.
ARTICLE II
FINDINGS
Section 2.1 Approval of Plan and System. The public interest and necessity require
that the City finance (a) the settlement of the odor litigation in the amount of $7,000,000 and
(b) certain improvements to the System described in Exhibit A (the "Project"). The City hereby
adopts such Project as a plan and system.
Section 2.2 Parity Conditions. The Council hereby finds as required by Section 7.1 of
Ordinance No. 96-40 and Section 7.1 of Ordinance No. 98-31 as follows:
(a) The 2003 Bonds will be issued for the purpose of acquiring, constructing
and installing additions and improvements to and extensions of, acquiring necessary equipment
for or making necessary repairs, replacements or other capital improvements and financing a
settlement of litigation related to capital improvements to the System.
(b) At the times of the issuance of the 2003 Bonds there will be no deficiency
in the Bond Fund.
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(c) The City will have on deposit in the Reserve Fund an amount equal to the
Reserve Fund Requirement.
(d) At the time of the issuance of the 2003 Bonds, the City will have on file a
certificate from an outside Professional Utility Consultant showing that the Net Revenue
received during any consecutive 12 -month period for which financial statements are available
within the 24 months preceding the date of delivery of the 2003 Bonds equals the Coverage
Requirement in each calendar year or Fiscal Year thereafter on the then -Outstanding Parity
Bonds and the 2003 Bonds, and that the Adjusted Net Revenues to be received each calendar
year or Fiscal Year thereafter, will equal at least 1.25 times the Average Annual Debt Service
each such calendar year or Fiscal Year, on the Outstanding Parity Bonds and the 2003 Bonds.
ARTICLE III
ISSUANCE OF 2003 BONDS
Section 3.1 Issuance of the 2003 Bonds. The City shall issue the 2003 Bonds in the
aggregate principal amount of not to exceed $17,700,000 in one or more series for the purpose of
providing the funds necessary to finance the odor litigation settlement, to repay a interfund loan
that was made to improve the spray field which was the source of the odor litigation, to pay costs
of the Project, to satisfy the Reserve Requirement, to capitalize interest, and to pay the expenses
incidental to the issuance of the 2003 Bonds.
The 2003 Bonds shall be designated the "City of Yakima Water and Sewer Revenue
Bonds, 2003," may be issued in one or more series, shall be in fully registered form, shall be in
the denomination of $5,000 each, or any integral multiple thereof, provided that no Bond shall
represent more than one maturity, shall be dated such date, bear interest at the rates per annum,
and be payable in the amounts and dates as shall be determined by a Sale Resolution.
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The 2003 Bonds shall be obligations only of the Bond Fund and shall be payable and
secured as provided herein. The 2003 Bonds shall not be general obligations of the City.
The Director of Finance and Budget of the City is hereby authorized to obtain insurance
and a Reserve Fund surety for the payment of principal of and interest on the 2003 Bonds, if she
should determine that it is in the best interests of the City to do so.
Section 3.2 Registration. Exchange and Payments.
(a) Registrar/Bond Register. The City hereby adopts the system of
registration approved by the Washington State Finance Committee, which utilizes the fiscal
agencies of the State of Washington in New York, New York, as registrar, authenticating agent,
paying agent and transfer agent (collectively, the "Bond Registrar"). The Bond Registrar shall
keep, or cause to be kept, at its principal corporate trust office, sufficient records for the
registration and transfer of the 2003 Bonds (the "Bond Register"), which shall be open to
inspection by the City. The Bond Registrar is authorized, on behalf of the City, to authenticate
and deliver 2003 Bonds transferred or exchanged in accordance with the provisions of such 2003
Bonds and this ordinance and to carry out all of the Bond Registrar's powers and duties under
this ordinance. The Bond Registrar shall be responsible for its representations contained in the
Certificate of Authentication on the 2003 Bonds.
(b) Registered Ownership. The City and the Bond Registrar may deem and
treat the Registered Owner of each 2003 Bond as the absolute owner for all purposes, and neither
the City nor the Bond Registrar shall be affected by any notice to the contrary. Payment of any
such 2003 Bond shall be made only as described in Section 3(h) hereof, but such registration
may be transferred as herein provided. All such payments made as described in Section 3(h)
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shall be valid and shall satisfy the liability of the City upon such 2003 Bond to the extent of the
amount or amounts so paid.
(c) DTC Acceptance/Letter of Representations. The 2003 Bonds shall
initially be held in fully immobilized form by DTC acting as depository. To induce DTC to
accept the 2003 Bonds as eligible for deposit at DTC, the City has heretofore executed and
delivered to DTC a Blanket Issuer Letter of Representations (the "Letter of Representations").
Neither the City nor the Bond Registrar will have any responsibility or obligation to DTC
participants or the persons for whom they act as nominees with respect to the 2003 Bonds for the
accuracy of any records maintained by DTC or any DTC participant, the payment by DTC or
any DTC participant of any amount in respect of the principal of or interest on 2003 Bonds, any
notice that is permitted or required to be given to Registered Owners under this ordinance
(except such notices as shall be required to be given by the City to the Bond Registrar or to
DTC), the selection by DTC or any DTC participant of any person to receive payment in the
event of a partial redemption of the 2003 Bonds, or any consent given or other action taken by
DTC as the Registered Owner. For so long as any 2003 Bonds are held in fully immobilized
form hereunder, DTC or its successor depository shall be deemed to be the Registered Owner for
all purposes, and all references in this ordinance to the Registered Owners shall mean DTC or its
nominee and shall not mean the owners of any beneficial interest in any 2003 Bonds.
(d) Use of Depository.
(i)
The 2003 Bonds shall be registered initially in the name of
CEDE & Co., as nominee of DTC, with a single 2003 Bond for each maturity in a denomination
equal to the total principal amount of such maturity. Registered ownership of such immobilized
2003 Bonds, or any portions thereof, may not thereafter be transferred except (A) to any
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successor of DTC or its nominee, provided that any such successor shall be qualified under any
applicable laws to provide the service proposed to be provided by it; (B) to any substitute
.1 1 ./_ !'�_` .L .. ,. ,.a: .. (ii) below
..1�. substitute depository's
depository appointed by the City pursuant to subsection below or such depositor s
successor; or (C) to any person as provided in subsection (iv) below.
(ii) Upon the resignation of DTC or its successor (or any substitute
depository or its successor) from its functions as depository or a determination by the City to
discontinue the system of book entry transfers through DTC or its successor (or any substitute
depository or its successor), the City may appoint a substitute depository. Any such substitute
depository shall be qualified under any applicable laws to provide the services proposed to be
provided by it.
(iii) In the case of any transfer pursuant to clause (A) or (B) of
subsection (i) above, the Bond Registrar shall, upon receipt of all outstanding 2003 Bonds,
together with a written request on behalf of the City, issue a single new 2003 Bond for each
maturity then outstanding, registered in the name of such successor or substitute depository, or
all
.r _.7 _ such written .,� of City.
nominee, ali as specified in written request of the City.
(iv) In the event that (A) DTC or its successor (or substitute depository
or its successor) resigns from its functions as depository, and no substitute depository can be
obtained, or (B) the City determines that it is in the best interest of the beneficial owners of the
2003 Bonds that the 2003 Bonds be provided in certificated form, the ownership of such 2003
Bonds may then be transferred to any_ person or entity as herein provided, and shall no longer be
held in fully immobilized form. The City shall deliver a written request to the Bond Registrar,
together with a supply of definitive 2003 Bonds in certificated form, to issue 2003 Bonds in any
authorized denomination. Upon receipt by the Bond Registrar of all then outstanding 2003
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Bonds together with a written request on behalf of the City to the Bond Registrar, new 2003
Bonds shall be issued in the appropriate denominations and registered in the names of such
persons as are provided in such written request.
(e) Transfer or Exchange of Registered Ownership: Change in
Denominations. The registered ownership of any 2003 Bond may be transferred or exchanged,
but no transfer of any 2003 Bond shall be valid unless it is surrendered to the Bond Registrar
with the assignment form appearing on such 2003 Bond duly executed by the Registered Owner
or such Registered Owner's duly authorized agent in a manner satisfactory to the Bond
Registrar. Upon such surrender, the Bond Registrar shall cancel the surrendered 2003 Bond and
shall authenticate and deliver, without charge to the Registered Owner or transferee, a new 2003
Bond (or 2003 Bonds at the option of the new Registered Owner) of the same date, maturity and
interest rate and for the same aggregate principal amount in any authorized denomination,
naming as Registered Owner the person or persons listed as the assignee on the assignment form
appearing on the surrendered 2003 Bond, in exchange for such surrendered and canceled 2003
Bond. Any 2003 Bond may be surrendered to the Bond Registrar and exchanged, without
charge, for an equal aggregate principal amount of 2003 Bonds of the same date, maturity and
interest rate, in any authorized denomination. The Bond Registrar shall not be obligated to
transfer or exchange any 2003 Bond during a period beginning at the opening of business on the
15th day of the month next preceding any interest payment date and ending at the close of
business on such interest payment date, or, in the case of any proposed redemption of the 2003
Bonds, after the mailing of notice of the call of such 2003 Bonds for redemption.
(f) Bond Registrar's Ownership of Bonds. The Bond Registrar may become
the Registered Owner of any 2003 Bond with the same rights it would have if it were not the
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Bond Registrar, and to the extent permitted by law, may act as depository for and permit any of
its officers or directors to act as member of, or in any other capacity with respect to, any
committee formed to protect the rights oI the Registered Owners of the 2003 Bonds.
(g)
Registration Covenant. The City covenants that, until all 2003 Bonds
have been surrendered and canceled, it will maintain a system for recording the ownership of
each 2003 Bond that complies with the provisions of Section 149 of the Code. The ownership of
each 2003 Bond shall initially be recorded with DTC pursuant to this Section 3.2.
(h) Place and Medium of Payment. Both principal of and interest on the 2003
Bonds shall be payable in lawful money of the United States of America. For so long as all 2003
Bonds are in fully immobilized form, payments of principal and interest shall be made as
provided in accordance with the operational arrangements of DTC referred to in the Letter of
Representations. In the event that the 2003 Bonds are no longer in fully immobilized form,
interest on the 2003 Bonds shall be paid by check or draft mailed to the Registered Owners at the
addresses for such Registered Owners appearing on the Bond Register on the 15th day of the
v and _s _ r the 2003 Bonds _L_11 L,. ..Ll..
month preceding the interest payment date, principal of the shah be payable
upon presentation and surrender of such 2003 Bonds by the Registered Owners at the principal
office of the Bond Registrar; provided, however, that if so requested in writing by the Registered
Owner of at least $1,000,000 principal amount of 2003 Bonds, interest will be paid by wire
transfer•on the date due to an account with a bank located within the United States.
Section 3.3 Execution and Authentication of Bonds. The 2003 Bonds shall be signed
on behalf of the City with the manual or facsimile signature of the Mayor, shall be attested by
the manual or facsimile signature of the City Clerk and shall have the corporate seal of the City
impressed or a facsimile thereof imprinted thereon.
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Only such 2003 Bonds as shall bear thereon a Certificate of Authentication in the form
hereinbefore recited and manually executed by the Bond Registrar shall be valid or obligatory
for any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication
shall be conclusive evidence that the 2003 Bonds so authenticated have been duly executed,
authenticated and delivered hereunder and are entitled to the benefits of this ordinance.
In case either of the officers who shall have executed the 2003 Bonds shall cease to be
such officer or officers of the City before the 2003 Bonds so signed shall have been
authenticated or delivered by the Bond Registrar, or issued by the City, such 2003 Bonds may
nevertheless be authenticated, delivered and issued and upon such authentication, delivery and
issuance, shall be as binding upon the City as though those who signed the same had continued
to be such officers of the City. Any 2003 Bond may also be signed and attested on behalf of the
City by such persons as at the actual date of execution of such 2003 Bond shall be the proper
officers of the City although at the original date of such Bond any such person shall not have
been such officer of the City.
Section 3.4 Lost or Destroyed Bonds. In case any of the 2003 Bonds shall be lost,
stolen or destroyed, the Bond Registrar may authenticate and deliver a new bond or bonds of like
amount, date, tenor and effect to the registered owner or nominee thereof upon payment to the
City for the expenses and charges in connection therewith and upon his or her filing with the
Bond Registrar evidence satisfactory to said Bond Registrar that such 2003 Bond or 2003 Bonds
were actually lost, stolen or destroyed and of his ownership thereof, and upon furnishing the City
with indemnity satisfactory to them both.
Section 3.5 Form of 2003 Bonds. The 2003 Bonds shall be substantially in the form
of Exhibit B hereto.
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ARTICLE IV
REDEMPTION OF 2003 BONDS
Section 4.1 Redemption Prior to Maturity. The 2003 Bonds may be subject to
redemption in advance of their scheduled maturities as provided in a Sale Resolution to be
adopted by the Council.
Section 4.2 Notice of Redemption. Written notice of any redemption of 2003 Bonds
shall be given by the Bond Registrar on behalf of the City by first class mail, postage prepaid,
not less than 30 days nor more than 60 days before the redemption date to the registered owners
of 2003 Bonds that are to be redeemed at their last addresses shown on the Bond Register. So
long as the 2003 Bonds are in book -entry form, notice of redemption shall be given as provided
in the Letter of Representations. The Bond Registrar shall provide additions1 notice of
redemption (at least 30 days) to each NRMSIR and SID, if any, in accordance with Section 11.1.
The requirements of this section shall be deemed complied with when notice is mailed,
whether or not it is actually received by the owner.
Each notice of redemption shall contain the following information: (1) the redemption
date, (2) the redemption price, (3) if less than all outstanding 2003 Bonds are to be redeemed, the
identification (and, in the case of partial redemption, the principal amounts) of the 2003 Bonds to
be redeemed, (4) that on the redemption date the redemption price will become due and payable
upon each 2003 Bond or portion called for redemption, and that interest shall cease to accrue
from the redemption date, (5) that the 2003 Bonds are to be surrendered for payment at the
principal office of the Bond Registrar, (6) the CUSIP numbers of all 2003 Bonds being
redeemed, (7) the dated date of the 2003 Bonds, (8) the rate of interest for each 2003 Bond being
redeemed, (9) the date of the notice, and (10) any other information needed to identify the 2003
Bonds being redeemed.
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Upon the payment of the redemption price of 2003 Bonds being redeemed, each check or
other transfer of funds issued for such purpose shall bear the CUSIP number identifying, by
issue and maturity, the 2003 Bonds being redeemed with the proceeds of such check or other
transfer.
Section 4.3 Effect of Redemption. Unless the City has revoked a notice of
redemption, the City shall transfer to the Bond Registrar amounts that, in addition to other
money, if any, held by the Bond Registrar, will be sufficient to redeem, on the redemption date,
all the 2003 Bonds to be redeemed. From the redemption date interest on each 2003 Bond to be
redeemed shall cease to accrue.
Section 4.4 Amendment of Notice Provisions. The foregoing notice provisions of this
section, including but not limited to the information to be included in redemption notices and the
persons designated to receive notices, may be amended by additions, deletions and changes in
order to maintain compliance with duly promulgated regulations and recommendations
regarding notices of redemption of municipal securities.
Section 4.5 Purchase of 2003 Bonds. The City reserves the right to use at any time
any surplus Gross Revenues of the System available after providing for the payments required
by paragraphs First through Sixth inclusive of Section 5.1 of this ordinance, or other available
funds, to purchase any of the 2003 Bonds in the open market for retirement.
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ARTICLE V
FUNDS AND ACCOUNTS; DEFEASANCE
Section 5.1 Revenue Fund: Priority of Payments. The City hereby obligates and binds
itself to set aside and pay into the Water and Sewer Operating Funds (the "Revenue Fund") as
collected the Gross Revenues of the System. The Gross Revenues of the System shall be held in
the Revenue Fund separate and apart from all other funds and accounts of the City and used only
for the following purposes and in the following order of priority:
First, to pay the Costs of Maintenance and Operation of the System;
Second, to make all required payments into the Bond Fund;
Third, to pay the interest on the Parity Bonds;
Fourth, to pay the principal of and any sinking fund payments for the Parity Bonds;
Fifth, to make all payments required to be made into the Reserve Fund;
Sixth, to make all payments required to be made into any other revenue bond redemption
fund or debt service account or reserve account created to pay and secure the payment of the
principal of and interest on any revenue bonds of the City having a lien upon the Gross Revenues
of the System junior and inferior to the lien thereon for the payment of the principal of and
interest on the Parity Bonds;
Seventh, to retire by redemption or purchase in the open market any outstanding revenue
bonds of the City, to make necessary additions, improvements and repairs to or extensions and
replacements of the System, or for any other lawful City purposes.
The City may create a Rate Stabilization Account in the Revenue Fund. To the extent
that surplus Gross Revenues remain after the payments so required to be made out of the
Re\ enue Fund, the City may cred:: up to the full amount of such surpl:. to the Rate Stabilization
Account. Any credits from the Revenue Fund to the Rate Stabilization Account ..:gid any credits
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to the Revenue Fund from the Rate Stabilization Account made pursuant to Section 6.1 hereof,
shall be made prior to closing the books and accounts of the City for each Fiscal Year. Money in
the Rate Stabilization Account may be used for any lawful purpose. Money in the Rate
Stabilization Account may be used from time to time to make up any deficiencies in the Bond
Fund, and such money in the Rate Stabilization Account may be pledged as additional payments
to the Bond Fund to the extent required for any such deficiencies. The City may, at any time,
deposit Gross Revenues of the System in and withdraw Gross Revenues of the System from the
Rate Stabilization Account.
Nothing contained in this Section 5.1 shall be construed to require the deposit into the
Revenue Fund of any of the revenues, income, receipts or other moneys of the City derived
through the ownership or operation of any separate utility system hereafter created or established
from funds other than the proceeds of Bonds.
Section 5.2 Bond Fund.
(a) There has been created a special fund of the City designated the Water and Sewer
Revenue Bond Fund (the "Bond Fund"), which shall be used solely for the purpose of paying the
principal, premium, if any, and interest on the Parity Bonds, of retiring the Parity Bonds prior to
maturity in the manner herein provided, and of paying any reimbursement obligation with
respect to a letter of credit or other credit enhancement device providing additional security for
any Variable Rate Bonds. Each month (or in the case of Variable Rate Bonds, at the times
provided in subsection (i) of this Section 5.2(a)), after applying amounts as required in Section
5.1, the City shall withdraw from the Revenue Fund and (to the extent not otherwise provided)
transfer to the Bond Fund, amounts as follows and in the following order of priority: first, into
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the Interest Account; second, into the serial Bond Principal Account and Ten 1 Bond Principal
Account; and third, into the Reserve Fund,
(i) interest Account. The City has created a separate account in the Bond
Fund, to be known as the "Interest Account" to provide for the payment of interest on the Parity
Bonds as the same becomes due and payable. Upon the issuance of the 2003 Bonds, all accrued
interest on the 2003 Bonds shall be paid into the Interest Account.
In the case of all Parity Bonds other than Variable Rate Bonds, the City shall transfer to
the Interest Account amounts sufficient to pay when due the installment of interest next falling
due on all Parity Bonds. In the case of Variable Rate Bonds, not later than on the last day of the
month immediately succeeding the month of closing of such bonds and ori or before the last day
of each succeeding month, the City shall transfer to the Interest Account an amount equal to the
interest on such Variable Rate Bonds estimated to become due and payable on the due date. If
on any date on which an installment of interest on Variable Rate Bonds falls due there are
insufficient amounts in the Interest Account to make such interest payment, the City shall
withdraw from the Revenue Fund and transfer to the Interest Account an amount that when
added to other money therein will equal the amount of interest falling due and payable on such
interest payment date. In making the credits required by this subsection (a) (i), any amounts
credited to the Interest Account representing accrued interest received on the sale of 2003 Bonds
or other Parity Bonds, interest capitalized from the proceeds of any Parity Bonds and any other
transfers and credits otherwise made or required to be made to the Interest Account shall be
taken into consideration and allowance made with respect to the full amount of such transfers
and credits.
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(ii) Serial Bond Principal Account. The City has created a separate account in
the Bond Fund known as the "Serial Bond Principal Account" to provide for the payment of the
principal of Serial Bonds as the same shall mature and become due and payable. The City shall
transfer to the Serial Bond Principal Account amounts sufficient to pay when due the installment
of principal next falling due on the Serial Bonds.
(iii) Term Bond Principal Account.
(A) The City shall create and establish a separate account in the Bond
Fund to be known as the "Term Bond Principal Account" in order to meet the specified Sinking
Fund Requirements of Term Bonds and to otherwise retire 2003 Bonds, if any, and other Parity
Bonds prior to maturity. The City shall transfer to the Term Bond Principal Account amounts
sufficient to pay when due the Sinking Fund Requirement next falling due on all Term Bonds.
(B) The City shall apply the money paid into the Bond Fund for credit
to the Term Bond Principal Account to the redemption of Term Bonds on the next ensuing
Sinking Fund Requirement due date (or may so apply such money prior to such Sinking Fund
Requirement due date), pursuant to the terms of the ordinance authorizing the issuance thereof.
The City may also apply the money paid into the Bond Fund for credit to the Term Bond
Principal Account for the purpose of retiring Term Bonds by the purchase of such Term Bonds at
a purchase price (including any brokerage charge) not in excess of the principal amount thereof.
The City shall apply such money to the redemption or purchase of Term Bonds in an
amount such that the aggregate principal amount of Term Bonds so purchased or redeemed is at
least equal to such next ensuing Sinking Fund Requirement. Any such purchase of Term Bonds
by the City may be made with or without tenders of Term Bonds in such manner as the City
shall, in its discretion, deem to be in its best interest.
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(iv) Reserve Fund.
(A) The City has created a separate fund to be known as the "Reserve
Fund" to provide a reserve for the payment of the principal, premium, if any, and interest on the
Parity Bonds. The City hereby covenants and agrees that on the date of issuance of the 2003
Bonds the City will have on deposit in the Reserve Fund an amount equal to the Reserve Fund
Requirement. Each ordinance providing for the issuance of Additional Bonds shall provide for
payments into the Reserve Fund from any other money lawfully available therefor (in which
event, in providing for deposits and credits required by the foregoing provisions of this
paragraph (A), allowance shall be made for any such amounts so paid into such fund) in amounts
that within not less than five years of equal monthly payments will provide for deposit of the
Reserve Fund Requirement or may provide for the City to obtain Qualified Insurance or a
Qualified Letter of Credit for specific amounts required pursuant to this Section to be paid into
the Reserve Fund, such amounts so covered by Qualified Insurance or a Qualified Letter of
Credit shall be credited against the amounts required to be maintained in the Reserve Fund by
this Section to the extent that such payments and credits to be made are insured by an insurance
company, or guaranteed by a letter of credit from a bank. Such Qualified Letter of Credit or
Qualified Insurance shall not be cancelable on less than five years notice. In the event of any
cancellation, the Reserve Fund shall be funded in accordance with this paragraph, as if the Parity
Bonds which remain Outstanding had been issued on the date of such notice of cancellation.
(B) Money in the Bond Fund and Reserve Fund may, at the option of
the City, be invested and reinvested as permitted by law in Permitted Investments maturing, or
which are retirable at the option of the owner, prior to the date needed or prior to the maturity
date of the final installment of principal of the Parity Bonds payable out of the Bond Fund and
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Reserve Fund. Earnings on investments in the Bond Fund and Reserve Fund shall be transferred
to the Revenue Fund, except that earnings on investments in the Reserve Fund shall first be
applied to remedy any deficiency in such account.
(C) For the purpose of determining the amount credited to the Reserve
Fund, obligations in which money in the Reserve Fund shall have been invested shall be valued
at the market value thereof. The term "market value" shall mean, in the case of securities that
are not then currently redeemable at the option of the owner, the current bid quotation for such
securities, as reported in any nationally circulated financial journal, and the current redemption
value in the case of securities that are then redeemable at the option of the owner. For
obligations that mature within six months, the market value shall be the par value thereof. The
valuation shall include accrued interest thereon. The valuation of the amount in the Reserve
Fund shall be made by the City as of the close of business on each December 31 (or on the next
preceding business day if December 31 does not fall on a business day) and after any withdrawal
and may be made on each June 30 (or on the next preceding business day if June 30 does not fall
on a business day).
(D) If the amount in the Reserve Fund shall be less than the Reserve
Fund Requirement, the City shall transfer from the Revenue Fund, for credit to the Reserve Fund
no later than the 25th day of the sixth succeeding calendar month the amount necessary to
restore the Reserve Fund to the Reserve Fund Requirement. Prior to such time, such transfer
shall come from money in the Revenue Fund first available after making the current specified
payments into the Interest Account and Principal Accounts. If the amount in the Reserve Fund
shall be greater than the Reserve Fund Requirement, then and only then may the City withdraw
at any time prior to the next date of valuation from the Reserve Fund the difference between the
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amount in the Reserve Fund and the Reserve Fund Requirement and deposit such difference in
the Revenue Fund.
(b) Money in the Interest Account, the Serial Bond Principal Account and the Term
Bond Principal Account shall be transmitted to the Bond Registrar in amounts sufficient to meet
the next maturing installments of principal, interest and premium, if any, at or prior to the time
upon which any interest, principal or premium, if any, is to become due. In the event there shall
be a deficiency in the Interest Account, the Serial Bond Principal Account or the Term Bond
Principal Account for such purpose, the City shall make up any such deficiency from the
Reserve Fund by the withdrawal of cash therefrom for that purpose, and, if necessary, by sale or
redemption of any authorized investments in such amount as will provide cash in said Reserve
Fund sufficient to make up any such deficiency. If a deficiency still exists immediately prior to
an interest payment date and after the withdrawal of cash, the City shall then draw from any
Qualified Letter of Credit or Qualified Insurance. Such draw shall be made at such times and
under such conditions as the agreement for such Reserve Fund credit facility shall provide.
(c) Whenever and so long as amounts on deposit in the Bond Fund, including the
Reserve Fund, are sufficient to provide money to pay the Parity Bonds then Outstanding,
including such interest as may thereafter become due thereon and any premiums upon
redemption, no payments need be made into the Bond Fund pursuant to this ordinance.
(d) Money transferred from the Bond Fund to the Bond Registrar for the Parity
Bonds and the interest thereon shall be held in trust for the owners of such Parity Bonds. Until
so set aside for the retirement of principal, payment of sinking fund installments, payment of
interest and premium, if any, as aforesaid, moneys in the Bond Fund shall be held in trust for the
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benefit of the owners of the Parity Bonds then Outstanding and payable equally and ratably and
without preference or distinction as between different installments or maturities.
(e) The amounts so pledged to be paid into the Bond Fund and the Reserve Fund are
hereby declared to be a prior lien and charge upon the Gross Revenues of the System superior to
all other charges of any kind or nature whatsoever (including any transfer of money to other
funds of the City and taxes or payments in lieu of taxes) except the Costs of Maintenance and
Operation, and is equal in priority to the lien and charge which may hereafter be made to pay and
secure the payment of the principal of and interest on any Additional Bonds.
(f) The Council hereby finds and declares that in fixing the amounts to be paid into
the Bond Fund and the Reserve Fund out of the Gross Revenues of the System, it has exercised
due regard for the Costs of Maintenance and Operation and for the amounts required to pay and
secure the payment of the principal of and interest on the currently Outstanding Parity Bonds,
and has not obligated the City to set aside and pay into such Fund and Account a greater amount
of such Gross Revenues than in its judgment will be available over and above the Costs of
Maintenance and Operation and the principal of and interest on the currently Outstanding Parity
Bonds.
Section 5.3 Defeasance. In the event that money and/or Government Obligations
maturing or having guaranteed redemption prices at the option of the holder at such time or
times and bearing interest to be earned thereon in amounts (together with such money, if any)
sufficient to redeem and retire part or all of the 2003 Bonds in accordance with their terms are
irrevocably set aside in a special account and pledged to effect such redemption and retirement,
then no further payments need be made into the Bond Fund for the payment of the principal of
and interest on the 2003 Bonds so provided for, and such 2003 Bonds shall then cease to be
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entitled to any lien, benefit or security of this ordinance, except the right to receive the funds so
set aside and pledged, and such 2003 Bonds shall no longer be deemed to be outstanding
hereunder. Within 30 days of any defeasance of such 2003 Bonds, the City shall provide notice
of defeasance of such 2003 Bonds to registered owners and to each NRMSIR and SID, if any, in
accordance with Section 11.1.
ARTICLE VI
PARTICULAR COVENANTS OF THE CITY
So long as any Parity Bonds remain Outstanding, the City covenants and agrees with the
owners of all Parity Bonds as follows:
Section 6.1 Rate Covenant. The City shall establish, maintain and collect rates and
charges for the use of the services and facilities of and all commodities sold, furnished or
supplied by the System, which shall be fair and nondiscriminatory and shall adjust such rates and
charges from time to time so that:
(a) The Gross Revenues collected (together with Assessments collected) will at all
times be sufficient (a) to pay the Costs of Maintenance and Operation of the System, (b) to pay
the principal of, premium, if any, and interest on the Parity Bonds, as and when the same shall
become due and payable, (c) to make adequate provision for the payment of any Term Bonds,
(d) to make when due all payments which the City is obligated to make into the Reserve Fund
and all other payments which the City is obligated to make pursuant to this ordinance, and (e) to
pay all taxes, assessments or other governmental charges lawfully imposed on the System or the
revenue therefrom or payments in lieu thereof and any and all other amounts which the City may
now or hereafter become obligated to pay from the Gross Revenues by law or contract; and
(b) The Net Revenues in each Fiscal Year will be at least equal to the Coverage
Requirement calculated as of December 31 of the preceding calendar year. For the purpose of
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meeting this requirement if the City creates a Rate Stabilization Account pursuant to Section 5.1,
(i) there may be added to Net Revenues for any Fiscal Year such amount, not greater than the
Annual Debt Service for such Fiscal Year, withdrawn from the Rate Stabilization Account and
deposited in the Revenue Fund, and (ii) there must be subtracted from Net Revenues for any
Fiscal Year such amounts as are withdrawn from the Revenue Fund and deposited into the Rate
Stabilization Account for such Fiscal Year.
Section 6.2 Maintenance and Operation. The City shall at all times maintain, preserve
and keep the properties of the System in good repair, working order and condition and will from
time to time make all necessary and proper repairs, renewals, replacements, extensions and
betterments thereto, so that at all times the business carried on in connection therewith will be
properly and advantageously conducted, and the City will at all times operate or cause to be
operated the properties of the System and the business in connection therewith in an efficient
manner and at a reasonable cost.
Section 6.3 Sale or Disposition of the System. The City will not sell or otherwise
dispose of the System in its entirety unless simultaneously with such sale or other disposition,
provision is made for the payment into the Bond Fund of cash or "Government Obligations," as
now or hereafter defined in chapter 39.53 RCW, as amended, or its successor statute, if any,
sufficient together with interest to be earned thereon to pay the principal of and interest on the
then Outstanding Parity Bonds, nor will it sell or otherwise dispose of any part of the useful
operating properties of the System unless such facilities are replaced or provision is made for
payment into the Bond Fund of the greater of:
(a) An amount which will be in the same proportion to the net amount of Parity
Bonds then Outstanding (defined as the total amount of the Parity Bonds less the amount of cash
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and investments in the Bond Fund and accounts therein) that the Net Revenues from the poi tion
of the System sold or disposed of for the preceding year bears to the total Net Revenues for such
period; or
(b) An amount which will be in the same proportion to the net principal amount of
Parity Bonds then Outstanding that the book value of the part of the System sold or disposed of
bears to the book value of the entire System immediately prior to such sale or disposition.
The proceeds of any such sale or disposition of a portion of the properties of the System
(to the extent required above) shall be paid into the Bond Fund.
Notwithstanding any other provision of this subsection, the City may sell or otherwise
dispose of any of the works, plant, properties and facilities of the System or any real or personal
property comprising a part of the same which shall have become unserviceable, inadequate,
obsolete or unfit to be used in the operation of the System, or no longer necessary, material to or
useful in such operation, without making any deposit into the Bond Fund.
Section 6.4 Liens or Encumbrances. The City will not at any time create or permit to
accrue or to exist any lien or other encumbrance or indebtedness upon the System or the Gross
Revenues or any part thereof, prior or superior to the lien thereon for the payment of the Parity
Bonds, and will pay and discharge, or cause to be paid and discharged, any and all lawful claims
for labor, materials or supplies which, if unpaid, might become a lien or charge upon the
Revenues of the System, or any part thereof, or upon any funds in the hands of the City, prior to
or superior to the lien of the Parity= Bonds, or which might impair the security of the Parity
Bonds.
Section 6.5 Insurance. The City shall, to the extent insurance coverage is available at
reasonable cost with responsible insurers, keep, or cause to be kept, the System and the operation
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thereof insured, with policies payable to the City, against the risks of direct physical loss,
damage to or destruction of the System, or any part thereof, and against accidents, casualties or
negligence, including liability insurance and employer's liability, at least to the extent that
similar insurance is usually carried by utilities operating like properties as determined by the
City Manager. A program of self insurance against certain risks or as to part of the potential
liability for certain risks may be included as part of the City's insurance coverage plan.
In the event of any loss or damage to the properties of the System covered by insurance,
the City will (a) with respect to each such loss, promptly repair and reconstruct to the extent
necessary to the proper conduct of the operations of the System the lost or damage portion
thereof and shall apply the proceeds of any insurance policy or policies covering such loss or
damage for that purpose to the extent required therefor, unless in the case of loss or damage
involving an amount less than or equal to 2% of the value of net utility plant of the System or
more, such repair and reconstruction shall not be recommended by the City Manager, and
(b) if the City shall not use the entire proceeds of such insurance to repair or
reconstruct such lost or damaged property, such insurance proceeds thereof not so used shall be
paid into the Revenue Fund, and if greater than 2% of the value of the net utility plant of the
System for any one loss or damage, shall be used to purchase or redeem bonds or to acquire or
construct extensions, betterments and improvements to the System.
Section 6.6 Books and Accounts. The City shall keep proper books of account in
accordance with any applicable rules and regulations prescribed by the State of Washington.
The City shall prepare, and any owner or holder of Parity Bonds may, upon written request,
obtain copies of, balance sheets and profit and loss statements showing in reasonable detail the
financial condition of the System as of the close of each year, and the income and expenses of
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such year, including the amounts paid into the Revenue Fund, the Bona Fund, and into any
special funds or accounts created pursuant to the provisions of this ordinance, and he amounts
expended for maintenance, renewals, replacements, and capital additions to the System.
Section 6.7 Additions and Improvements. The City will not expend any of the
revenues derived by it from the operation of the System or the proceeds of any indebtedness
payable from the Revenues of the System for any extensions, betterments or improvements to
the System which are not legally required or economically sound, and which will not properly
and advantageously contribute to the conduct of the business of the System in an efficient
manner; provided, that to the extent permitted by law, the City may provide commodities,
services or facilities free of charge or at a reduced charge in order to carry out a plan adopted by
the Council for conservation of water or to benefit elderly, handicapped or poor persons.
Section 6.8 Tax Covenants. The City hereby covenants to undertake all actions
required to maintain the tax-exempt status of interest on the 2003 Bonds under Section 103,
Sections 141 through 149 inclusive, and Section 265 of the Code as set forth in the Arbitrage and
1 ax Certification that will be executed at the closing of the 2003 Bonds.
ARTICLE VII
ADDITIONAL BONDS
Section 7.1 Additional Bonds. Parity Bonds may be issued payable from the Bond
Fund on a parity with the 1996 Bonds, 1998 Bonds, and 2003 Bonds, and secured by an equal
charge and lien on the Gross Revenues pledged to the Bond Fund:
First, for the purpose of acquiring, constructing and installing additions and
improvements to and extensions of, acquiring necessary equipment for or making necessary
repairs, replacements or other capital improvements to the System and other lawful purposes
related to the System, or
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Second, for the purpose of refunding, or purchasing and retiring prior to their maturity,
any outstanding Bonds or other revenue obligations of the System.
(a) The City may issue such Additional Bonds upon compliance with the following
conditions:
(i) At the time of the issuance of such Additional Bonds, there shall be no
deficiency in the Bond Fund.
(ii) In each ordinance authorizing such Additional Bonds, provision shall be
made for payments into the Reserve Fund in accordance with Section 5.2(a) (iv) of this
ordinance.
(iii) At the time of the issuance of such Additional Bonds, the City shall have
on file a certificate from a Professional Utility Consultant, not then employed by the City except
for the purpose of giving such certificate, showing that the Net Revenue received during any
consecutive 12 -month period for which financial statements are available within the 24 months
preceding the date of delivery of such Additional Bonds equals the Coverage Requirement in
each calendar year or Fiscal Year thereafter on the then -Outstanding Parity Bonds and the
Additional Bonds to be issued, and that the Adjusted Net Revenues to be received each calendar
year or Fiscal Year thereafter, will equal at least 1.25 times the Average Annual Debt Service
each such calendar year or Fiscal Year, on the Outstanding Parity Bonds and the Additional
Bonds to be issued.
The Adjusted Net Revenues shall be the Net Revenues for a period of any 12 consecutive
months out of the 24 months immediately preceding the date of delivery of such proposed
Additional Bonds, as adjusted to take into consideration changes in Net Revenues estimated to
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occur under one or more of the following conditions for each year after such delivery for so long
as any Bonds, including the Additional Bonds proposed to be issued, shall be outstanding:
(A) Any increase UI uGGaJe ill Net Revenues that would result if any
change in rates and charges adopted by the Council prior to the date of such certificate and
subsequent to the beginning of such 12 -month period, had been in force during the fall 12 -month
period;
(B) The additional Net Revenues from any rate increases that have
been approved by ordinance of the Council but that are not then in effect;
(C) Any increase or decrease in Net Revenues estimated by such
Professional Utility Consultant to result from any additions, betterrrients and improvements to
and extensions of any facilities of the System that (i) became fully operational during such 12 -
month period, (ii) were under construction at the time of such certificate, or (iii) will be
constructed from the proceeds of the Additional Bonds to be issued;
(D) The additional Net Revenues that would have been received if any
for
i i t the System during such tr1 period
..1 ......... customers ..«n fthe na, 4,vP
customers added to the 12 -month period were 4 us6omers .o. e..tire
period.
(E) The additional Net Revenues that may be derived by the City from
any users of the System with whom the City has entered into a contract for utility services to be
furnished, which revenues have not otherwise been included in Net Revenues.
Such Professional Utility Consultant shall base his certification upon, and his certificate
shall have attached thereto, financial statements of the System audited by the State Examiner
(unless such an audit is not available for a 12 -month period within the preceding 24 months) and
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certified by the chief financial officer of the City, showing income and expenses for the period
upon which the same is based.
The certificate of such Professional Utility Consultant shall be conclusive and the only
evidence required to show compliance with the provisions and requirements of this subsection.
Notwithstanding the foregoing, if Additional Bonds are to be issued for the purpose of
refunding at or prior to their maturity any part or all of the then Outstanding Bonds and the
issuance of such refunding Additional Bonds results in a debt service savings and does not
require an increase of more than $5,000 in any year for principal and interest on such refunding
Additional Bonds, the certificate required by subsection (a) (3) of this section need not be
obtained.
Once the 1996 and 1998 Bonds are no longer outstanding, in lieu of a certificate from a
Professional Utility Consultant, the Director of Finance and Budget or other financial officer of
the City may certify that the Net Revenues of the System for any 12 consecutive months of the
24 months prior to the date of issuance of such Additional Bonds are at least 125% of the
Average Annual Debt Service due in any fiscal or calendar year thereafter, including in such
calculation debt service on such Additional Bonds.
(b) Nothing herein contained shall prevent the City from issuing revenue bonds or
other obligations which are a charge upon the Gross Revenues of the System junior or inferior to
the payments required by this ordinance to be made out of such Gross Revenues into the Bond
Fund and accounts therein to pay and secure the payment of any Outstanding Bonds.
(c) Nothing herein contained shall prevent the City from issuing revenue bonds to
refund maturing Bonds for the payment of which money is not otherwise available.
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(d) Notwithstanding any other provision of this ordinance, for so long as the 2003
Bonds are Outstanding, no bonds may be issued subsequent to the issuance of the 2003 Bonds
with a lien and charge on the Gross Revenues supenor to the hen and charge of the 2003 Bonds.
Section 7.2 Pledge Effected by Ordinance.
(a) The 2003 Bonds are special limited obligations of the City payable from and
secured solely by Gross Revenues, subject to the prior payment of Costs of Maintenance and
Operation of the System and other money and assets specifically pledged hereunder for the
payment thereof. There are hereby pledged as security for the payment of the principal,
premium, if any, and interest on the 2003 Bonds in accordance with their terms of this ordinance,
subject only to the provisions of this ordinance restricting or permitting the application thereof
for the purposes and on the terms and conditions set forth in this ordinance, (i) the proceeds of
the sale of the 2003 Bonds to the extent held in the funds established by this ordinance, (ii) the
Gross Revenues, and (iii) the money and assets, if any, credited to the Revenue Fund, the Bond
Fund and the Reserve Fund, and the income therefrom. The Gross Revenues and other money
and assets hereby pledged shall immediately be subject to the lien of this pledge without any
physical delivery thereof or further act, and the lien of this pledge shall be valid and binding as
against all parties having claims of any kind in tort, contract or otherwise against the City
regardless of whether such parties have notice thereof.
(b) The 1996 Bonds, the 1998 Bonds, the 2003 Bonds and any Additional Bonds
shall be equally and ratably payable and secured hereunder without priority by reason of date of
adoption of the ordinance providing for their issuance or by reason of their series, number or
date of sale, issuance, execution or delivery, and by the liens, pledges, charges, trusts,
assignments and covenants made herein, except as otherwise expressly provided or permitted in
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this ordinance and except as to insurance that may be obtained by the City to insure the
repayment of one or more series or maturities within a series.
(c) The 1996 Bonds, the 1998 Bonds, the 2003 Bonds and any Additional Bonds
shall not in any manner or to any extent constitute general obligations of the City or of the State
of Washington, or of any political subdivision of the State of Washington, or a charge upon any
general fund or upon any money or other property of the City or of the State of Washington, or
of any political subdivision of the State of Washington, not specifically pledged thereto by this
ordinance, nor shall the full faith and credit of the City or of the State of Washington, or of any
political subdivision of the State of Washington, be pledged to the payment of principal,
premium, if any, or interest thereon.
ARTICLE VIII
DEFAULTS AND REMEDIES
Section 8.1 Events of Default. This ordinance and each ordinance adopted pursuant to
Article X are hereinafter in this Article VIII and in Article IX referred to collectively as "the
Ordinance."
The City hereby covenants and agrees with the purchasers and owners from time to time
of any Parity Bonds, in order to protect and safeguard the covenants and obligations undertaken
by the City securing any Parity Bonds, that the following shall constitute "Events of Default":
(a) If the City shall default in the performance of any obligation with respect
to payments into the Bond Fund and such default is not remedied within a period of 30 days;
(b) If default shall be made in the due and punctual payments of the principal
of and premium, if any, on any of the Parity Bonds when the same shall become due and
payable, either at maturity or by proceedings for redemption or otherwise;
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(c) if default shall be made in the due and punctual payment oa any
installment of interest on any Parity Bonds;
(d) ii the City snail de-tauit in the observance and performance of any other o
the covenants, conditions and agreements on the part of the City contained in the Ordinance and
such default or defaults shall have continued for a period of 90 days after the City shall have
received from the Bondowners Committee or from the owners of not less than 20% in principal
amount of the Parity Bonds outstanding, a written notice specifying, and demanding the cure of,
such default;
(e) If the City shall (except as herein permitted) sell, transfer, assign or
convey any properties constituting the System or interests therein, or any part or parts thereof, or
shall make any agreement for such sale or transfer (except as expressly authorized by Section 6.3
hereof);
(f) If an order, judgment or decree shall be entered by a court of competent
jurisdiction (a) appointing a receiver, trustee or liquidator for the whole or any substantial part of
it � � filed against
,.a aL .. City seeking ,. al... bankruptcy, arrangement
the System, (b) approving a petition against the seeking the. ar angement
or reorganization of the City under any applicable law of the United States or the State of
Washington, or (c) assuming custody or control of the whole or any substantial part of the
System under the provisions of any other law for the relief or aid of debtors and such order,
judgment or decree shall not be vacated or set aside or stayed (or, in case custody or control is
assumed by such order, such custody or control shall not be otherwise terminated), within 60
days from the date of entry of such order, judgment or decree;
(g)
If the City shall (a) admit in writing its inability to pay the debts of the
System generally as they become due, (b) file a petition in bankruptcy or seeking a composition
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of indebtedness under any state or federal bankruptcy or insolvency law, (c) make an assignment
for the benefit of its creditors, (d) consent to the appointment of a receiver of the whole or any
substantial part of the System, or (e) consent to the assumption by any court of competent
jurisdiction under the provisions of any other law for the relief or aid of debtors of custody or
control of the whole or any substantial part of the System.
Section 8.2 Formation of Bondowners Committee. During the continuance of an
Event of Default, the owners of Parity Bonds representing 20% in principal amount of the Parity
Bonds then Outstanding may call a bondholders meeting for the purpose of electing a committee
(the "Bondowners Committee") to act on behalf of all Parity Bondowners (the `Bondowners").
Such meeting shall be called and the proceedings thereof shall be conducted in the manner
provided in Article IX hereof.
At such meeting the Bondowners present in person or by proxy may, by a majority of the
votes cast, elect one or more persons, who may or may not be Bondowners, to the Bondowners
Committee, which shall act as trustee for all registered owners of Parity Bonds outstanding, and
the Bondowners Committee as such trustee may have and exercise all the rights and powers
provided for in this ordinance to be exercised by the Bondowners Committee. The Bondowners
present in person or by proxy at said meeting, or at any adjourned meeting thereof, shall
prescribe the manner in which the successors of the persons elected to the Bondowners
Committee at such Bondowners meeting shall be elected or appointed, and may prescribe rules
and regulations governing the exercise by the Bondowners Committee of the powers conferred
upon it herein, and may provide for the termination of the existence of the Bondowners
Committee. The members of the Bondowners Committee elected by the Bondowners in the
manner herein provided, and their successors, as a committee are hereby declared to be trustees
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for the owners of all the Parity Bonds then Outstanding, and are empowered to exercise in the
name of the Bondowners Committee as trustee, all the rights and powers hereinafter conferred
on the Bondowners Committee.
Section 8.3 Books of City Open to inspection. The City covenants that if an Event of
Default shall have happened and shall not have been remedied, the books of record and account
of the City and all other records relating to the System shall at all times during regular business
hours be subject to the inspection and use of the Bondowners Committee and any person holding
at least 20% of the principal amount of Parity Bonds Outstanding and of their respective agents
and attorneys.
The City covenants that if an Event of Default shall happen and shall not have been
remedied, the City will continue to account, as a trustee of an express trust, for all Gross
Revenues and other money, securities and funds pledged under this ordinance.
Section 8.4 Suits at Law or in Equity. If an Event of Default shall happen and shall
not have been remedied, then and in every such case, the Bondowners Committee by its agents
and attorneys, shall be entitled and empowered to proceed forthwith to take such needful steps
and institute such suits, actions and proceedings at law or in equity for the collection of all sums
in connection with the Parity Bonds and to protect and enforce the rights of Bondowners under
this ordinance for the specific performance of any covenant herein contained or in aid of the
execution of any power herein granted, or for an accounting against the City as trustee of an
express trust, or in the enforcement__of any other legal or equitable right as the Bondowners
Committee being advised by counsel, shall deem most effectual to enforce any of the rights of
the owners of the Parity Bonds.
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Any action, suit or other proceedings instituted by the Bondowners Committee hereunder
shall be brought in its name as trustee for the Bondowners and all such rights of action upon or
under any of the Parity Bonds or the provisions of this ordinance may be enforced by the
Bondowners Committee without the possession of any of the Parity Bonds, and without the
production of the same at any trial or proceedings relative thereto except where otherwise
required by law, and the respective owners of said Parity Bonds, by taking and holding the same,
shall be conclusively deemed irrevocably to appoint the Bondowners Committee the true and
lawful trustee for the respective owners of said bonds, with authority to institute any such action,
suit or proceeding; to receive as trustee and deposit in trust any sums becoming distributable for
the receipt of such money, and to do all acts with respect thereto that the Bondowner might have
done in person, provided, however, that nothing herein contained shall be deemed to authorize or
empower the Bondowners Committee to consent to, accept or adopt, on behalf of any
Bondowner, any plan of reorganization or adjustment affecting the Parity Bonds or the City or
any right of any owner thereof, or to authorize or empower the Bondowners Committee to vote
the claims of the owners thereof in any receivership, insolvency, liquidation, bankruptcy,
reorganization or other proceeding to which the City shall be a party, and provided further,
however, that any Bondowner or Bondowners may by mutual agreement transfer title to the
Parity Bonds held by him or them to the Bondowners Committee, or may by agreement with
other Bondowners create or organize a separate trustee or bondowners committee and may
confer or organize a separate trustee or bondowners committee and may confer upon the
Bondowners Committee or such separate trustee or bondholders committee and may confer or
organize a separate trustee or bondowners committee and may confer upon the Bondowners
Committee or such separate trustee or bondholders committee, such powers and duties and such
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1_ it • a and of this ,7:......,,,,. shall not 1.
agreement or agreements shall provide, the provisions ordinance be
construed as a limitation on the powers and duties which consenting Bondowners may by
_f_. Committee
such separate truster bondholders
agreement confer on the Bondowners or $%paraw trustee or bondholders
committee. The Bondowners Committee shall have full powers of substitution and delegation in
respect to any of the powers hereby granted.
Section 8.5 Direction of Actions of Bondowners Committee by Majority Owners.
The owners of not less than a majority in principal amount of the Parity Bonds at the time
Outstanding, may direct the time, method and place of conducting any proceeding for any
remedy available to the Bondowners Committee, or exercising any trust or power conferred upon
the Bondowners Committee, provided that the Bondowners Committee shall be provided with
reasonable scrutiny and indemnity and shall have the right to decline to follow any such
direction only (i) if the Bondowners Committee shall be advised by counsel that the action or
proceeding so directed may not lawfully be taken; or (ii) if the Bondowners Committee in good
faith shall determine that the action or proceeding so directed would involve the Bondowners
Committee al lability 4-...t the action
e,1. directed would h0 •inavvetla,
111 pers011a1 11[1U1111y Or that U1G ac11V11 Or prul GGui lg so u1re� a `v`v'ou v� ufjuouy
prejudicial to the owners of Parity Bonds not parties to such direction.
Section 8.6 Suits by Individual Bondowners. No owner of any one or more of the
Parity Bonds shall have any right to institute any action, suit or proceeding at law or in equity for
the enforcement of any provision of the Ordinance or the execution of any trust under the
Ordinance or for any remedy under the Ordinance, unless an Event of Default shall have
happened and be continuing, and unless no Bondowners Committee has been created as herein
provided, but any remedy herein authorized to be exercised by the Bondowners Committee, may
be exercised individually by any Bondowner, in his own name and on his own behalf or for the
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benefit of all Bondowners, in the event no Bondowners Committee has been created, or with the
consent of the Bondowners Committee, if such Bondowners Committee has been created;
provided, however, that nothing in the Ordinance or in the Parity Bonds shall affect or impair the
obligation of the City, which is absolute and unconditional, to pay at the respective dates of
maturity and places therein expressed the principal of and premium, if any, and interest on the
Parity Bonds to the respective owners thereof, or affect or impair the rights of action, which are
also absolute and unconditional, of any owner to enforce the payment of his Parity Bonds, or to
reduce to judgment his claim against the City for the payment of the principal and interest on his
Parity Bonds, without reference to, or consent of, the Bondowners Committee of any other
owner of the Parity Bonds.
Section 8.7 Waivers of Default. No delay or omission of the Bondowners Committee
or of any Bondowner to exercise any right or power arising upon the happening of an Event of
Default shall impair any right or power or shall be construed to be a waiver of any such Event of
Default or to be an acquiescence therein; and every power and remedy given by this Article to
the Bondowners Committee or to the Bondowners may be exercised from time to time and as
often as may be deemed expedient by the Bondowners Committee or by such owners.
The Bondowners Committee or the owners of not less than 50% in principal amount of
the Parity Bonds at the time Outstanding, or their attorneys -in -fact duly authorized, may on
behalf of the owners of all of the Parity Bonds waive any past default under the Ordinance and
its consequences; except a default in_ the payment of the principal of and premium, if any, and
interest on any of the Parity Bonds. No such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
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Section 8.8 Remedies Granted in Ordinance Not Exclusive. No remedy by the terms
of the Ordinance confe-~ ::d upon or reserved to the Bondowners Committee or the Bondowners
is intended to be exclusive of any other remedy, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under the Ordinance or existing
at law or in equity or by statute on or after the date of adoption of the Ordinance.
ARTICLE IX
BONDOWNERS MEETINGS
Section 9.1 Call of Bondowners Meetings. The City, the Bondowners Committee or
the owners of not less than 20% in principal amount of the Parity Bonds then outstanding may at
any time call a meeting of the owners of the Parity Bonds. Every such meeting shall be held at
such place in the City of Yakima, State of Washington, or in the City of Seattle, State of
Washington, as may be specified in the notice calling such meeting. Written notice of such
meeting, stating the place and time of the meeting and in general terms the business to be
transacted, shall be mailed to the Bondowners by the City, the Bondowners Committee or the
Bondowners calling such meeting not less than 30 nor more than 60 days before such meeting,
and shall be published at least once a week for four successive calendar weeks on any day of the
week, the date of first publication to be not less than 30 or more than 60 days preceding the
meeting; provided, however, that the mailing of such notice shall in no case be a condition
precedent to the validity of any action taken at any such meeting. The expenses of publication of
such notice shall be paid or reimbursed by the City. Any meeting of Bondowners shall,
however, be valid without notice if the owners of all Parity Bonds then Outstanding are present
in person or by proxy or if notice is waived before or within 30 days after the meeting by those
not so present.
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Section 9,2 Notice to Bondowners. Except as otherwise provided in the Ordinance,
any provision in this ordinance for the mailing of a notice or other paper to Bondowners shall be
fully complied with if it is mailed postage prepaid to each registered owner of any of the Parity
Bonds then outstanding at his/her address, if any, appearing upon the Bond Register, and any
provision in this ordinance contained for publication of a notice or other matter shall require the
publication thereof in The Bond Buyer in the City of New York, State of New York (or in lieu of
publication in The Bond Buyer, in a daily newspaper printed in the English language and
customarily published on each business day and of general circulation 'in the Borough of
Manhattan, the City of New York, State of New York), and also in a daily newspaper printed in
the English language and customarily published on each business day and of general circulation
in the City of Seattle, State of Washington.
Section 9.3 Proxies: Proof of Ownership of Parity Bonds. Attendance and voting by
Bondowners at such meetings may be in person or by proxy. Owners of Parity Bonds, by an
instrument in writing under their hands, may appoint any person or persons, with full power of
substitution, as their proxy to vote at any meeting for them.
Any registered owner of Parity Bonds shall be entitled in person or by proxy to attend
and vote at such meeting as owner of the Parity Bonds registered or certified in his/her name
without producing such Parity Bonds, and such persons and their proxies shall, if required,
produce such proof of personal identity as shall be satisfactory to the secretary of the meeting.
All proxies presented at such meeting -shall be delivered to the inspectors of votes and filed with
the secretary of the meeting. All other persons seeking to attend or vote in such meeting must
produce the Parity Bonds claimed to be owned or represented at such meeting.
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The vote at any such meeting of the owner of any Parity Bond entitled to vote thereat
shall b:_ binding upon such owner and upon every such subsequent owner of such Parity Bond
(whether or not such subsequent owner has notice thereof).
Section 9.4 Execution of Instruments by Bondowners. Any request, direction, consent
or other instrument in writing required or permitted by this ordinance to be signed or executed
by Bondowners may be in any number of concurrent instruments of similar tenor, and may be
signed or executed by such Bondowners in person or by agent appointed by an instrument in
writing. Proof of the execution of any such instrument shall be sufficient for any purpose of this
ordinance if the fact and date of the execution by any person of any such instrument may be
proved by either (a) an acknowiedgi ient executed by a notary public or other officer empowered
to take acknowledgments of deeds to be recorded in the particular jurisdiction, or (b) an affidavit
of a witness to such execution sworn to before such a notary public or other officer. Where such
execution is by an officer of a corporation or association or a member of a partnership on behalf
of such corporation, association or partnership, such acknowledgment or affidavit shall also
constitute sufficient proof of his/her authority.
The foregoing shall not be construed as limiting the City to such proof, it being intended
that the City may accept any other evidence of the matters herein stated which it may deem
sufficient. Any request or consent of any Bondowner shall bind every future owner of the same
Parity Bond in respect of anything done by the City in pursuance of such request, direction or
consent.
The right of a proxy for a Bondowner to act may be approved (subject to the City's right
to require additional proof) by a written proxy executed by such Bondowner as aforesaid.
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Section 9.5 Appointment of Officers at Bondowners Meetings. Persons named by the
City or elected by the owners of a majority in principal amount of the Parity Bonds represented
at the meeting in person or by proxy in the event the City is not represented at such meeting,
shall act as temporary chairperson and temporary secretary of any meeting of Bondowners. A
permanent chairperson and a permanent secretary of such meeting shall be elected by the owners
of a majority in principal amount of the Parity Bonds represented at such meeting in person or by
proxy. The permanent Chairperson of the meeting shall appoint two inspectors of votes who
shall count all votes cast at such meeting, except votes on the election of chairperson and
secretary as aforesaid, and who shall make and file with the secretary of the meeting and with
the City their verified report of all such votes cast at the meeting.
Section 9.6 Quorum at Bondowners Meetings. The owners of not less than the
principal amount of the Parity Bonds required for any action to be taken at such meeting must be
present at such meeting in person or by proxy in order to constitute a quorum for the transaction
of business, less than a quorum, however, having power to adjourn from time to time without
any other notice than the announcement thereof at the meeting; provided, however, that, if such
meeting is adjourned by less than a quorum for more than ten days, notice thereof shall be
published by the City at least five days prior to the adjourned date of the meeting.
ARTICLE X
AMENDMENTS TO ORDINANCE
Section 10.1 Amendments.
(a) The Council from time to time and at any time may pass an ordinance or
ordinances amending this ordinance, which ordinance or ordinances thereafter shall become a
part of this ordinance, for any one or more or all of the following purposes:
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(1) To add to the covenants and agreements of the City in this ordinance,
other covenants and agreements thereafter to be observed, which shall not adversely affect the
interests of the owners of any Parity Bonds, or to surrender any right or power herein reserved.
(2) To make such provisions for the purpose of curing any ambiguities or of
curing, correcting or supplementing any defective provision contained in this ordinance or any
ordinance authorizing Additional Bonds in regard to matters or questions arising under such
ordinances as the Council may deem necessary or desirable and not inconsistent with such
ordinances and which shall not adversely affect, in any material respect, the interest of the
owners of Parity Bonds.
Any such amending ordinance may be adopted without the consent of the owners of any
Parity Bonds outstanding, notwithstanding subsection (b) of this section.
(b) With the consent of the owners of not less than 65% in aggregate principal
amount of the Parity Bond at the time Outstanding, the Council may pass an ordinance or
ordinances supplemental hereto for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this ordinance or of any amending ordinance;
provided, however, that no such amending ordinance shall:
(1)
Extend the fixed maturity of any Parity Bonds, or reduce the rate of
interest thereon, or extend the time of payment of interest from their due date, or reduce the
amount of the principal thereof, or reduce any premium payable on the redemption thereof,
without the consent of the owner of each bond so affected; or
(2) Reduce the aforesaid percentage of Bondowners required to approve any
such amending ordinance, without the consent of the owners of all of the Parity Bonds then
Outstanding.
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It shall not be necessary for the consent of Bondowners under this subsection (b) to
approve the particular form of any proposed supplemental ordinance, but it shall be sufficient if
such consent shall approve the substance thereof.
(c) Upon the adoption of any ordinance pursuant to the provisions of this Section,
this ordinance shall be deemed to be modified and amended in accordance therewith, and the
respective rights, duties and obligations of the City under this ordinance and all owners of Parity
Bonds outstanding hereunder shall thereafter be determined, exercised and enforced thereunder,
subject in all respects to such modification and amendments, and all terms and conditions of any
such supplemental ordinance shall be deemed to be part of the terms and conditions of this
ordinance for any and all purposes.
(d) Parity Bonds executed and delivered after the execution of any amending
ordinance passed pursuant to the provisions of this section may have a notation as to any matter
provided for in such amending ordinance, and if such supplemental ordinance shall so provide,
new bonds so modified as to conform, in the opinion of the Council, to any modification of this
ordinance contained in any such supplemental ordinance, may be prepared and delivered without
cost to the owners of any affected Parity Bonds then outstanding, upon surrender for cancellation
of such bonds with all unmatured coupons and all matured coupons not fully paid, in equal
aggregate principal amounts.
Section 10.2 Obtaining Approval of Amendments at Bondowners Meeting. The City
may at any time adopt an ordinance amending the provisions of this ordinance to the extent that
such amendment is permitted by the provisions of this Article X, to take effect when and as
provided in this Section. At any time thereafter such ordinance may be submitted by the City for
approval to a meeting of the bondowner duly convened and held in accordance with the
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provisions of this ordinance. A record in duplicate of the proceedings of each meeting of the
Bondowners shall be prepared by the permanent secretary of the meeting and shall have attached
_ of affidavits person having
thereto the original reports UI uic inspectors votes and by a or persons _•..•===b
,, .i r,...at. the facts knowledge of the facts, showing a copy of the notice of the meeting and setting forth the facts
with respect to the mailing and publication thereof under the provisions of this ordinance. Such
a record shall be signed and verified by the affidavits of the permanent chairperson and the
permanent secretary of the meeting, and one duplicate thereof shall be delivered to the City.
Any record so signed and verified shall be proof of the matter therein stated. If the ordinance of
the City making such amendment shall be approved by a resolution duly adopted at such meeting
of bondowners by the affirmative vote of the owners of the required percentages of Parity Bonds,
a notice stating that a resolution approving such amendment has been so adopted shall be mailed
by the City to each bondholder who has requested such notice (but failure so to mail copies of
such notice shall not affect the validity of such resolution) and shall be published at lest once in
the manner provided in Section 9.2 hereof. Proof of such mailing and publication by the
rr , rr _i _ of a having of the factsafiled the
affidavit or affidavits person or persons knowledge of tfit, shall be �...... with a==..
City. Such ordinance of the City making such amendment shall be deemed conclusively to be
binding upon the City, the paying agents, and the owners of all Parity Bonds at the expiration of
30 days after the publication of the notice provided for in this Section, except in the event of a
final decree of a court of competent jurisdiction setting aside such ordinance or annulling the
action taken thereby in a legal action or equitable proceeding for such purpose commenced
within such period; provided that the City and any paying agents during such 30 day period and
any such further period during which such action or proceeding may be pending shall be entitled
in their absolute discretion to take such action, or to refrain from taking such action, with respect
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to such ordinance as they may deem expedient. Nothing in this ordinance contained shall be
deemed or construed to authorize or permit, by reason of any call of a meeting of Bondowners or
of any right conferred hereunder to make such a call, any hindrance or delay in the exercise of
any rights conferred upon or reserved to the paying agents or the Bondowners under any of the
provisions of this ordinance.
Section 10.3 Alternate Method of Obtaining Approval of Amendments. The City may
at any time adopt an ordinance amending the provisions of this ordinance, or of any Parity
Bonds, to the extent that such amendment is permitted by the provisions of this Article, to take
effect when and as provided in this Section. Upon adoption of such ordinance, a request that
Bondowners consent thereto shall be mailed by the City to the Bondowners and notice that the
City is requesting Bondowners to consent to such amendment shall be published at least once in
the manner provided in Section 9.2 hereof. Such ordinance shall not be effective unless and
until there shall have been filed with the City the written consents of the percentages of owners
of outstanding Bonds specified herein and a notice shall have been published as hereinafter in
this Section provided. Each such consent shall be effective only if accompanied by proof of
ownership of the Parity Bond for which such consent is given. A certificate or certificates of the
Clerk of the City that he/she has examined such proof and that such proof is sufficient shall be
conclusive that the consents have been given by the owners of the Parity Bonds described in
such certificate or certificates. Any such consent shall be binding upon the owner of the Parity
Bonds giving such consent and on every subsequent owner of such Parity Bonds (whether or not
such subsequent owner has notice thereof). A notice stating that the ordinance has been
consented to by the owners of the required percentages of Bonds and will be effective as
provided in this Section, may be given to the Bondowners by mailing such notice to the
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bondholders, and shall be given by publishing the same at least once in the manner provided in
Section 9.2 hereof. A record, consisting of the papers required by this Section to be filed with
of .t tet_ ..a..�,_.1 and ♦1.:.. «.1;........o shall be deemed
the City shall be proof the matters therein stated, this o dinanee deemed
conclusively to be binding upon the City and the owners of ail Parity Bonds at the expiration of
30 days after the notice last provided for in this Section, except in the event of a final decree of a
court of competent jurisdiction setting aide such consent or annulling the action taken thereby in
a legal action or equitable proceeding for such purpose commenced within such period.
Section 10.4 Amendment of Ordinance in Any Respect by Approval of All
Bondowners. Notwithstanding anything contained in the foregoing provisions of this Article, the
� ,7 and
rights and obligations of the City and of the owners of the Parity Bonds, and the terms an
provisions of the Parity Bonds and of this ordinance, may be amended in any respect with the
consent of the City, by the affirmative vote of the owners of all said Bonds then Outstanding at a
meeting of Bondowners called and held as hereinabove provided, or upon the adoption of an
ordinance by the City and the consent of the owners of all the Parity Bonds then Outstanding,
• .t _ � Section
_ t n 't except that ... ..�:.... to bondowners either
such consent to be given as provided in Section 10.3 no notice eiahea
by mailing or publication shall be required, and the amendment shall be effective immediately
upon such unanimous vote or written consent of all of the Bondowners.
Section 10.5 Exclusion of Bonds Owned by City. Parity Bonds owned or held by or for
the account of the City shall not be deemed Outstanding for the purpose of any vote or consent
or other action or any calculation of Outstanding Bonds in this ordinance provided for, and shall
not be entitled to vote or consent or take any other action in this ordinance provided for.
Section 10.6 Endorsement of Amendment on Bonds. Parity Bonds delivered after the
effective date of any action amending this ordinance may bear a notation by endorsement or
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otherwise as to such action, and in that case upon demand of the owner of any Parity Bond
Outstanding at such effective date and presentation of his/her Parity Bond for that purpose at the
principal office of the paying agents, suitable notation shall be made on such Parity Bond by the
paying agent as to any such action. If the City shall so determine, new Parity Bonds so modified
as in the opinion of the City and its counsel to conform to such action shall be prepared,
delivered and upon demand of the owner of any Parity Bond then outstanding shall be
exchanged without cost to such Bondowner for Parity Bonds then outstanding hereunder, upon
surrender of such Bonds with any unmatured coupons pertaining thereto.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Undertaking to Provide Ongoing Disclosure.
(a) Contract/Undertaking. This section constitutes the City's written undertaking for
the benefit of the owners of the 2003 Bonds as required by Section (b)(5) of the Rule.
(b) Financial Statements/Operating Data. The City agrees to provide or cause to be
provided to each NRMSIR and to the SID, if any, in each case as designated by the Commission
in accordance with the Rule, the following annual financial information and operating data for
the prior fiscal year (commencing in 2004 for the fiscal year ended December 31, 2003):
(1) Annual financial statements showing ending retained earnings for the
System prepared in accordance with the Budget Accounting and Reporting System prescribed by
the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute) and
generally of the type included in the official statement for the 2003 Bonds under the heading
"Water and Sewer Operating Statement";
(2) Principal amount of Bonds of the System;
(3) Debt service coverage for Outstanding Bonds;
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(4) Rates for the System; and
(5) Number of customers of the System.
Such annual information and operating data described above shall be provided on or
before nine months after the end of the City's Fiscal Year. The City's current Fiscal Year ends
December 31. The City may adjust such Fiscal Year by providing written notice of the change
of Fiscal Year to each then existing NRMSIR and the SID, if any. In lieu of providing such
annual financial information and operating data, the City may cross-reference to other
documents provided to the NRMSIR, the SID or to the Commission and, if such document is a
final official statement within the meaning of the Rule, available from the MSRB.
If not provided as part of the annual financial information discussed above, the City shall
provide the City's audited annual financial statement for the System prepared in accordance with
the Budget Accounting and Reporting System prescribed by the Washington State Auditor
pursuant to RCW 43.09.200 (or any successor statute) when and if available to each then
existing NRMSIR and the SID, if any.
(c) Material Events. The City agrees to provide or cause to be provided, in a timely
manner, to the SID, if any, and to each NRMSIR or to the MSRB notice of the occurrence of any
of the following events with respect to the 2003 Bonds, if material:
(1) Principal and interest payment delinquencies;
(2) Non-payment related defaults;
(3) Unscheduled draws on debt service reserves reflecting financial
difficulties;
difficulties;
(4) Unscheduled draws on credit enhancements reflecting financial
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(5) Substitution of credit or liquidity providers, or their failure to perform;
(6) Adverse tax opinions or events affecting the tax-exempt status of the 2003
Bonds;
(7) Modifications to the rights of 2003 Bond owners;
(8) Bond calls (optional, contingent or unscheduled Bond calls other than
scheduled sinking fund redemptions for which notice is given pursuant to the Commission's
Exchange Act Release 34-23856);
(9) Defeasances;
(10) Release, substitution or sale of property securing repayment of the 2003
Bonds; and
(11) Rating changes.
Solely for purposes of disclosure and not intending to modify this undertaking, the City
advises that no property secures repayment of the 2003 Bonds.
(d) Notification Upon Failure to Provide Financial Data. The City agrees to provide
or cause to be provided, in a timely manner, to each NRMSIR or to the MSRB and to the SID, if
any, notice of its failure to provide the annual financial information described in Subsection (b)
above on or prior to the date set forth in Subsection (b) above.
(e) Termination/Modification. The City's obligations to provide annual financial
information and notices of material events shall terminate upon the legal defeasance, prior
redemption or payment in full of all of the 2003 Bonds. This section, or any provision hereof,
shall be null and void if the City (1) obtains an opinion of nationally recognized bond counsel to
the effect that those portions of the Rule which require this section, or any such provision, are
invalid, have been repealed retroactively or otherwise do not apply to the 2003 Bonds; and
-56-
P:\DG\DGO2E 03/10/02
(2) notifies each then existing NRiMSIR and the SID, if any, of such opinion and the cancellation
of this section.
Notwithstanding any other provision of this motion, the City may amend this
Section 11.1, and any provision of this Section 11.1 may be waived, with an approving opinion
of nationally recognized bond counsel in accordance with the Rule. In the event of any
amendment or waiver of a provision of this Section 11.1, the City shall describe such
amendment in the next annual report, and shall include, as applicable, a narrative explanation of
the reason for the amendment or waiver and its impact on the type (or in the case of a change of
accounting principles, on the presentation) of financial information or operating data being
presented by the City. In addition, if the amendment relates to the accounting principles to be
followed in preparing financial statements, (i) notice of such change shall be given in the same
manner as for a material event under subsection (c), and (ii) the annual report for the year in
which the change is made should present a comparison (in narrative form and also, if feasible, in
quantitative faun) between the financial statements as prepared on the basis of the new
accounting principles and those prepared on the basis of the former accounting principles.
(f) Bond Owner's Remedies Under This Section. The right of any Bond Owner or
Beneficial Owner of 2003 Bonds to enforce the provisions of this section shall be limited to a
right to obtain specific enforcement of the City's obligations hereunder, and any failure by the
City to comply with the provisions of this undertaking shall not be an event of default with
respect to the 2003 Bonds hereunder. For purposes of this section, "Beneficial Owner" means
any person who has the power, directly or indirectly, to vote or consent with respect to, or to
dispose of ownership of, any 2003 Bonds, including persons holding 2003 Bonds through
nominees or depositories.
-57-
PADG\DG02E 03/10/02
Section 11.2 Severability. If any one or more of the covenants or agreements provided
in this ordinance to be performed on the part of the City shall be declared by any court of
competent jurisdiction to be contrary to law, then such covenant or covenants, agreement or
agreements, shall be null and void and shall be deemed separable from the remaining covenants
and agreements in this ordinance and shall in no way affect the validity of the other provisions of
this ordinance or of any Parity Bonds.
Section 11.3 General Authorization. The Mayor and Director of Finance and Budget,
and each of the other appropriate officers, agents and representatives of the City are each hereby
authorized and directed to take such steps, to do such other acts and things, and to execute such
letters, certificates, agreements, papers, financing statements, assignments or instruments as in
their judgment may be necessary, appropriate or desirable in order to carry out the terms and
provisions of, and complete the transactions contemplated by this ordinance.
Section 11.4 Prior Acts. All acts taken pursuant to the authority of this ordinance but
prior to its effective date are hereby ratified and confirmed.
Section 11.5 Effective Date. This ordinance shall be effective 30 days after its passage,
approval and publication as provided by law.
PASSED by the Council of the City of Yakima at a regular meeting thereof, held
this th day of October, 2003.
ATTEST
City Clerk
-58-
CITY OF YAKIMA, WASHINGTON
By
Mayor
P:\DG\DG02E 03/10/02
APPROVED AS TO FORM:
City Attorney
First Reading:
Publication Date:
Effective Date:
-59-
P'\DG1DG02E 03/10/02
EXHIBIT A
City of Yakima
Wastewater Treatment Plant Capital Improvements
In the City of Yakirna's approved Wastewater Facilities Plan the Wastewater Division has identified
several priorities that need to be implemented at the Wastewater Treatment Plant to comply with new and
existing environmental rules and regulations. Compliance is required to meet the Washington Department
of Ecology (WDOE) criteria to provide adequate capacity and backup operations to major processes of the
plant as identified in the City's NPDES Permit and associated rules and regulations. The following areas
have been identified and prioritized as the Yakima Wastewater Treatment Plants most important operations
to be implemented:
Solids dewatering — only one of two centrifuges is functional any longer for dewatering
Biosolids and it requires extensive maintenance to continue operating. A new
centrifuge or alternate source of dewatering the biosolids is required to maintain
compliance when the older centrifuge is out of service.
Solids thickening - the waste activated sludge (WAS) thickening process reduces the
volume of solids sent to the dewatering processes. There is
currently only one dissolved air flotation thickener (DAFT) to
thicken secondary sludge. A second thickening unit is needed to meet Ecology
criteria.
Secondary clarification — the secondary clarifiers are the final sedimentation process prior
to discharge to the Yakima River. Reliability standards for WDOE
require that 75% of the design flow for this final process should be
handled with one unit off line. Based on this the two existing
secondary clarifiers are at or near hydraulic capacity and an additional
secondary clarifier is required to meet Ecology criteria.
New RAS/WAS Pump Station — the RAS/WAS pump station is used to transport Return
Activated Sludge (RAS) from the secondary clarifiers back to the
aeration basin flow control system through two constant speed open
screw pumps. Waste activated sludge is pumped from the two
existing secondary clarifiers through two pumping systems. With the
addition of a new secondary clarifier or future new aeration basins a
new RAS/WAS pumping station would be required. With a new
RAS/WAS pumping station current problems with the control of the
RAS pumping flow split would be resolved as well as having sufficient
capacity to handle peak hour flow conditions.
Emergency Power — the emergency power system supplies a second source of power to assure minimum
treatment is provided under utility power failures. The existing generator set was
installed in 1972 and at a minimum requires a complete inspection/overhaul. Another
generator set is required to operate the minimum treatment processes at present.
Replacement of Blower VFDs — the VFDs that operate the four 400 horsepower blowers are far less
efficient and generate more harmonic distortion on the electrical power system than
newer technology. They are at the end of their useful life and are hard to find parts for.
All four need to be replaced.
If additional funds are available after completing the prioritized projects above, there are several other
improvements and upgrades identified in the approved facilities plan that need to be completed. These
projects are required to comply with current and future regulatory requirements and mandates also. The
costs for the mandated improvements to the wastewater treatment plant and collection system identified in
the approved facilities plan have been estimated at over 20 million dollars.
NO.
EXHIBIT B
UNITED STATES OF AMERICA
STATE OF WASHINGTON
CITY OF YAKIMA
WATER AND SEWER REVENUE BOND, 2003
e
INTEREST RATE: % MATURITY DATE: CUSIP NO.:
REGISTERED OWNER:
PRINCIPAL AMOUNT:
The City of Yakima, Washington (the "City"), hereby acknowledges itself to owe and for
value received promises to pay to the Registered Owner identified above, or registered assigns,
on the Maturity Date identified above, the Principal Amount indicated above and to pay interest
from , 2003, until payment of this bond at the Interest Rate set forth above, payable
on 1, 2004, and semiannually thereafter on the first days of each succeeding
and . Both principal of and interest on this bond are payable in lawful money of the
United States of America. For so long as the bonds of this issue are held in fully immobilized
form, payments of principal and interest thereon shall be made as provided in accordance with
the operational arrangements of DTC referred to in the Blanket Issuer Letter of Representations
from the City to The Depository Trust Company. In the event that the bonds of this issue are no
longer held in fully immobilized form, interest on this bond shall be paid by check or draft
Owner
the on the 1 5th day of
mailed to the Registered at address appearing �u�. Bond Register on the _„ �
the month preceding the interest payment date, and principal of this bond shall be payable upon
presentation and surrender of this bond by the Registered Owner at the principal office at the
principal office of the fiscal agency of the State of Washington in New York, New York (the
"Bond Registrar"); provided, however, that if so requested in writing by the Registered Owner of
at least $1,000,000 principal amount of bonds, interest will be paid by wire transfer on the date
due to an account with a bank located within the United States.
This bond is one of an authorized issue of bonds of like date and tenor, except as to
number, amount, rate of interest and date of maturity, in the aggregate principal amount of
$ (the "Bonds"), and is issued pursuant to Ordinance No. 2003-, passed by the
City Council on October 7 _, 2003, and Resolution No. of the City Council adopted on
, 2003 (collectively, the "Bond Ordinance"), to finance certain improvements to the
City's water and sewer system and pay costs of settling a lawsuit. Capitalized terms used in this
bond and not otherwise defined shall have the meanings given them in the Bond Ordinance.
The Bonds are subject to optional [and mandatory] redemption as set forth in the Bond
Ordinance.
B-1
P \DG\DG02E 03/10/02
The Bonds are payable solely from the special fund of the City known as the Water and
Sewer Revenue Bond Fund" (the "Bond Fund"). The City has irrevocably obligated and bound
itself to pay into the Bond Fund out of Revenue of the System or from such other money as may
be provided for such purpose certain amounts necessary to pay and secure the payment of the
principal and interest on such bonds.
The City has pledged to set aside from the Revenue Fund out of the Revenue of the
System and to pay into the Bond Fund the various amounts required by the Bond Ordinance to
be paid into and maintained in such Fund within the times provided by the Bond Ordinance.
To the extent more particularly provided by the Bond Ordinance, the amounts so pledged
to be paid from the Revenue Fund out of Gross Revenues into the Bond Fund shall be a lien and
charge thereon equal in rank to the lien and charge upon Gross Revenues of the amounts
required to pay and secure the payment of the City's Outstanding Parity Bonds, and any
Additional Bonds hereafter issued and superior to all other liens and charges of any kind or
nature, except the Costs of Maintenance and Operation of the System.
The City has further bound itself to maintain the System in good repair, working order
and condition, to operate the same in an efficient manner and at a reasonable cost, and to
establish, maintain and collect rates and charges in each calendar year that will make available,
for the payment of the principal of and interest on Outstanding Bonds, Net Revenue in an
amount that will be equal to the Coverage Requirement.
The pledge of Gross Revenues and other obligations of the City under the Bond
Ordinance may be discharged at or prior to the maturity or redemption of the bonds of this issue
upon the making of provision for the payment thereof on the terms and conditions set forth in the
Bond Ordinance.
This Bond is a special limited obligation of the City and is not an obligation of the State
of Washington or any political subdivision thereof other than the City, and neither the full faith
and credit nor the taxing power of the City or the State of Washington is pledged to the payment
of this Bond.
This Bond shall not be valid or become obligatory for any purpose or be entitled to any
security or benefit under the Bond Ordinance until the Certificate of Authentication has been
manually signed by the Bond Registrar.
This Bond is transferable only on the records maintained by the Bond Registrar for that
purpose upon the surrender of this Bond by the Registered Owner or his/her duly authorized
agent and only if endorsed in the manner provided hereon, and a new fully registered Bond of
like principal amount, maturity and interest rate shall be issued to the transferee in exchange.
Such exchange or transfer shall be without cost to the Registered Owner or transferee. The City
and Bond Registrar may deem the person in whose name this Bond is registered to be the
absolute owner for the purpose of receiving payment of the principal of and interest on this Bond
and for all other purposes.
B-2
P\DG\DG02E 03/10/02
The Bond Registrar is not required to issue, register, transfer or exchange any Bonds
during a period beginning at the opening of business on the 15th day of the month next
preceding any interest payment date and ending at the close of business on the interest payment
date, or, in the case of any proposed redemption of the Bonds, after the mailing of notice of the
call of such Bonds for redemption.
It is hereby certified that all acts, conditions and things required by the Constitution and
statutes of the State of Washington and the Charter and ordinances of the City to exist, to have
happened, been done and performed precedent to and in the issuance of this Bond have
happened, been done and performed and that the issuance of this bond and the bonds of this
series does not violate any constitutional, statutory or other limitation upon the amount of
bonded indebtedness that the City may incur.
The City has caused this Bond to be executed by the manual or facsimile signature of the
Mayor and to be attested by the manual or facsimile signature of the Clerk, and has caused the
seal of the City to be impressed or imprinted on this bond, as of this day of , 2003.
ATTEST:
/s/ manual or facsimile signature
Clerk
CITY OF YAKIMA, WASHINGTON
By /s/ manual or facsimile signature
Mayor
The Bond Registrar's Certificate of Authentication on the Bonds shall be in substantially
the following form:
B-3
P \DG\DG02E 03/10/02
CERTIFICATE OF AUTHENTICATION
This is one of the Water and Sewer Revenue Bonds, 2003, of the City of Yakima,
Washington, dated 1, 2003, described in the Bond Ordinance.
WASHINGTON STATE FISCAL AGENCY, as
Bond Registrar
By
Authorized Signatory
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR TAXPAYER IDENTIFICATION NUMBER OF
TRANSFEREE
(Please print or typewrite name and address, including zip code, of transferee)
the within bond and does hereby irrevocably constitute and appoint
as attorney-in-fact to transfer
said bond on the books kept for registration thereof with full power of substitution in the
premises.
DATED:
SIGNATURE GUARANTEED:
NOTICE: Signature(s) must be
guaranteed pursuant to law.
NOTE: The signature on this Assignment must
correspond with the name of the Registered Owner
as it appears upon the face of the within bond in
every particular, without alteration or enlargement
or any change whatever
B-4
P\DG\DG02E 03/10/02
DRAFT
BOND DEBT SERVICE
City of Yakima
Water & Sewer Revenue Bonds, 2003 Series A &. B
Period Annual
Ending Pnncipal Coupon Interest Debt Service Debt Service
11/17/2003
05/01/2004 351.417.39 351.417.39
11/01/2004 560,000 1 800% 381,055 00 941.055 00 1,292,472.39
05/01/2005 376,015.00 376,015 00
11/01/2005 600.000 2.100% 376,015 00 976,015 00 1,352,030 00
05/01P006 uo 71 c nn 3A9,71-7.00
11/01/2006 610,000 2.500% 369,715 00 979,715.00 1,349,430 00
05/01/2007 362,090.00 362,090 00
11/01/2007 625,000 2.950% 362,090 00 987,090 00 1,349,180 00
05/01/2008 352,871.25 352,871.25
11/01/2008 645,000 3.300% 352,371.25 997,871.25 1,350,742.50
05/01/2009 342,228.75 342,228 75
11/01/2009 665,0000 3 650% 342,228.75 1,007,228.75 1,349,457.50
05/01/2010 330,092.50 330,092.50
11/01/2010 690,000 4 000% 330,092.50 1,020,092.50 1,350,185.00
05/01/2011 316,292.50 316,292.50
11/01/2011 720,000 4.250% 316,292.50 1,036,292.50 1,352,585 00
05/01/2012 300.992.50 300,992.50
11/01/2012 750,000 4.450% 300,992.50 1,050,992.50 1,351,985 00
05/01/2013 284,305 00 284,305 00
11/01/2013 780,000 4 600% 284,305 00 1,064,305 00 1,348,610 00
05'01/2014 266,365 00 266,365 00
11/01/2014 4 X07 ')66,3h5 0036 5 ,2 2,7 0 00
820 000 7t ��1 0 _6 l,�i_ 3
05/01/2015 247 005 00 247.095 00
11'01/2015 855 i4;.) 4 SC0';., 247,095 00 1,102,095 00 1,349,19(1 00
05;01'2016 226 575 00 226.575 00
11/01/2016 895,000 4 900% 226,575 00 1,121,575 00 1,348,150 00
05/01/2017 204 647 50 204,647.50
11/01/2017 940,000 5 000% 204,647 50 1,144,647.50 1,349,295 00
05701/2018 181,147 50 181,147 50
11/01/2018 990,000 5 100% 181,147 50 1,171,147.50 1,352,295 00
05/01/2019 155,902.50 155,902.50
11/01/2019 1,040,000 5.200% 155.902.50 1,195,902.50 1,351,805 00
05/01/2020 128,862.50 128,862.50
11/01/2020 1,095,000 5.300% 128,862.50 1,223,862.50 1,352,725 00
05/01/2021 99,845 00 99,845 00
11/01/2021 1,150,000 5 400% 99,845 00 1,249,845 00 1,349,690.00
05/01/2022 68,795 00 68.795 00
11/01/2022 1,210,000 5 500% 68,795 00 1,278,795.00 1,347,590.00
05/01/2023 35,520 00 35,520 00
11'01/2023 1,280,000 5 550% 35.520 00 1,315,520 00 1,351,040 00
16,920,000 10 031,187.39 26,951,187 39 26,951,137.39
Sep 10 2003 4.57 pm Prepared - Seattle -Northwest Securities (Finance 5.001 Yaktma:03WSREVI Page 4
Section D
Budget Appropriation
ORDINANCE NO. 2003 -
AN ORDINANCE amending the 2003 budget for the City of Yakima; and making
appropriations to provide for settlement costs of the odor
litigation and certain capital improvements to the City's
wastewater system from Unappropriated Fund Balances within
various Funds for expenditure during 2003.
WHEREAS, the various funds indicated on the attached Schedule I contain
Unappropriated Fund Balances available for appropriation and expenditures during 2003
in various amounts and for the purposes mentioned in the attached Schedule, and
WHEREAS, at the time of the adoption of the 2003 budget it could not
reasonably have been foreseen that the appropriation provided for by this ordinance would
be required; and the City Council declares that an emergency exists of the type
contemplated by RCW 35.33.091 and that it is in the best interests of the City to make the
appropriation herein provided, now, therefore,
BE IT ORDAINED BY THE CITY OF YAKIMA:
Section 1. Appropriations are hereby made, for expenditure during 2003, from
Unappropriated Fund Balances in the various Funds to the various accounts and in the
various amounts, and for the various specific purposes, all as specified in the Schedule
attached hereto and incorporated herein.
Section 2. This ordinance is one making an appropriation and shall take effect
immediately upon its passage, approval and publication as provided by law and by the City
Charter.
PASSED BY THE CITY COUNCIL, signed and approved this day of
, 2003.
MARY PLACE, MAYOR
ATTEST:
CITY CLERK
First Reading: 10-7-2003
Publication Date:
Effective Date:
Cje 10/02/03 wwater bond approp ord 03
APP ROP.ORDLNANCE P A (_E
SCHEDULE I
Wastewater Facility Project
RESOURCES:
Bond Proceeds -Series A
478-478-238-1854-39110-BND
Bond Proceeds -Series B
478-478-238-2055-39110-BND
1
$7,000,000.00
$8,000,000.00
TOTAL RESOURCES $15,000,000.00
APPROPRIATIONS:
Damage Claims
478-478-238-1854-59435-499 $7,000,000.00
Interfund Loan Payment - Principal
478-478-238-1942-58235-790 $1,420,000.00
Interfund Loan Payment - Interest
478-478-238-1942-59235- 820 $94,178.00
2004 Facilities Improvement
478-478-238-2055-59435-650 $70,000.00
Blower Variable Frequency Drive
478-478-238-2056-59435-650 $120,000.00
TOTAL APPROPRIATIONS $8,704,178.00
2003 Sewer Revenue Bond Reserve
RESOURCES:
Bond Proceeds -Series A
494-494-238-1854-39110-BND
Bond Proceeds -Series B
494 -494 -238 -2055 -39110 -SND
$792,000.00
$900,000.00
TOTAL RESOURCES $1,692,000.00
erp 10/1/2003 2:04 PM appropriation misc
Appendix
Plaintiff Documents filed with the Court
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA, PETERSON 6 DAHEIM LLP
TACOMA OFFICE
1201 PACIFIC AVENL SUITE 2200
POST OFFICE E 1IS7
TACOMA WASHINGTC 98401-1157
(253) 620-6500
FACSIMILE 1253) 620-6565
REPLY TO TACOMA OFFICE
JOHN C. GUADNOLA
ATTORNEY AT LAW
DIRECT 1253' 620-6410
(206) 6'6-6-410
E-MAIL Iguadnola@gth-law corn
October 1, 2003
The Honorable Susan Hahn
Yakima County Superior Court
County Courthouse
128 North 2"a Street
Yakima, WA 98901
RE: Murphy, et al vs. City of Yakima
Yakima Superior Court Cause No. 99 2 00611 8
SEATTLE OFFICE
ONE UNION SQUARE
600 UNIVERSITY. SUITE 2100
SEATTLE WASHINGTON 98 1 01-4 1 8S
(206) 676-7500
FACSIMILE (206) 676-7575
OCT 022003
rY LEGAL DEPT.
Dear Judge Hahn:
Enclosed with this letter are the bench copies of Plaintiffs' Motion for Preliminary
Approval of the settlement with Yakima and the supporting documents filed with the motion.
Exhibit B to the Settlement Agreement, a legal description of the class area, has not been
completed. We will ask counsel for the City to submit it to you as soon as it is ready.
We have noted the motion for Friday, October 10, 2003. It is our understanding that the
Yakima City Council will consider the settlement at its meeting on October 7, 2003. Unless the
Council rejects the settlement, which we believe to be unlikely, everything will be in place for
preliminary approval on the 10`h
In preparing our motion and accompanying documents, which include forms of notice to
be mailed to class members and published in local papers, we have taken the liberty of assuming
the Court will consider final approval of the settlement on November 21, 2003. We have
confirmed with Maria that this date is available.
We believe November 21 provides ample time for the approval process. We have
retained Rust Consulting to administer claims. This company handled distribution of the first
notice in this case and has assisted us in several other cases, consistently doing an excellent job.
If preliminary approval is granted on October 10th, notices should be mailed to class members on
Monday, October 13 or at the latest by Wednesday, October 15. We are asking the Court to set
Friday, November 14, as the deadline for mailing objections to the settlement or mailing "opt -
out" notices from people who moved into or acquired residential property in the class area after
[1242111 v4.doc]
LAW OFFICES
GORDON. THOMAS. HONEYWELL, MALANCA. PETERSON & DAHEIM LLP
TACOMA OFFICE
1201 PACIFIC AVENUE SUITE 2200
POST OFFICE BOX 1157
TACOMA WASHINGTON 9840!-1157
1253) 620-6500
FACSIMILE (253) 620-6565
REPLY TO TACOMA OFFICE
JOHN C. GUADNOLA
ATTORNEY AT LAW
DIRECT (253) 620-6410
(206) 676-6410
E-MAIL Iguadnolaagth-law com
October 1, 2003
Kim M. Eaton, County Clerk
Yakima County Superior Court
128 North Second Street
Yakima, WA 98901
Re: Murphy, et al, v. City of Yakima, et al.
Yakima County Superior Court Cause No. 99-2-00611-8
SEATTLE OFFICE
ONE UNION SOUARE
600 UNIVERSITY. SUITE 2100
SEATTLE WASHINGTON 9510!-4155
(206) 676-7500
FACSIM)Lt iCO6( 676-7575
pA rrEIVED
(�rT .`ZO13
LI11 IN AL PAng
Dear Ms. Eaton:
Enclosed for filing is the original Plaintiffs' Motion for Preliminary Approval of
Settlement and Plan of Distribution for Approval of Class Notice; Memorandum in Support of
Plaintiffs' Motion for Preliminary Approval of Settlement; Declaration of John C. Guadnola in
Support of Motion for Preliminary Approval; Published Notice of Proposed Final Settlement and
Plan of Distribution; Notice of Proposed Final Settlement and Plan of Distribution; Note for
.� of first
..l
Motion Calendar and Certificate of Service. Please conform the extra copies the First page o�
each pleading and return them to me in the enclosed self-addressed stamped envelope.
Under separate cover, I am sending a bench copy of the above-mentioned documents to
Judge Hahn.
Thanking you in advance for your cooperation.
Very truly yours,
JCG:gam
Enclosure
cc: All Counsel
[1242372 vOl.doc]
0));,a—aweL
Gina A. Mitchell, Secretary for
John C. Guadnola
Q 4 ; is ; 503
tori y LEGAL DEPT.
SUPERIOR COURT OF WASHINGTON - COUNTY OF YAKIMA
WILFRED and KAREN MURPHY, et al.,
Plaintiffs,
v.
CITY OF YAKIMA, a Washington municipal
corporation, et al.,
Defendants.
CASE NO. 99-2-00611-8
NOTE FOR MOTION DOCKET
THE HONORABLE SUSAN L.
HAHN
TO THE CLERK OF THE SUPERIOR COURT AND TO:
Name: Thomas Wolfendale, WSBA No. 03776
Preston Gates & Ellis
925 Fourth Avenue, Suite 2900
Seattle, WA 98104-1158
Phone: 206-623-7580
Attorneys for Defendant and Third Party Plaintiffs City of Yakima
Please take notice that the undersigned will bring on for hearing a motion for: PLAINTIFFS' MOTION FOR
PRELIMINARY APPROVAL OF SETTLEMENT AND APPROVAL OF CLASS NOTICE
(Type of Motion)
The hearing is requested to be held during the regular motion calendar on:
DATE OF HEARING/MOTION
Friday, October 10, 2003 from 9 a.m. to 11 a.m.
Nature of Case: Hazardous Waste
Dated: October 1, 2003
Name: John C. Guadnola/Kenneth G. Kieffer
Address: 1201 Pacific Avenue, Suite 2100
Tacoma, WA 98402 =
Signed:
WSBA
Att
36/ 0850
ey for: Plaintiffs
one: (253) 620-6485
THE ABOVE INFORMATION MUST BE COMPLETED AND SIGNED
FOR CLERK'S USE ONLY
Assigned to: Date: By:
[1211966 v7.doc]
GORDON, THOMAS, HONEYWELL
MALANCA, PETERSON (3 DAHEIM LLP
October 1, 2003
Page 2
the last notice was mailed and published. This means class members will have approximately 30
days to respond to the notice if they choose to do so. Objections or "opt -out" notices mailed on
November 14 will be available for review by the Court and counsel during the week before the
hearing on November 21.
In addition, we have scheduled two "town hall" meetings for the 5th and 6th of November.
Plaintiffs' Counsel will attend both meetings, to answer questions and to provide assistance in
claim frm. if do so We have Spanish language translators available at
filling out forms, 11 asked to vv, .. .+ will have language
the meeting on November 6`h. This means class members will have some 20 days to prepare for
the meeting, and at least a week after the meeting to prepare any objection or "opt -out" notice
they choose to file. And, of course, class members who choose to do so will have 30 days to fill
out and submit claim forms that will allow them to participate in the proceeds of the Settlement.
The enclosed materials include a color -coded map of the class area. The map shows the
precise boundaries of the class area and the boundaries of three Zones in the class area which
will be treated differently under the Plan of Distribution. We are in the process of preparing
Spanish language translations of the two forms of notice. We will deliver the translations to the
Court prior to the October 10 hearing.
If you have any questions, or would like to discuss any aspect of this in advance of the
October 10 hearing' please do not hesitate to contact us and we will schedule a conference call
with defense counsel. Otherwise, we will be prepared to address the motion and any questions
the Court may have at the hearing.
Very truly yours,
� • 7
JCS
John C. Guadnola
JCG:garn
cc: Thomas Wolfendale (w/encl.)
Timothy G. Leyh (w/encl.)
Ray Paolella (w/encl.)
Stephen J. Tan (w/encl.)
Phil Lamb (w/encl.)
Bradley Jones (w/o encl.)
Timothy Ashcraft (w/o encl.)
Kenneth Kieffer (w/o encl.)
[1242111 v4.doc]
TO: ADDITIONAL ATTORNEYS
Name: Timothy G. Leyh, WSBA No. 14853
Daniel Hamgan & Tollefson LLP
999 Third Avenue 44th Floor
Seattle, WA 98104
Phone: 206-623-1700
Attorneys for Defendants and Third Party Plaintiffs City of Yakima
Name: Stephen J. Tan, WSBA No. 22756
Brown Reavis & Manning PLLC
1201 Third Avenue, Suite 320
Seattle, WA 98101
Phone: 206-292-6300
Attorneys for Defendant Del Monte
Name: Ray Paolella
Yakima City Attorney'
200 South 3`d Street
Yakima, WA 98901
Name: Philip A. Lamb
City Attorney
102 West Ahtanum
Union Gap, WA 98903
[1211966 v7.doc]
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"''F ED
DCT ) «; 2003
MY- LEGAL DEPT.
COURT OF THE STATE OF WASHINGTON
FOR YAKIMA COUNTY
WILFRED AND KAREN MURPHY, husband
and wife, et al.,
Plaintiffs,
vs.
CITY OF YAKIMA, a Washington municipal
corporation, et al,
Defendants.
NO. 99-2-00611-8
PLAINTIFFS' MOTION FOR
PRELIMINARY APPROVAL OF
SETTLEMENT AND PLAN OF
DISTRIBUTION, AND FOR
APPROVAL OF CLASS NOTICE
ASSIGNED TO THE HONORABLE
SUSAN L. HAHN
HEARING DATE: October 10, 2003
Plaintiffs respectfully move the Court, pursuant to CR 23, for entry of an Order
preliminarily approving the settlement between Plaintiffs and the City of Yakima,
preliminarily approving the plan of distribution proposed by Plaintiffs, and approving the
Class Notices to be sent to class members and published.
This motion is based upon the supporting memorandum filed simultaneously herewith,
upon the declaration of John C. Guadnola and the exhibits attached to that declaration, also
PL. MOT. FOR PRELIM. APPROVAL - 1 of 2
(99-2-00611-8)
[1241271 v5.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401-1157
(253) 620-6500 - FACSIMILE (253) 820-6565
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submitted simultaneously with the motion, and upon all other pleadings and filings in this
case.
Dated this 15day of October, 2003.
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
PL. MOT. FOR PRELIM. APPROVAL - 2 of 2
(99-2-00611-8)
[ 1241271 v5.doc]
Albert
John 1
' . Malanca, BA No. 01226
. Guadnola, WSBA No. 08636
eth G. Kieffer, WSBA No. 10850
Bradley B. Jones, WSBA No. 17197
Timothy L. Ashcraft, WSBA No. 26196
Attorneys for Plaintiffs
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
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POST OFFICE BOX 1157
TACOMA, WASHINGTON 86401-1157
(253) 620-6500 - FACSIMILE (253) 6208565
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PFCFMED
OCT 0 2003
cirr t,t,L bei.
SUPERIOR COURT OF THE STATE OF WASHINGTON
FOR YAKIMA COUNTY
WILFRED AND KAREN MURPHY, husband
and wife, et al.,
11 II
vs.
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Plaintiffs,
CITY OF YAKIMA, a Washington municipal
corporation, et al,
Defendants.
NO. 99-2-00611-8
MEMORANDUM IN SUPPORT OF
pLATNTIFFS' MOTION FOR
PRELIMINARY APPROVAL OF
SETTLEMENT
ASSIGNED TO THE HONORABLE
SUSAN L. HAHN
HEARING DATE: October 10, 2003
Plaintiffs respectfully submit this memorandum in support of their motion for
preliminary approval of their settlement with the City of Yakima, for preliminary approval of
the plan of distribution being proposed by Plaintiffs, and for approval of Class Notices to be
sent to the class members and published.
I. THE SETTLEMENT
After some five and one-half years of intense, hard-fought litigation, Plaintiffs and the
City of Yakima have reached an agreement that will finally and completely dispose of all
claims remaining in this case. A copy of the Settlement Agreement is being submitted to the
Court as Exhibit 1 to the Guadnola Declaration. The Settlement Agreement has been
approved by all of the named Plaintiffs, individually and in their capacity as Class
Representatives, and by the representatives of the City who participated in the mediation.
MEMORANDUM IN SUPPORT OF APPROVAL - 1 of 15
(99-2-00611-8)
[1241352 v6.docj
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA. WASHINGTON 88101.1157
(253) 8205500 - FACSIMILE (253) 620-6565
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Plaintiffs anticipate that the Yakima City Council will approve the settlement at its regularly -
scheduled hearing on October 7, 2003.
The settlement calls for entry of a judgment against the City of Yakima in the amount
of $13 million. The City will pay $7 million, in cash, into a trust account maintained by
Plaintiffs' Counsel. Upon such payment, the City will receive a partial satisfaction of
judgment and the Court will be asked to enter a stipulated order of dismissal which releases
the City from all further liability to the Class but does not affect the validity of the judgment.
Plaintiffs will then pursue the City's insurers to enforce the $6 million unsatisfied portion of
the judgment.
II. THE SETTLEMENT IS FAIR AND REASONABLE
Plaintiffs submit that the Court should approve the settlement with the City of Yakima
because it is reasonable and is fair to all Class Members. As the Court well knows, this case
is rife with issues of fact and issues of law that have been hotly contested by both sides.
Although Plaintiffs are confident they would ultimately prevail if the matter were tried, they
recognize that the City has many legitimate arguments it could advance at a trial. Neither
Plaintiffs nor the City could predict a favorable outcome from a trial with any degree of
certainty, and both sides would expend vast amounts of time and money taking this case
through a trial and the inevitable appeals.
Against this backdrop, a settlement guaranteeing the Class gross receipts of
$7 million, with a potential for additional millions recovered from the insurance companies, is
clearly reasonable. Plaintiffs' Counsel anticipate that, if this matter were to go to trial, they
would ask the jury for a total damage award of $20 million, of which approximately $6
million would be property damages and $14 million would be personal nuisance damages.
The guaranteed recovery of $7 million represents 35% of Plaintiffs' best case claim. In a case
of this magnitude, with such uncertainty as to factual and legal issues, that in and of itself is a
MEMORANDUM IN SUPPORT OF APPROVAL - 2 of 15
(99-2-00611-8)
[1241352 v6.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401-1157
(253) 620-6500 - FACSIMILE (253) 620-6565
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reasonable result. In this case, however, the Plaintiffs have the opportunity to recover several
million additional dollars from the insurers.
Thus, the gross settlement amount is fair and reasonable, and should be approved by
the Court.
III. THE PROPOSED PLAN OF DISTRIBUTION
Plaintiffs are proposing a Plan of Distribution that will distribute the settlement
proceeds in a manner that is fair and equitable to all members of the Class. The plan of
distribution is outlined in the Class Notice attached as Exhibit 2 to the Guadnoia Declaration.
As the Court knows, the Class that the Court certified in this case comprises all
persons who lived in the class area, or owned residential property in the class area, between
June 30, 1990 and the date Final Approval of the Settlement is granted, which is expected to
be late November 2003. As the Court also knows, however, the evidence amassed during the
discovery indicates that the impacts varied widely from year to year and within different
portions of the Class area. The plan of distribution takes those variations into account.
A. Compensation To Class Representatives And Original Plaintiff.
Plaintiffs first propose that the individuals who participated most actively in the
prosecution of this case be compensated for their effort. Some 140 individuals were named
plaintiffs in the original lawsuit and answered interrogatories propounded by the Defendants;
they should be paid $1,000 each as compensation for their efforts. Of these individuals, 20
were deposed prior to class certification; they should be given an additional $1,500 as
compensation for their time and services, for a total of $2,500 each. Finally, the eight Class
Representatives should each receive an additional $7,500, for a total of $10,000, as
compensation for their time and services. These Class Representatives spent a tremendous
amount of time on this case. In addition to answering interrogatories and being deposed prior
to class certification, they all had their depositions taken after the Class was certified. In
MEMORANDUM IN SUPPORT OF APPROVAL - 3 of 15
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[1241352 v6.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 88401.1157
(253) 820-8500 • FACSIMILE (253) 820.8585
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addition, they have participated in numerous meetings to discuss strategy and tactics, they
provided extensive assistance to Plaintiffs' Counsel in the gathering of facts, and they
participated in three different mediations.
B. Creation Of A Personal Nuisance Damages Fund And A Property Damages
Fund.
Plaintiffs propose that, after deduction of the above-described payments to individual
Class Members who contributed directly to the prosecution of this lawsuit and after deduction
of whatever attorneys' fees and costs the Court awards to Plaintiffs' Counsel, the balance of
the settlement proceeds be divided into two distinct funds. One fund, containing 70% of the
net proceeds, will be designated the Personal Nuisance Damages Fund and will be used to
compensate individuals for damages suffered while actually living in the class area. The
remaining 30% of the net settlement proceeds will be placed into the Property Damages Fund
and used to compensate property owners for the negative impact that the odors from the
wastewater treatment plant had on property values in the class area.
Dividing the net settlement proceeds on a 70/30 basis is entirely consistent with the
damage evidence Plaintiffs' Counsel intended to offer at trial and with the arguments they
intended to advance to the jury. Plaintiffs' Counsel believe the most telling evidence of
property damage comes from their real estate expert, Dr. Mundy. His calculations, which are
included in Exhibit 4 to the Guadnola Declaration, show cumulative property damages
ranging from $4.5 million of loss if value in 2002 was the sole element considered to $13
million if loss of use and interest on loss of use were also considered. Plaintiffs' Counsel
would have argued that this analysis supported a reasonable award of $6 million for property
damages. Plaintiffs' Counsel also intended to argue to the jury that total damages for the
Class should be in the vicinity of $20 million. Thus, Plaintiffs anticipated arguing at trial that
70% of total damages would be attributed to personal nuisance injury and 30% to loss in
MEMORANDUM IN SUPPORT OF APPROVAL - 4 of 15
(99-2-00611-8)
[1241352 v6.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401-1157
(253) 620.6500 - FACSIMILE (253) 620.6565
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property value. Accordingly, that is an appropriate basis for allocating the net settlement
proceeds between the two types of damages.
C. The "Time/Impact" Adjustment.
Payments from the Property Damages Fund will go to entities or individuals who
owned property in the class area during the class period. Payments from the Personal
Nuisance Damages Fund will go to individuals who lived in the class area during the class
period. Plaintiffs are proposing that, in both cases, adjustments be made to assure that the
individual payments are equitably distributed. The first adjustment takes into account both
the length of time covered by a particular claim and the relative impact of odors from the
treatment plant in the specific years included in the claim. Each month during the period from
June, 1990 through May, 1995 will be given a value of 1. Each month for the period from
June, 1995 through October, 2000 will be given a value of 3, and each month from November
2000 through the date of Final Approval will be given a value of 1. This "time/impact"
adjustment produces a "time/impact" value for each claim that is consistent with the evidence
developed during discovery and with the rulings of the Court on several legal issues.
The Court has ruled that inverse condemnation claims extend back to the beginning of
the class period, in June of 1990. There is substantial anecdotal evidence indicating that the
odor problems were quite significant between June 1990 and June 1995. However, it is well-
established law that, in a case such as this, inverse condemnation damages are measured at the
time of trial. The evidence adduced by Plaintiffs' experts indicated that the impact on
property damages was relatively constant prior to 1995 and that it abated to a significant
degree by 2003.1 Therefore, it seems inappropriate to give the early months of the inverse
condemnation damage period any heavier weighting despite the severity of the odors at that
time.
See Mundy Report attached as Exhibit 4 to Guadnola Declaration.
MEMORANDUM IN SUPPORT OF APPROVAL - 5 of 15
(99-2-00611-8)
[1241352 v6.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401-1157
(253) 820-8500 - FACSIMILE (253) 8208585
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The Court has also ruled that the statute of limitations cuts off any claim for personal
nuisance damages prior to June of 1995.2 Therefore, no matter how severe the odors were
between 1990 and June of 1995, no class member has a claim for personal nuisance damages
m those years. This, too, makes it inappropriate to attach any weight to those earlier months.
The period from June 1995 through October 2000 is given substantially greater
"time/impact" value in computing damages. This weighting is based on the Court's statute of
limitations rulings, as indicated above. It is also based on the substantial body of anecdotal
evidence indicating that odors were particularly severe during this time period. The ill-fated
composting project that triggered an uproar in the class area and ultimately led directly to this
lawsuit took place in the summer of 1995. Biosolids stored on the ground at the wastewater
treatment plant were a constant source of odor, and that storage continued until the fall of
1998. The sprayfields were another constant source of odor, and their use was not
discontinued until October 2000. Therefore, Plaintiffs believe the evidence they would
present at trial establishes that the people who lived in the class area between June 1995 and
October 2000 suffered the most intense odors that could be proven. This clearly justifies a
"time/impact" adjustment that gives extra weight to the months during that period for
purposes of allocating personal nuisance damages.
It also is appropriate to weight those months for purposes of allocating property
damages. Anyone who sold property in the class area during that time would undoubtedly
have received substantially less for his or her property than would have been the case in the
absence of the odors. In addition, Plaintiffs' real estate expert concluded that owners of real
property in the class area suffered significant damages as a result of loss of use of their
property.3 This component of property damage is cumulative, calculated on a year -by -year
2 Order entered February 14, 2003.
3 See Mundy Report attached as Exhibit 4 to Guadnola Declaration.
MEMORANDUM IN SUPPORT OF APPROVAL - 6 of 15
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[1241352 v6.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401-1157
(253) 620-6500 - FACSIMILE (253) 620-6585
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basis. The people who owned property in the class area during the period 1995 through
October 2000 incurred significantly greater loss of use damages than did people who owned
property after that time period.
The "time/impact" adjustment is implemented by multiplying the number of months a
claimant lived in or owned property in the class area by the "time/impact" value of 1 or 3
attributed to those specific months. Everything else being equal, an individual who, for
example, owned a specific parcel of property for two years in the period between June 1995
and October 2000 would receive three times as large an award of property damages as would
an individual who owned the same piece of property for two years prior to June 1995 or after
October 2000. Similarly, everything else being equal an individual who, for example, lived at
a specific address for two years during the period from April 1995 to October of 2000 would
receive an award of personal nuisance damages three times greater than would be given to an
individual who lived at the same address for two years prior to June 1995 or after October
2000.
D. The "Proximity" Adjustment,
Plaintiffs are also proposing a "proximity" adjustment, whereby claims are weighted
in accordance with the proximity of the specific property involved to the wastewater treatment
plant. Plaintiffs propose that the class area be divided into three Zones. The Zones are
consistent with the computer modeling done by Plaintiffs' odor dispersion expert, Palo
Zannetti, when he estimated the impact of odors from the treatment plant. Dr. Zannetti
created isopleths, which are computer-generated maps. One isopleth shows the peak
concentrations in the class area for odors from the treatment plant; a second isopleth shows
peak concentrations of odors from the sprayfields. Copies of these two isopleths are attached
as Exhibit 5 to the Guadnola Declaration.
MEMORANDUM IN SUPPORT OF APPROVAL - 7 of 15
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[1241352 v6.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2200
POST OFFICE BOX 1157
TACOMA. WASHINGTON 58401-1157
(253) 620-6500 - FACSIMILE (253) 520-9585
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Dr. Zannetti's modeling shows that the most severe odor impacts fell on the portion of
the class area immediately west of the treatment plant and sprayfields. That area has been
designated Zone 1 by the Plaintiffs. According to Dr. Zannetti's modeling the next most
severe impacts were felt in the northwest corner of the class area and in that portion of the
class area south of Zone 1 to the Valley Mall Boulevard. That area has been designated Zone
2 by the Plaintiffs. Finally, the least significant odor impacts would have been felt in that
portion of the class area south of Valley Mall Boulevard, which has been designated Zone 3
by the Plaintiffs. All three Zones are shown on the map attached as Exhibit 6 to the Guadnola
Declaration.
In addition to distinguishing the three Zones, it is necessary to determine what relative
value should be assigned to the three Zones. Reference to Dr. Zannetti's modeling is helpful
on this portion of the analysis as well. His analysis consistently shows that if a particular
release of odors from the wastewater treatment plant is rated at an intensity of 5 in Zone 1 it
would be rated at an intensity of 2 in Zone 2 and at an intensity of 1 in Zone 3.4 Therefore,
Plaintiffs' proposed plan of distribution allocates damages among the three Zones in that same
ratio. In other words, assuming everything else is equal claimants in the different Zones
would receive awards which bore the same relationship as is shown in Dr. Zannetti's study.
For every $500 awarded to a claimant in Zone 1, an identically situated claimant in Zone 2
would receive $200 and an identically situated claimant in Zone 3 would receive $100. Stated
differently, every $800 in settlement proceeds distributed would go $500 (62.5%, or 5/8) to
claimants in Zone 1, $200 (25%, or 2/8) to claimants in Zone 2, and $100 (12.5% or 1/8) to
claimants in Zone 3.
a See Zannetti isopleths, Ex. 5 to Guadnola Declaration.
MEMORANDUM IN SUPPORT OF APPROVAL - 8 of 15
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[1241352 v6.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA. WASHINGTON 86401-1157
(253) 620-6500 - FACSIMILE (253) 620-8585
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E. Computing individual Awards.
Once all of the above adjustments have been made, and all claim forms. have been
submitted and processed, determining the specific award for any particular claimant is a
matter of relatively straightforward arithmetic. Each claim is given a "time/impact" value that
reflects the specific months covered by the claim and the weight given to ,those months. For
property damage calculations, this "time/impact" value would be multiplied by the assessed
value of the specific piece of property in the most recent Yakima County records, and the
result would in turn be multiplied by the percentage applicable to the Zone in which the
property fell. All of the property damage claims would be added together, and each claim
would be converted to a percentage of the aggregate amount.
11«1 other ..,cords, if u e total of all of the claims computed with the formula
["time/impact" value x "assessed" value x "proximity" percentage] equaled 500 and the same
calculations applied to a specific property equaled 5, that property would be awarded 1% of
the total Property Damages fund.
A substantially identical calculation would be done for each personal nuisance claim,
the only differences being that the time period would not extend prior to April of 1995 and
would nn adjustment for assessed value. Each Personal Nuisance Damages claim's
there •�vuau be nwv J»...,..��--- -�- -- - ------
relative value would be determined by calculating the "tine/impact" value of the claim and
multiplying it by the appropriate "proximity" percentage. Again, the results of all these
calculations would be added up and each individual claim value would be converted to a
percentage of the total value. As was true in the case of property damage awards, if the total
of all Personal Nuisance Damages calculations equaled 1,000 and the value attached to an
individual claim was 20, that claimant would be awarded 2% of the Personal Nuisance
Damages Fund.
Plaintiffs believe the Court should approve this plan of distribution because it will
fairly and equitably distribute settlement proceeds among claimants, reflecting the nature of
MEMORANDUM IN SUPPORT OF APPROVAL - 9 of 15
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LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401.1157
(253) 820-8500 - FACSIMILE (253) 620-8585
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damages each claimant suffered, the period of time during which those damages were
incurred, and the intensity of the damages as measured by proximity to the wastewater
treatment plan.
IV. UNION GAP SETTLEMENT
As the Court will recall, Plaintiffs settled with the City of Union Gap for a total of
$200,000 in a settlement approved February 14, 2003. As part of that settlement, Plaintiffs
agreed that the net proceeds of the settlement would be distributed entirely to individuals
living south of Valley Mall Boulevard, the area now designated by Plaintiffs in the Plan of
Distribution as Zone 3. Plaintiffs' proposed Plan of Distribution implements that agreement.
Plaintiffs propose that the $200,000 settlement fund received from the City of Union
Gap be treated identically to the $7 million settlement fund received from the City of Yakima.
Plaintiffs' Counsel will request fees and costs, and whatever amount the Court awards will be
computed as a percentage of the aggregate $7.2 million in settlement funds. Both funds will
then be reduced by the same percentage, to assure that the class members in the north do not
carry a disproportionate share of the costs of the litigation. Once the net value of the Union
Gap settlement has been determined, the funds will be distributed among claimants living or
owning property in Zone 3. The calculations will be identical to the calculations used for
distributing the City of Yakima's settlement, except that each claim will be valued as a
percentage of the total of Zone 3 claims instead of as a percentage of the total of claims from
all three Zones.
V. RELEASE OF CLAIMS
The proposed settlement, if approved by the Court, will provide fair and reasonable
compensation to class members. It will also provide the finality that the City of Yakima and
Del Monte Corporation need. The settlement agreement will extinguish all claims of all class
members relating to odors emitted from the wastewater treatment plant at any time up to the
MEMORANDUM IN SUPPORT OF APPROVAL - 10 of 15
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LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA.
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2200
POST OFFICE BOX 1157
TACOMA. WASHINGTON 08401.1157
(253) 620-6500 - FACSIMILE (253) 820.6585
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date of Final Approval. It will also bar class members and future owners of property in the
class area from asserting any claim for inverse condemnation as a result of odors emitted from
r 'C_ additional .t
the wastewater treatment plant in the future, unless the odors result from specific additional
of t a �t....,� and exceed the level of odors
acts or omissions in the City's operation the treatment plant exceed level odors
that occurred dining the three years preceding the settlement. This gives. the City assurance
that it can continue to run the plant, with all the operational improvements implemented up
through October 2000 when the sprayfields were taken out of commission, without concern
about ongoing liability.
The Settlement Agreement also releases all claims against Del Monte Corporation. As
the Court knows, Del Monte entered into a settlement agreement with the City of Yakima
some three years ago. Under the terms of that agreement, Del Monte paid Yakima $500,000
and Yakima agreed to indemnify Del Monte from any additional exposure to Plaintiffs in the
underlying litigation. Although Del Monte is not contributing directly to the present
settlement, it is clear that the $500,000 payment has had the effect of freeing up additional
monies for the City of Yakima to contribute to the settlement which otherwise would not have
been available. Therefore, Plaintiffs submit that the Settlement Agreement includes sufficient
consideration to release Del Monte.
VI. ATTORNEYS' FEES AND COSTS
Plaintiffs' Counsel are not asking for a specific award of fees and costs at this time.
However, they expect to ask for such an award at about the same time as they ask for final
approval of the Settlement Agreement. Counsel will ask for reimbursement of all of their out-
of-pocket expenses, which currently exceed $1 million and will ultimately include the costs of
administering the claims process. Counsel will also ask for a fee equal to one-third of the net
settlement proceeds after payment of compensation to the original Plaintiffs and Class
Representatives, reimbursement of costs, and payment of claim administration costs. Counsel
MEMORANDUM IN SUPPORT OF APPROVAL - 11 of 15
(99-2-00611-8)
[1241352 v6.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401.1157
(253) 820-8500 - FACSIMILE (253) 820$585
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will submit a detailed petition which is expected to show that the hours spent on this case, if
billed at the attorneys' normal hourly rates, would have produced a fee equal to or greater
than the percentage fee requested.
VII. CLASS NOTICE
Finally, Plaintiffs are moving the Court for approval of two forms of notice to class
members. These forms are attached as Exhibits 2 and 3 to the Guadnola Declaration. The
short form, Exhibit 3, is intended for publication in the Yakima Herald Republic and in La
Voz. The long form will be mailed to all current owners of residential real property in the
class area, all known residents of the class area, and all known former owners of residential
property in the class area. Plaintiffs are working with their real estate expert, Dr. Mundy,
with defense counsel and with the Yakima County Assessor's Office to generate the mailing
list for the notice. Plaintiffs have also arranged for translation of both forms of notice, so that
they can be published and mailed in both English and Spanish. Copies of the translated
notices are attached as Exhibit 7 to the Guadnola Declaration.
Plaintiffs submit that the forms of notice should be approved by the Court. They have
been reviewed and approved by defense counsel and the City of Yakima. The proposed
notices fairly and accurately apprise class members of the terms of the settlement, of their
rights under the Settlement Agreement, of the anticipated request for attorneys' fees and costs,
of the proposed Plan of Distribution, and of the fact that an additional hearing will be held to
consider any objections that may be made. The notices also advise class members that there
will be two "town hall" meetings conducted by Plaintiffs' Counsel to answer questions about
the settlement and provide assistance in completing claims forms. Interpreters will be present
at the meetings to assist Spanish-speaking claimants.
MEMORANDUM IN SUPPORT OF APPROVAL - 12 of 15
(99-2-00611-8)
[1241352 v6.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON 8 DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401.1157
(253) 620-6500 - FACSIMILE (253) 620-6565
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VTH. ARGUMENT
This motion requests that the Court preliminarily approve the proposed class
settlement and Plan of Distribution and establish the procedure to be utilized in the Court's
settlement war Plan -- - - •
determination of whether the proposed settlement and Plan of Distribution should receive
final approval from the Court.
Approval of class action settlements involves a two-step
process. First, counsel submit the proposed terms of settlement
and the court makes a preliminary fairness evaluation....
If the preliminary evaluation of the proposed settlement does
not disclose grounds to doubt its fairness or other obvious
deficiencies ... the court should direct that notice under Rule
23(e) be given to the class members of a formal fairness
hearing, at which arguments and evidence may be presented in
support of and in opposition to the settlement.
MANUAL FOR COMPLEX LITIGATION § 30.41 at 236-237 (3rd Ed. 1995).
Thus, the present motion before the Court focuses on two basic questions. The first
question is Does the settlement appear fair? "In evaluating the settlement, the judge should
keep in mind the unique ability of class and defense counsel to assess the potential risks and
rewards of litigation; a presumption of fairness, adequacy and reasonableness may attach to a
class settlement reached in arms -length negotiations between experienced, capable counsel
after meaningful discovery." Id. § 30.42 at 240. There is a "strong judicial policy that favors
settlements, particularly where complex class action litigation is concerned." Class Plaintiffs
v. Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992), cert. denied, 506 U.S. 953, 121 L. Ed. 2d 333,
113 S. Ct. 408 (1992). Here, the parties have had extensive involvement in this litigation for
some five years. The evidentiary record, both documentary and testimonial, is massive.
Plaintiffs and the settling defendants are well aware of the facts, legal theories, and defenses
asserted by each party.
MEMORANDUM IN SUPPORT OF APPROVAL - 13 of 15
(99-2-00611-8)
[1241352 v6.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401-1157
(253) 620.5500 - FACSIMILE (253) 820-6505
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The Class will receive a Notice of Proposed Final Settlement and Plan of Distribution.
Class members will have the opportunity to submit written objections to the proposed
settlement and to appear at the Fairness Hearing in order to voice their opinion concerning the
fairness and reasonableness of the proposed settlement.
Consistent with the requirements of the law, the proposed settlement is fair and
reasonable, the class members will be fully informed of the settlement, and they will be given
an opportunity to object. The class representatives fought hard to obtain the maximum
possible recovery for the class members and, in so doing, received a valuable settlement. This
compromise between the Plaintiffs and the City of Yakima is reasonable and the Court should
preliminarily approve the proposed settlement.
The second question is whether the proposed Class Notice adequately informs
prospective class members of the settlement and its ramifications. Boggess v. Hogan, 410 F.
Supp. 433, 442 (N.D. Ill. 1975). Every known class member will receive a Notice of
Proposed Final Settlement and Plan of Distribution. The Notice will reasonably apprise class
members of the settlement, of their options, and of the consequences of their choices. A
summary of that Notice will also be published in local newspapers. The proposed Notice
fully and accurately advises class members of the terms of the proposed settlement, the Plan
of Distribution, their right to object to or comment upon the settlement and Plan of
Distribution, and the legal consequences of the settlement.
This Court has broad discretion with respect to the procedure for the notice in class
action litigation. CR 23(e). In exercising this discretion, the Court must ensure that class
members are provided with all essential information concerning the litigation. The proposed
Notices expressly accomplish that goal.
MEMORANDUM IN SUPPORT OF APPROVAL - 14 of 15
(99-2-00611-8)
[ 1241352 v6.docj
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2200
POST OFFICE BOX 1157
TACOMA. WASHINGTON 98401-1157
(253) 020.6500 - FACSIMILE (253) 620.0565
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II
IX. CONCLUSION
The proposed settlement, if approved by the Court, will bring an end to more than five
years of intense and costly litigation. It is a fair and reasonable compromise of the claims of
the class members, providing class members with reasonable compensation and providing the
City of Yakima and Del Monte with finality. The proposed Plan of Distribution is carefully
constructed to make sure that settlement proceeds are distributed equitably among class
members. The proposed Class Notices are clear and unambiguous in the information and
instructions given to prospective class members. For all of these reasons, Plaintiffs
instructions o-1......, �.. ...� ... r---!" -- --
respectfully urge the Court to preliminarily approve the Settlement Agreement and the
proposed Plan of Distribution, to approve the proposed forms of Class Notice, and to set a
hearing for Final Approval of the Settlement Agreement more than 30 days after entry of the
Order granting preliminary approval.
RESPECTFULLY SUBMITTED this / c)- day of October, 2003.
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
..41169
Malanca, WSBA No. 01226
C. Guadnoia, WSBA No. 08636
enneth G. Kieffer, WSBA No. 10850
Bradley B. Jones, WSBA No. 17197
Timothy L. Ashcraft, WSBA No. 26196
Attorneys for Plaintiffs
MEMORANDUM IN SUPPORT OF APPROVAL - 15 of 15
(99-2-00611-8)
[1241352 v7.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401-1157
(253) 8208500 - FACSIMILE (253) 820-6565
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g4* 1VED
OCT
e " Z003
LcUAL DEPT
SUPERIOR COURT OF THE STATE OF WASHINGTON
FOR YAKIMA COUNTY
WILFRED AND KAREN MURPHY, husband
and wife, et al.,
Plaintiffs,
vs.
CITY OF YAKIMA, a Washington municipal
corporation, et al,
Defendants.
NO. 99-2-00611-8
DECLARATION OF JOHN C.
GUADNOLA IN SUPPORT OF
MOTION FOR PRELIMINARY
APPROVAL
ASSIGNED TO THE HONORABLE
SUSAN L. HAHN
HEARING DATE: October 10, 2003
I, John C. Guadnola, declare under penalty of perjury under the laws of the State of
Washington as follows:
1. I am a partner in the firm of Gordon, Thomas, Honeywell, Malanca, Peterson
& Daheim, LLP and am one of the attorneys principally responsible for representing Plaintiffs
in the above -captioned litigation. I make this Declaration of my personal knowledge.
2. Attached to this Declaration as Exhibit 1 is a true and correct copy of the
Settlement Agreement between Plaintiffs and the City of Yakima. The Settlement Agreement
has been approved by all Class Members, by all attorneys involved in the matter, and by
certain officials of the City of Yakima. It is anticipated that the full City Council will approve
the settlement at its regularly -scheduled meeting on October 7, 2003.
GUADNOLA DECLARATION - 1 of 2
(99-2-00611-8)
[ 1241418 v5.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401-1157
(253) 620-6500 - FACSIMILE (253) 620-8565
3. Attached to this Declaration as Exhibit 2 is a true and correct copy of the
proposed form of Class Notice to be mailed to Class members.
4. Attached to this Declaration as Exhibit 3 is a true and correct copy of the
proposed published Class Notice to be published in the Yakima Herald Republic the La Voz or
other newspapers of general circulation the Court deems appropriate.
5. Attached to this Declaration as Exhibit 4 are excerpts from the expert report of
Dr. William Mundy, Plaintiffs' real estate expert.
6. Attached to this Declaration as Exhibit 5 are true and correct copies of two
computer-generated maps, known as isopleths, created by Dr. Palo Zannetti. These isopleths
were Figure 20 and Figure 21 in Dr. Zannetti's final report. They show the relative strengths
of odors in the different portions of the class area, as computed by Dr. Zannetti. These
isopleths, along with the balance of Dr. Zannetti's work, are the basis for Plaintiffs'
recommendation that the class area be divided into Zones 1, 2 and 3 for purposes of allocating
settlement proceeds.
7. Attached to this Declaration as Exhibit 6 is a true and correct copy of a map of
the class area showing proposed Zones 1, 2 and 3.
I declare under penalty of perjury under the laws of the State of Washington that the
foregoing is true and correct.
Dated this / ' day of October, 2003 at Tacoma, Washington.
GUADNOLA DECLARATION - 2 of 2
(99-2-00611-8)
[1241418 v5.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401-1157
(253) 6208500 - FACSIMILE (253) 820-8585
SETTLEMENT AGREEMENT
WHEREAS, Representative Plaintiffs Martin Cuevas, Karen Cuevas, Daniel
Martinez, Karen Murphy, Willie Murphy, Darlene Ryan, and Verla Row have brought suit,
individually and on behalf of the residential class certified by the Court against the City of
Yakima in the action presently pending in the Superior Court of Washington, Yakima County,
styled Murphy, et al. v. City of Yakima, et al., Cause No. 99-2-00611-8 (the "Action"), alleging
injury and damage to Representative Plaintiffs and members of the class of persons and
residential property owners in the vicinity of the City of Yakima's Wastewater Treatment Plant
and adjacent Industrial Sprayfield ("WWTP"); and
WHEREAS, in April 1999, Representative Plaintiffs and Class Members on behalf of
themselves and others similarly situated, filed a class action complaint against defendant City of
Yakima (the "City") and Del Monte Corporation, a New York corporation ("Del Monte
Corporation") asserting causes of action for negligence, nuisance, trespass, and inverse
condemnation as a result of the odors originating from the WWTP. Representative Plaintiffs and
Class Members asserted, among other things that, as a result of negligent operation of the
WWTP, including the collection, transportation and storage of biosolids, odors emanating from
the WWTP afflicted the entire Class Area and occurred with such frequency and were of such
intensity and duration as to interfere with the Representative Plaintiffs' and Class Members' use
and enjoyment of their property, adversely impacting property values and causing personal
discomfort, anxiety, stress, headaches, nausea and other adverse health effects; and
WHEREAS, on December 14, 2000, Representative Plaintiffs and Class Members filed a
motion to certify the class against the City and Del Monte Corporation. On April 19, 2001, the
Court granted Plaintiffs' Motion for class certification; and
WHEREAS, on June 15, 2001, the Representative Plaintiffs mailed and published a
notice of pendency of class actions to members of the certified class; and
WHEREAS, the City and Del Monte Corporation deny the allegations made against it in
the Action; and
WHEREAS, the Parties recognize the existence of disputed issues of law and fact
regarding the allegations in the Action; and
WHEREAS, the Parties wish to avoid the expense and risk involved in continued
litigation over the matters alleged in the Action, and instead wish to compromise and settle the
various disputes arising in connection therewith.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, the Parties agree as follows:
DEFINITIONS
"Action" means Murphy, et al. v. City of Yakima, et a1., Yakima County Superior Court
Cause No. 99-2-00611-8.
"Administrative Expenses" means expenses incurred in the administration of this
Settlement as provided herein or as otherwise allowed by the Court.
"Claim(s)" means any administrative or tort claim or any lawsuit filed with or against the
City or Del Monte Corporation with regard to actions or failures to act relating to, arising out of,
concerning or caused by the WWTP up through and including the date of Final Approval.
"Claim(s)" includes, but is not limited to, the City's alleged acts and omissions of negligence and
failure, in the construction, operation, maintenance, and repair of the WWTP up through and
including the date of Final Approval, to comply with the applicable standard of care for the
design, construction and operation of a waste water treatment plant, including but not limited to
the collection, transportation and storage of biosolids; or any other common law, statutory or
regulatory cause of action.
"Class Area" means the area shown on the map attached hereto as Exhibit A, as legally
described on Exhibit B attached hereto.
"Class Members" means all persons and entities, including minors, who: (a) reside in or
own residential property, or who have resided in and/or owned residential property within the
Class Area at any time between June 30, 1990 and the date of Preliminary Approval of this
Settlement and who have not previously opted out of the class (the "Class").
"Common Fund" means the fund established pursuant to paragraph 2 of this Agreement.
"Plaintiffs' Counsel" means Albert R. Malanca, Kenneth G. Kieffer, John C. Guadnola,
Bradley B. Jones, Timothy L. Ashcraft, Joan C. Foley, and the law firm of Gordon, Thomas,
Honeywell, Malanca, Peterson & Daheim LLP.
"Court" means the Superior Court of Washington, Yakima County, or other Court
properly acquiring jurisdiction over the Action.
"Odors" shall be given the broadest possible interpretation, including without limitation,
any and all airborne odors of any kind to humans, animals, plants, or the environment, and any
effects of odors including any kind of annoyance, discomfort, or adverse effects on body, mind,
spirit, health, property, air, quality of life, enjoyment of life, or other interests, relating to, arising
out of, concerning or caused by the WWTP prior to Final Approval regardless of whether such
Odors are tangible or intangible.
"Final Approval" means the date by which all of the following have occurred: (1) the
Court has entered an Order finally approving this Settlement in a form to be agreed upon by the
Parties; and (2) the applicable time period for filing appeals or requests for review of said Order
has passed without any appeals or requests for review being filed, or if appeals or requests for
review are filed, the entry of orders affirming said Order or denying review after exhaustion of
all appellate remedies.
"Parties" mean the Representative Plaintiffs, the Class Members, and the City of Yakima.
"Preliminary Approval" of this Settlement means the Court's entry of an order
preliminarily approving this Settlement and authorizing notice to the Class. The Parties shall use
good faith efforts to agree upon the form of the order and of the notice. In the event the Parties
cannot agree, they shall both submit their proposed orders and notices to the Court and the Court
shall decide the form of the order and notice.
"Released Parties" shall mean the City of Yakima and Del Monte Corporation, each and
every one of their departments, divisions, agencies, commissions, boards, subdivisions, owners,
officers, directors, employees, attorneys, elected officials, predecessors, heirs, successors and
assigns. It is the intention of the Parties that this term be given the broadest possible
interpretation.
"Representative Plaintiffs" means Martin Cuevas, Karen Cuevas, Daniel Martinez, Karen
Murphy, Willie Murphy, Darlene Ryan, and Verla Row.
"WWTP" means the Yakima Regional Wastewater Treatment Plant, its collection and
transportation facilities, and the former operation of the adjacent Industrial Sprayfields,
composting facility, and outdoor biosolids storage area.
TERMS AND CONDITIONS OF SETTLEMENT
1. Purpose. This Settlement and Settlement Agreement are intended solely for the
purpose of compromising disputed claims and potential claims and avoiding the risk and expense
of continued litigation. This Settlement and Settlement Agreement are not, and shall not be
construed or characterized as, an admission of wrongdoing of any kind on the part of any Party,
nor does any Party admit or concede the validity of any claim or defense asserted by any other
party in the Action.
2. Settlement Amount. The City agrees and stipulates to the entry following Final
Approval of a judgment in the amount of Thirteen Million and No/100 Dollars ($13,000,000)
in favor of Representative Plaintiffs and the Class Members. A copy of the judgment is attached
as Exhibit C. The City shall arrange for payment to the trust account of Gordon, Thomas,
Honeywell, Malanca, Peterson & Daheim, LLP, the sum of Seven Million and No/100 Dollars
($7,000,000) in trust for the Class Members ("The Common Fund"), which, together with the
judgment referenced above and Plaintiffs pursuit of claims against policies of insurance
referenced below, shall constitute full and final Settlement of the Action. These funds shall be
paid on the latter of Final Approval or December 15, 2003, provided, however, that if Final
Approval occurs before December 15_, 2003 and the City, using its best efforts, has not
completed financing its payment obligation hereunder, it may extend its payment date an
additional two weeks to December 29, 2003. The Representative Plaintiffs and Class covenant
not to execute against the Released Parties for any amounts of the judgment in excess of Seven
Million and No/100 Dollars ($7,000,000) except against those insurers who issued policies of
insurance to Yakima between 1997 and 2001.
3. No Assignment of Policies; Continued Prosecution of Insurance Litigation. By
this Settlement, the City is not assigning its insurance policies to the Class and the City may
continue to pursue its claims against its insurers. Plaintiffs and the City shall maintain their
current lawsuits against the City's insurance carriers. The City shall retain full authority and
responsibility for its pending appeal of its lawsuit against its insurers throughout the appellate
process including but not limited to any motions for reconsideration, rehearing en banc and
otherwise. If and only if the City's pending appeal is successful and results in a remand to the
district court for further proceedings, Plaintiffs agree that Plaintiffs' Counsel may elect to assume
responsibility for further prosecution of the action. If Plaintiffs' Counsel so elect, they will
manage both the remanded federal court action and at their sole discretion, the declaratory
judgment action in Yakima County Superior Court; provided, however, that the City may •
associate as co -counsel with Plaintiffs' Counsel in the lawsuits and may, at its election, prosecute
the lawsuits at the City's sole cost and expense should Plaintiffs' Counsel decline to do so.
a Allocation of insurance Recoveries. Plaintiffs and the City agree that they
will share any proceeds recovered from the City's insurance carriers by settlement, judgment or
otherwise. The proceeds from a resolution of either or both insurance lawsuits will be
collectively allocated as follows:
(a) With respect to the recovery of any "net proceeds" at or under
$1,000,000, the City shall be entitled to the first $500,000 of the net proceeds, which shall be
considered as partial recovery to the City for amounts paid to Plaintiffs in settlement and./or costs
and fees previously incurred, as will all other monies allocated to the City under this paragraph.
The Plaintiffs shall be entitled to the next $500,000 in partial satisfaction of their judgment.
Thereafter, with respect to any recovery of net proceeds between $1,000,000 and $3,000,000, the
Plaintiffs shall recover 80% of the net proceeds and the City shall recover 20%; provided,
however, Plaintiffs' Counsel shall not receive any attorney fees from the City's 20% recovery.
With respect to the recovery of any net proceeds above $3,000,000 the Parties shall split the
recovery equally. Plaintiffs' Counsel shall be entitled to recover attorney fees from any recovery
of net proceeds above $3,000,000 as follows: (1) a 1/3 contingent fee from the City's share, and
� the !"�---- regarding Class Plaintiffs' share. "Net
(2) whatever fee is approved and set by the Court the Class t lain iffy Net
proceeds" is defined as gross proceeds less reasonable costs and expenses actually incurred after
the date the Final Settlement Documents are executed (but not legal fees).
(b) Neither the City nor the Plaintiffs shall settle and compromise their
respective lawsuits without the other's consent unless the settlement exceeds $900,000. As to
any settlement in excess of $900,000, either the City or Plaintiffs may accept the settlement and
bind both Parties, with the settlement proceeds being dispersed as provided in this Agreement.
For settlement proposals by the insurers at or in excess of $1,000,000, either Party shall have the
option to buy out the Party wishing to settle by paying that Party's share of the proposed
settlement amount and may thereafter continue the prosecution of the respective insurance carrier
lawsuit.
5. Administration. All costs or expenses incurred in administering this Settlement,
including without limitation the cost of providing notice to the Class and any expenses incurred
in connection with the division and distribution of the Common Fund, shall be paid from the
Common Fund. The City shall have no obligation whatsoever to pay any sum for such
administrative costs and expenses, except that each party shall be responsible for its own
attorneys' fees, costs, and expenses incurred in defending the Action, negotiating this
Agreement, and performing any obligations as set forth in this Agreement unless expressly
provided otherwise in this Agreement. Representative Plaintiffs, Class Members, and Plaintiffs'
Counsel shall be solely responsible for complying with any tax laws or other laws relating to
administration or distribution of the Common Fund.
6. Court Approval of Settlement. The Parties shall take all reasonable measures
necessary to secure Final Approval of this Settlement as required by CR 23 or other applicable
legal authority including but not limited to RCW 4.22 et seq. Plaintiffs' Coupsel shall promptly
file with the Court a Motion for Preliminary Approval and any necessary supporting papers,
asking the Court to enter an order, following approval by the City Council, in a form to be agreed
upon by the Parties. The Parties shall use their best efforts to agree on a form of the Motion for
Preliminary Approval. The City may file with the Court such additional papers in support of the
Motion for Preliminary Approval as it deems necessary or appropriate, in its sole discretion. If
the Parties cannot agree on the form of a Motion for Preliminary Approval, each party may
submit its own version to the Court. Plaintiffs' Counsel shall, at the appropriate time following
Preliminary Approval, prepare and file with the Court a Motion for Final Approval, and any
necessary supporting papers, asking the Court to enter an Order finally approving the Settlement
("Settlement Order") and Order of Dismissal in a form to be agreed upon by the Parties. The
Parties shall use their best efforts to agree on a form of the Motion for Final Approval. The City
may file with the Court such additional papers in support of the Motion for Final Approval as it
deems necessary or appropriate, in its sole discretion, subject to the provisions set forth above. If
the Parties cannot agree on the form of a Motion for Final Approval, each party may submit its
own version to the Court. In the event Final Approval is not obtained, the Parties shall make all
reasonable efforts to negotiate a new settlement agreement that will meet with approval of the
Court. In the event this Settlement is not approved and the Parties are not able to negotiate a new
one, the Parties shall so notify the Court and proceed with the Action. Any pleadings submitted
or statements made pursuant to this paragraph are settlement communications subject to
Evidence Rule 408. In the event Final Approval is not achieved, the Parties agree that nothing
contained in this Settlement Agreement, Plaintiffs' Counsel's or The City's pleadings or oral
statements submitted pursuant to this paragraph may be used, quoted, referenced, or admitted in
the Action or any other litigation.
7. Fees and Costs of Plaintiffs' Counsel. Plaintiffs' Counsel shall apply to the Court
for an award of fees, expenses and costs, which shall be paid from the Common Fund established
under Paragraph 2 above. Aside from their obligations to pay into the Common Fund the
Settlement Amount referenced in paragraph 2 and pay attorneys' fees as provided in paragraphs
4 and 19, the City shall not have any obligation whatsoever to pay any sum for attorneys' fees,
expenses or costs claimed by Representative Plaintiffs, Class Members and/or Plaintiffs' Counsel
in connection with the Action including but not limited to any costs incurred by Representative
Plaintiffs or Plaintiffs' Counsel. The City shall not oppose the application for award of
reasonable fees, expenses or costs, and any future application for reasonable fees, expenses, or
costs; provided, however, that this agreement not to oppose such an award does not apply to an
application for fees, expenses or costs sought by any of the Parties for an alleged breach of this
Settlement Agreement.
8. Dismissal of Action. In consideration of the confession of judgment and payment
of the above amount, Representative Plaintiffs and Class Members shall dismiss the Released
Parries with prejudice and without costs to any Party. Plaintiffs' Counsel shall execute the
Stipulation and Order of Dismissal attached hereto as Exhibit D within fifteen (15) days after
Final Approval.
9. T _l..__ , f All Cl.. .. L... Rep «t..ti a Dl.. «+:FF «.i !'1.. Membe EFF cti.
1<GIGGJG Vl I111 \..10.LL11J V Y 1\G�JrGjG11l0.0 YG 1 latuu11J a11LL \�10.JJ 1V1G111VG110. L11GG11 Y4
upon Final Approval of this Settlement Agreement, the Representative Plaintiffs, Class Members
discharge,
r t Released
� T__a: __ from
1
and each of them hereby release, discharge, and forever acquit the Released Parties from any and
all claims, demands, damages, actions, causes of action or suits of any kind or nature whatsoever,
as alleged or as could have been alleged in the Action, whether in law or equity, arising out of or
relating in any way to (1) Odors; or (2) the allegation that Representative Plaintiffs and/or Class
Members have been damaged by operation of the WWTP as a result of residing or owning
residential property in the Class Area prior to Final Approval; or (3) operation of the WWTP
prior to Final Approval, including, without limiting the generality of the foregoing, any and all
claims for nuisance, negligence, inverse condemnation, strict liability, contribution, indemnity,
trespass, property damages, loss of use and enjoyment, and/or diminution of property values,
attorney fees, costs under any statutory or regulatory authority relating to Odors; penalties or
other relief resulting from violations of permits or failure to comply with applicable laws,
regardless of whether any such matters are claimed under theories of nuisance, trespass,
negligence, strict liability, inverse condemnation, contribution, indemnity, or any other common
law, statutory or regulatory cause of action, and regardless of whether defined as a continuing
tort or otherwise. This full and final release is intended to provide the broadest protection
possible from claims and damages as a result of acts, omissions or occurrences relating to the
WWTP on or before the date of Final Approval, including all causes of action therefore against
the Released Parties. This release is specifically intended to cover and include, without
limitation, any and all claims, civil or otherwise, past or present, which can or may ever be
asserted by the Representative Plaintiffs, each and every Class Member, and by their respective
agents, estates, marital communities, dependents, successors, assigns (including, but not limited
to subsequent purchasers, lessees and renters of property owned by Class Members within the
Cl___ Area),
a) lien holders, entities, against Parties relating
Class 1'11GaJ, or other the Released Parties arising out of or avaaaaaaab
in any way to the matters described above that are based on acts, omissions or occurrences on or
before the date of Final Approval that resulted or are alleged to have resulted in Odors or effects
of Odors. By this settlement, Representative Plaintiffs and each and every Class Member are
also releasing, on behalf of themselves, and their respective agents, estates, marital communities,
dependents, successors, assigns (including, but not limited to subsequent purchasers, lessees and
renters of property owned by Class Members within the Class Area) lien holders and other
entities, any inverse condemnation or "takings" claims concerning diminished property values
within the Class Area arising out of the construction, operation, maintenance, and repair of the
WWTP prior to Final Approval and any alleged actions or failures to act by the City concerning
the WWTP prior to Final Approval. No subsequent claim for inverse condemnation or takings of
any interest in property located within the Class Area, may be made by any of the Representative
Plaintiffs, any Class Member and any of their respective agents, estates, marital communities,
dependents, successors, assigns (including, but not limited to subsequent purchasers, lessees and
renters of property owned by Class Members within the Class Area) lien holders and other
entities, concerning the operation of the WWTP unless there is additional governmental action
by the City relating to the WWTP causing Odor impacts and emissions exceeding the degree and
level existing from October 3, 2000 to the date of Final Approval (including normal operational
events such as intermittent upset conditions), which also results in a measurable and provable
decline in market value separate and apart from any measurable or provable decline in market
value that has occurred through the date of Final Approval. Representative Plaintiffs and each
Class Member acknowledge and agree that this Settlement Agreement will be recorded with the
Yakima County Auditor's Office.
10. Cooperation. As partial consideration for this Settlement, the Parties agree to
cooperate in the following manner:
(a) The City will support the Representative Plaintiffs and Class Members'
Motions for Preliminary Approval and Final Approval of this Settlement. The City may file with
the Court such pleadings and papers in support of said Motions as it deems necessary or
appropriate, in its sole discretion. All pleadings submitted and statements made by the City with
regard to this provision shall be subject to the terms of paragraph 6.
(b) The City will cooperate with Representative Plaintiffs, Class Members and
Plaintiffs' Counsel in their pursuit of insurance proceeds from various policies of insurance
issued to the City between 1997 and 2001. The City and its employees and Counsel agree to
make themselves reasonably available for discovery proceedings and trial in the prosecution by
Representative Plaintiffs and Class Members of any and all causes of action concerning the
insurance policies whether in Class Members' own lawsuit or upon Plaintiffs' Counsel's
acceptance of the prosecution of the City's pending lawsuit as described in paragraph 3. The
City will also make available to Class Counsel all relevant and nonprivileged documents relating
to the pursuit of insurance claims against the City's policies.
(c) The City shall cooperate with Plaintiffs' Counsel in regard to Plaintiffs'
Counsel establishing, creating, updating or amending a database of Yakima County or City
records for the purpose of mailing notice to the Class and implementing a plan of distribution to
all Representative Plaintiffs and Class Members provided that such cooperation does not result in
significant use of the City's financial resources or personnel.
11. Effect on Claims.
(a) Effective upon Final Approval, every Claim of each Representative
Plaintiff and Class Member against the Released Parties shall be conclusively compromised,
settled and released and each such Representative Plaintiff and Class Member shall be barred
from initiating, asserting or prosecuting any Claim against the Released Parties, except to the
extent permitted by this Settlement Agreement and the Stipulation and Order of Dismissal
attached as Exhibit D.
(b) Any checks issued to the Plaintiffs, Representative Plaintiffs and Class
Members must contain language, approved by the Parties, to the effect that negotiation,
endorsement or deposit of the check constitutes a release.
(c) The Parties agree that the Notice of Settlement and the Final Approval will
contain language, to be agreed on by the Parties, to the effect that the Final Approval of the
Settlement will be binding upon all Class Members and will extinguish and release all Claims, as
set forth in paragraph 9 herein. The Notice shall also include language addressing disclosure
obligations under Washington law. The language shall inform Class Members of their duty to
disclose information material to a buyer's decision to purchase property and encourage class
members to disclose that their property is within the Class Area and that compensation was paid
for alleged property damages and nuisance from Odors caused by the WWTP.
12. Reporting Obligations. .The Representative Plaintiffs, Class Members and
Plaintiffs' Counsel shall provide to the City copies of a final disbursement statement identifying
the names, addresses, and amounts disbursed to each Representative Plaintiff and Class Member.
13. Use of Settlement Agreement.
(a) The parties to this Settlement Agreement, including Representative
Plaintiffs or any Class Member, shall not seek to introduce and/or offer the terms of the
Settlement Agreement, any statement, transaction or proceeding in connection with the
negotiation, execution or implementation of this Settlement Agreement, any statements in
the documents appended to this Settlement Agreement, stipulations, agreements,
admissions made or entered into in connection with any fairness hearing or any finding of
fact or conclusion of law made by the Superior Court or otherwise rely on the terms of
this Settlement Agreement, in any judicial or administrative proceeding, except as
provided in paragraphs 3, 4 and 10(b) or insofar as it is necessary to enforce the terms of
this Settlement Agreement.
(b) Neither this Settlement Agreement nor any exhibit hereto nor any
statement, transaction or proceeding in connection with the negotiation, execution or
implementation of this Settlement Agreement is intended to be or shall be construed as or
deemed to be evidence of an admission or concession by the Released Parties of any
liability or wrongdoing, or of the truth of any allegations asserted by any Representative
Plaintiff or any Class Member against them, or as an admission by the Representative
Plaintiffs or any Class Member of any lack of merit in their claims and no such statement,
transaction or nrnreedina shall be admissible in evidence for any purpose; except for
purposes of obtaining approval of this Settlement Agreement in this proceeding or pursuit
of claims against the City's insurers as provided in paragraphs 3, 4 and 10(b).
14. Parties Bound. This Settlement Agreement shall be binding on the Parties hereto
and each of their heirs, legal representatives, successors, and assigns, and inures to the benefit of
the Parties and Released Parties and their heirs, legal representatives, successors and assigns.
The Representative Plaintiffs, by approval of this Settlement Agreement by the Court, have full
authority to enter into this Settlement Agreement on their behalf and behalf of each Class
Member and to take steps reasonably necessary to achieve Final Approval, as fully to all intents
and purposes as each Class Member might or could do if personally present and a party to this
Settlement Agreement, and the acts of -the Representative Plaintiffs on behalf of the Class
Members are, upon approval by the Court of this Agreement, ratified and confirmed by each
Class Member.
15. No Third Party Beneficiary. No provision of this Settlement Agreement or any
exhibit thereto is intended to create any third -party beneficiary to this Settlement Agreement.
16. Integration. This written agreement contains the entire understanding among the
Parties in connection with its subject matter, and supersedes and replaces all prior negotiations,
agreements, or representations by or among the parties, whether oral or written. Each Party
acknowledges that no other Party, or any agent or attorney of any Party, has made any promise,
representation, or warranty whatsoever, express or implied, other than those expressly stated
herein, concerning the subject matter hereof to induce the other Party or Parties to execute this
document. Each Party acknowledges that in executing this document he, she, or it is not relying
on any promise, representation or warranty other than those expressly stated herein.
17. Choice of Law. The interpretation and enforcement of this Settlement Agreement
shall be governed by the laws of the State of Washington.
18. Construction of Settlement Agreement. This Settlement Agreement has been
drafted by mutual negotiations among the parties. It shall be construed according to the fair
intent of the language as a whole, and not for or against any party. The headings of the sections
and paragraphs of this Agreement are included for convenience only and shall not be deemed to
constitute part of this Agreement or to affect its construction.
19. Attorneys' Fees. In the event any party hereto, or his, her, or its authorized
representative, successor, or assign, shall institute suit to enforce this Settlement Agreement or
for any breach thereof, the substantially prevailing party in such suit or proceeding shall be
entitled to an award of his, her, or its reasonable costs, expenses and attorneys' fees incurred,
both at the trial and appellate court levels, before and after judgment.
20. Counterparts. This Settlement Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
21. Mediation and Arbitration. The Parties agree that Thomas V. Harris shall mediate
disputes arising from the Memorandum of Understanding and this Settlement Agreement. If
mediation fails, the Parties reserve the right to use other alternative dispute resolution processes
or seek court intervention.
DATED this day of , 2003.
Martin Cuevas, Representative Plaintiff Karen Cuevas, Representative Plaintiff
Daniel Martinez, Representative Plaintiff Karen Murphy, Representative Plaintiff
Willie Murphy, Representative Plaintiff Darlene Ryan, Representative Plaintiff
Verla Row, Representative Plaintiff
Add Acknowledgements for the signatures of
the Plaintiff Representatives
GORDON, THOMAS, HONEYWELL,
MALANCA, PETERSON & DAHEIM LLP
R. Malanca
eys for Plaintiffs
CITY OF YAKIM A
PRESTON GATES & ELLIS, LLP
By: By:
Thomas H. Wolfendale
Attorneys for City of Yakima
Richard Zais
City Manager
By:
Raymond Paolella
Yakima City Attorney
DEL MONTE CORPORATION
By:
Scott Rickman, Assistant Secretary
BROWN REAVIS & MANNING, PLLC
By:
Stephen J. Tan
Attorneys for Del Monte Corporation
K\25739\00038\TH W\THW A21 FQ
DANIELSON HARRIGAN LEYH &
TOLLEFSON, LLP
By:
Timothy G. Leyh
Attorneys for City of Yakima
ZValilma C1lass
Area
Bot:vcss
Birch St
0
Yakima Class Area
Zone 1
Zone
Zone 3
02
0 4 Miles
Mundy Associates LLC (912003)
98-1203
k'C)ur St
W 'hit S
V Qali . mi t s
WYa ma t
V ‘,VLshi1 t S
lV
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SUPERIOR COURT OF THE STATE OF WASHINGTON
FOR YAKIMA COUNTY
WILFRED and KAREN MURPHY, et al.,
Plaintiffs,
v.
CITY OF YAKIMA, a Washington municipal
corporation, and WASTEWATER DIVISION
OF THE DEPARTMENT OF ENGINEERING
AND UTILITIES, a discrete governmental
agency or unit of the City of Yakima, and DEL
MONTE CORPORATION, a New York
corporation,
Defendants.
Judgment Creditor:
NO. 99-2-00611-8
JUDGMENT AGAINST THE CITY OF
YAKIMA
ASSIGNED TO THE HONORABLE
SUSAN L. HAHN
JUDGMENT SUMMARY
Representative Plaintiffs and Class Members, as defined
in the Court Order entered in this action on April _,
2001.
Attorneys for Judgment Creditor: Gordon, Thomas, Honeywell, Malanca, Peterson &
Daheim LLP
Albert R. Malanca
John C. Guadnola
Kenneth G. Kieffer
Bradley B. Jones
Timothy L. Ashcraft
Judgment Debtor:
JUDGMENT - 1 of 3
(NO. 99-2-00611-8)
[1240135 v3]
City of Yakima
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2100
POST OFFICE BOX 1157
TACOMA, WASHINGTON 88401-1157
(253) 620-6500 - FACSIMILE (253) 620-6565
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Amount of Judgment: $13,000,000.00
interest Owed To Date: -0-
Tapable Costs And Fees: -0-
This matter came before the Court pursuant to and in accordance with that certain
Settlement Agreement given final approval by the Court on , 2003. The Court
having presided over this matter since its filing, having reviewed and approved the Settlement
Agreement, and being fully advised in the premises, it is hereby
ORDERED that the Plaintiffs and Class Members be and the same hereby are granted
�, nnn nnn 00 r rh;,teen Million Dollars) against the City of
,IUDG�R ^' i in the amount of $13,000,000. 0 (Th�rt
Yakima.
DONE IN OPEN COURT this day of , 2003.
The Honorable Susan L. Hahn, Superior Court Judge
Presented By:
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
Bradley B. Jones, WSBA 17197
John C. Guadnola, WSBA No. 08636
By:
Attorneys for Plaintiffs and Class Members
JUDGMENT - 2 of 3
(NO. 99-2-00611-8)
[1240135 v3]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2100
POST OFFICE BOX 1157
TACOMA. WASHINGTON 98401-1157
(253) 620-6500 - FACSIMILE (253) 820-6585
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*1g
PRESTON GATES & ELLIS
Thomas H. Wolfendale, WSBA 03776
and
DANIELSON HARRIGAN & TOLLEFSON
Timothy Leyh, WSBA 14853
By:
Attorneys for the City of Yakima
BROWN REAVIS & MANNING
Stephen J. Tan, WSBA 22756
By:
Attorneys for Del Monte Corporation
JUDGMENT - 3 of 3
(NO. 99-2-00611-8)
[1240135 v3]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2100
POST OFFICE BOX 1157
TACOMA, WASHINGTON 96401.1157
(253) 620-6500 - FACSIMILE (253) 620-6565
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SUPERIOR COURT OF THE STATE OF WASHINGTON
FOR YAKIMA COUNTY
WILFRED and KAREN MURPHY, et al.,
Plaintiffs,
v.
CITY OF YAKIMA, a Washington municipal
corporation, and WASTEWATER DIVISION
OF THE DEPARTMENT OF ENGINEERING
AND UTILITIES, a discrete governmental
agency or unit of the City of Yakima, and DEL
MONTE CORPORATION, a New York
corporation,
Defendants.
NO. 99-2-00611-8
STIPULATION AND ORDER OF
DISIVIISSAL
ASSIGNED TO THE HONORABLE
SUSAN L. HAHN
HEARING DATE: October 10, 2003
Pursuant to the stipulation of the parties to the above -captioned action, as evidenced
by the signatures of their respective counsel below, and in accordance with the Settlement
Agreement given final approval by this Court on , 2003, it is hereby
ORDERED, ADJUDGED AND DECREED as follows:
1. Except to the extent necessary to permit the Court to exercise the continuing
jurisdiction described below, and without impacting the validity or enforceability of the
Judgment entered against the City of Yakima in this matter or the ability of Representative
STIPULATION AND ORDER OF DISMISSAL - 1 of 4
(NO 99-2-00611-8)
[1240129 v6]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2100
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401.1157
(253) 620-6500 - FACSIMILE (253) 620-6565
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Plaintiffs and Class Members to recover on unsatisfied portions of the Judgment above and
beyond that subject to execution against the City of Yakima and Del Monte Corporation, a
New York corporation, all "claims" of Plaintiffs and Class Members (as "claims" is defined in
the Settlement Agreement) shall be and the same hereby are DISMISSED WITH
PREJUDICE and without costs.
2. Notwithstanding the foregoing dismissal of claims against the City and Del
Monte Corporation, this Court retains jurisdiction over this matter for the following purposes:
(a) determining the reasonable fees and costs to be awarded to Plaintiffs'
counsel;
(b) approving a method of allocating net settlement proceeds among class
members and a procedure for administering claims submitted by class
members;
(c) overseeing the administration of claims submitted by class members and,
to the extent permitted or required by the approved procedure, resolving
disputes about the allowance, disallowance or amount of any such claims ;
and
(d) overseeing the distribution of settlement funds to class members.
3. This Court's retained jurisdiction shall extend to any and all monies recovered
on behalf of the Class, whether by way of settlement or enforcement of a judgment, from any
of the City's insurers,
4. The Judgment entered in this matter pursuant to and in accordance with the
Settlement Agreement given final approval by the Court on , 2003, is and
STIPULATION AND ORDER OF DISMISSAL - 2 of 4
(NO 99-2-00611-8)
[ 1240129 v6]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2100
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401-1157
(253) 620-6500 - FACSIMILE (253) 620.6565
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shall remain in full force and effect in accordance with its terms; provided, however, that the
City of Yakima shall not be subject to execution of judgment in excess of Seven Million
Dollars ($7,000,000.00) as set forth in the Settlement Agreement. Neither the dismissal with
prejudice of claims against the City of Yakima and Del Monte Corporation nor any other
provision of this Order shall have any impact of any nature whatsoever on such Judgment. •
5. This Order shall not limit, prejudice or in any way affect any action brought or
he the City Yakima or Representative Plaintiffs or Class Members for the
to Lr brought by xxta, �.asJ of : e.,�,,,,» .,� by Representative
purpose of recovering proceeds of insurance policies issued in favor of the City of Yakima.
The City shall remain a party to this action to the extent necessary to prevent any such
limitation, prejudice or other effect but the City's status as a party shall not in any way affect
the dismissal with prejudice of all claims the Plaintiffs and Class Members brought or could
have brought against it in this action.
DONE ;N OPEN COURT this day of , 2003.
The Honorable Susan L. Hahn, Superior Court Judge
STIPULATION AND ORDER OF DISMISSAL - 3 of 4
(NO. 99-2-00611-8)
[1240129 v6]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2100
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401-1157
(253) 820.8500 - FACSIMILE (253) 820-8585
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The parties to the above -captioned action, by and through their respective attorneys of
record, hereby stipulate and agree to entry of the foregoing Order of Dismissal.
GORDON, THOMAS, HONEYWELL,
MALANCA, PETERSON & DAHEIM LLP
Albert R. Malanca, WSBA 01226
John C. Guadnola, WSBA 08636
Kenneth G. Kieffer, WSBA 10850
Bradley B. Jones, WSBA 17197
Timothy L. Ashcraft, WSBA 26196
By:
Attorneys for Plaintiffs and Class Members
Dated: , 2003.
STIPULATION AND ORDER OF DISMISSAL - 4 of 4
(NO 99-2-00611-8)
[1240129 v6]
PRESTON GATES & ELLIS
Thomas H. Wolfendale, WSBA 03776
and
DANIELSON HARRIGAN &
TOLLEFSON
Timothy Leyh, WSBA 14853
By:
Attorneys for the City of Yakima
Dated: , 2003.
BROWN REAVIS & MANNING
Stephen J. Tan, WSBA 22756
By:
Attorneys for Del Monte Corporation
Dated: , 2003.
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2100
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401.1157
(253) 820-6500 - FACSIMILE (253) 820-8565
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SUPERIOR COURT OF THE STATE OF WASHINGTON
FOR YAKIMA COUNTY
WILFRED and KAREN MURPHY, husband and
wife, et al.,
Plaintiffs,
v.
CITY OF YAKIMA, a Washington municipal
corporation, et al.,
Defendants/Third Party Plaintiffs,
v.
CITY OF UNION GAP, a Washington municipal
corporation, et al.,
Third P . Defendant.
NO. 99-2-00611-8
NOTICE OF PROPOSED FINAL
SETTLEMENT AND PLAN OF
DISTRIBUTION
ASSIGNED TO THE HONORABLE
SUSAN L. HAHN
IMPORTANT LEGAL NOTICE
This Notice may affect your legal rights. Please read carefully.
I. YOU MAY BE ELIGIBLE TO RECEIVE A SHARE OF CASH BENEFITS
FROM A PROPOSED SETTLEMENT
You may have been previously notified that you may be a member of the certified
class described below in a lawsuit against the City of Yakima and Del Monte Corporation
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 1 of 18
(99-2-00611-8)
[ 1241104 v8.doc]
LAW OF ICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 08401-1157
(253) 820-8.500 - FACSIMILE (253) 520-8565
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concerning odors from the Yakima Regional Wastewater Treatment Plant and adjacent
Industrial Sprayfields (collectively the "Treatment Plant"). THIS NOTICE IS . A
J �riiii �i.:TT' �'� T�? e T E e R T TER NOTTC.F., AND MAY AFFECT YOUR RIGHTS.
A. Summary of Class Membership_
The Court has previously ruled that the following people and' entities are class
members:
DEFINITION OF THE CLASS
ALL PERSONS, INCLUDING MINORS AND BUSINESS ENTITIES, WHO,
AT ANY TIME SINCE JUNE 30, 1990 HAVE RESIDED IN AND/OR OWNED
RESIDENTIAL REAL PROPERTY IN THE AREA DEPICTED ON THE MAP
ATTACHED AS EXHIBIT A.
B. Purpose of the Notice.
The purpose of this Notice is to inform you of:
• The status of the lawsuit;
• The essential terms of a proposed settlement with the City of Yakima, owner and
operator of the Treatment Plant. The settlement will also resolve claims against
Del Monte Corporation;
� which '11 4 to class
• The essential terms of a Plan of Distribution, will govern payment
members of the net proceeds of all settlements;
• The requirement that you file a Proof of Claim Form in order to share in the
proposed Settlement Funds;
• The time and place of two meetings Class Counsel will,hold for class members to
answer questions about the settlement and proposed Plan of Distribution and to
assist in completing Proof of Claim Forms;
• The hearing to be held by the Court to consider final approval of the proposed
settlement and Plan of Distribution;
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 2 of 18
(99-2-00611-8)
[1241104 v8.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUf7E 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401.1157
(253) 620-6500 • FACSIMILE (253) 620-6565
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• Your rights and obligations as a result of this lawsuit and the settlement, and steps
you may take in relation to the settlement and this class action litigation.
• Summary of Options and Deadlines.
As a class member, you may choose to:
• Receive a portion of cash benefits of the proposed settlement. (To share in the
benefits of the proposed settlement, you must mail a Proof of Claim form by
December 15, 2003. For more on filing a claim, read Section IV);
• Object to the proposed settlement or plan of distribution. (To object, you must
mail a written objection by November 14, 2003. For more on objecting, read
Section IV).
• Do Nothing. (If you do nothing, you will be bound by the terms of the settlement,
including releasing any and all claims you may currently have against the City of
Yakima and Del Monte concerning the Treatment Plant, but will receive no cash
benefits).
By prior Notice, if you owned property or resided in the class area prior to July 2001
you were given an opportunity to exclude yourself from the class; therefore, you may no
longer exclude yourself and you will be bound by the settlement if it is approved by the Court.
However, those who are class members solely because they acquired property or moved into
the Class Area between July 2001 and October 10, 2003 ("New Class Members") may choose
to exclude themselves from the lawsuit. To do so, a New Class Member must file a request
for exclusion, in which case he or she will not be eligible to receive a share of the cash
benefits and will not be bound by the terms of the settlement. (New Class Members may
exclude themselves from the lawsuit by requesting an exclusion form in writing by
November 1, 2003 and mailing it to Class Counsel by November 14, 2003. For more detail,
read Section IV).
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 3 of 18
(99-2-00611-8)
[1241104 v8.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE 80X 1157
TACOMA, WASHINGTON 88401.1157
(253) 620-6500 • FACSIMILE (253) 6208585
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11.
orr rTATe nr TLTZi T kW/QUIT
Ai $J� x".9: PAZ, £
The claims in the lawsuit against the City of Yakima and Del Monte were described in
the first Notice you received. If you want to receive another copy of that original Notice,
please refer to Section VI of this Notice. If you did not already file a timely exclusion from
the class and you fall within the definition of the class, you are a class member.
On April 19, 2001, the Court ruled that the claims against the City and Del Monte
would be certified as a class action. The parties proceeded to engage in lengthy discovery
involving hundreds of thousands of pages of documents, depositions of dozens of factual
witnesses, and the work of nearly a dozen expert witnesses. The parties also filed, and the
Court ruled upon, dozens of motions directed at a variety of issues.
Prior to class certification the City of Yakima and Del Monte entered into their own
settlement agreement. In return for Del Monte paying Yakima $500,000 and agreeing to
other expenses and activities designed to close down the Industrial Spray -fields and reduce
odors, Yakima agreed to assume any liability Del Monte had to the Class Members in this
lawsuit.
In October of 2001 the City of Yakima sued the City of Union Gap, claiming that
collection an transportation facilities owned by Union Gap contributed to the alleged
sewer I,VllGliliWi and ucuaoYv...4.+�... odors Class Members claimed to experience. The plaintiff class never sued Union Gap
directly. Nonetheless, the City of Union Gap agreed to settle with the class for $200,000 in
order to avoid the expense and uncertainty of being a party to the lawsuit. The settlement
with the City of Union Gap provides that the net proceeds of that settlement will be
distributed only to class members living or owning residential property south of Valley Mali
Boulevard.
In August of 2001 the City of Yakima sued four (4) insurance companies, claiming the
policies the companies issued to Yakima covered the claims made in this lawsuit by the class.
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LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SLATE 2200
POST OFFICE BOX 1957
TACOMA, WASHINGTON 98401-1157
(253) 820-8600 - FACSIMILE (253) 8248585
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A federal judge ruled in favor of the insurance companies and dismissed Yakima's lawsuit.
That decision is currently on appeal to the Ninth Circuit Court of Appeals.
In April of 2003, Class Counsel filed a separate lawsuit on behalf of the class against
the same insurance companies. In that lawsuit the class seeks an order that the claims for
damages caused by the Treatment Plant are covered by the terms of the policies. That lawsuit
will be heard in Yakima County Superior Court. No trial date has been set.
Trial in this lawsuit was scheduled to begin on March 3, 2003. However, on
February 15, 2003, the Court certified an issue for appeal. The Court of Appeals accepted the
appeal in May 2003. This delayed the trial indefinitely. In the absence of a settlement, it is
unlikely the trial would occur sooner than the late fall of 2004.
In September 2003, the named class representatives and attorneys for the class reached
a settlement agreement with the City of Yakima, described below.
On October 10, 2003, Judge Susan L. Hahn, who has presided over this case for more
than four years, preliminarily approved the proposed settlement with the City of Yakima and
the proposed release of claims against Yakima and Del Monte.
The Court will hold a hearing (the "Fairness Hearing") in the Courtroom of Judge
Susan L. Hahn, Superior Court of Yakima County, at 128 North Second Street, Yakima,
Washington at 9:00 a.m. on November 21, 2003, to determine whether, as recommended by
both Class Counsel and the class representatives, the Court should finally approve the
proposed settlement with the City of Yakima. At that same hearing, the Court will consider
final approval of the Plan of Distribution for all the settlement proceeds (see Section V below)
and may consider Class Counsel's request for reimbursement of costs and an award of
attorneys' fees.
TO RECEIVE A SHARE OF THE SETTLEMENT BENEFITS, YOU MUST
MAIL THE ATTACHED PROOF OF CLAIM FORM, POSTMARKED ON OR
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 5 of 18
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LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98101.1157
(253) 8208500 - FACSIMILE (253) 6208585
BEFORE DECEMBER 15, 2003, TO CLASS COUNSEL (SEE SECTION IV FOR
MORE DETAILS).
III. THE SETTLEMENT
A settlement has been reached in the litigation between plaintiffs and defendant the
City of Yakima. The settlement will end all claims in the lawsuit against both the City of
Yakima and Del Monte. That settlement is embodied in a Settlement Agreement which is on
file with the Court. Class Counsel believe that this settlement is fair, adequate, reasonable,
and in the best interest of the class. The Court has preliminarily approved the settlement. The
terms of the settlement are summarized below. You may obtain a copy of the Settlement
Agreement from Class Counsel at the address provided in Section VI, below, and are
encouraged to do so if you have any questions about the exact terms of the settlement.
A. Establishment of Common Fund.
Plaintiffs and defendant City of Yakima have entered into a proposed settlement.
Under the terms of the settlement, the City of Yakima agrees to the entry of a judgment
against it for $13,000,000. Following Final Approval of the settlement the City will pay
$7,000,000 into the trust account of Class Counsel, and will have no further financial
obligation to the Class Members.
Amounts between $7 million and $13 million can only be collected from Yakima's
insurance companies. The City of Yakima will continue its appeal of the dismissal of its
claims against its insurers and the class will continue its separate lawsuit against the same
insurers in Yakima County Superior Court. The City of Yakima and the class agree to
cooperate in their suits against the insurers, and have agreed on a formula for distributing any
money the City or the class receive from any settlement with or judgment against the insurers.
Under that formula the City of Yakima receives the first $500,000, the class receives the next
$500,000, the class receives 80% and Yakima 20% of any amounts between $1 and $3
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LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON 8. DAHEIM LLP
1201 PACIFIC AVENUE, SUfTE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401-1157
(253) 620-3500 • FACSIMiLE (253) 620.5565
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million, and the class and the City share equally in any amounts over $3 million.
Ultimate recovery of any amount above $7 million depends upon Class Counsels' and
the City of Yakima's success in pursuing such claims. At this point, it is uncertain what
amounts, if any, Class Counsel or the City will obtain from these insurance companies for the
benefit of the class.
B. Release of Claims Against the City of Yakima and Del Monte.
Upon Court approval of the settlement and entry of the final court order dismissing
claims against the City of Yakima and Del Monte, you and all other class members will be
releasing all claims you may have for acts or omissions of the City of Yakima and Del Monte
concerning the Treatment Plant prior to the date of final approval of the settlement. In
addition, the settlement limits a future type of property damage claim, called inverse
condemnation or "takings," to situations where there is additional activity by the City of
Yakima that causes an increase in odors over the level that has existed for the last three years.
The limit on future inverse condemnation or "takings" claims will bar current and
future property owners and residents from pursuing claims for such damages incurred prior to
November 21, 2003. The City of Yakima intends to file a copy of the Settlement Agreement
with the Yakima County Assessor's Office. A reference to the Settlement Agreement may
appear on property records.
Class members are advised that Washington law imposes a duty on sellers of
residential property to inform buyers of any important information that may affect a buyer's
decision to purchase the property. The fact that this odor lawsuit occurred and the basic terms
of the settlement may be the type of information the law would require a seller to disclose.
Class members are encouraged to either disclose the fact of the lawsuit and settlement at the
time they sell their property or consult with a lawyer regarding any disclosure obligations.
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LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2200
POST OFFICE 80X 1157
TACOMA. WASHINGTON 88101-1157
(253) 620$500 - FACSIMILE (253) 820-6585
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C. Attorneys' Fees and Costs.
Class Counsel intend to seek reimbursement from the Common Fund for costs
advanced during the litigation on behalf of the class and for the costs of administering the
settlement. Class Counsel will also seek one-third of the net settlement (the total settlement
amount minus litigation and administration costs) as payment of legal fees. To date, Class
Counsel have spent some five years working on behalf of the class and have received no
payment for their services. To date, Class Counsel have spent more than $1 million on
litigation costs (deposition transcripts, copying costs, etc.) without being reimbursed for any
of those payments. The fee requested by Class Counsel would compensate them for their
efforts in achieving a settlement fund for the benefit of the class, and for their risk in
undertaking this representation on a contingency basis for the last five years. If approved by
the Court, the fee request would be within the range of fees awarded to plaintiffs' counsel
under similar circumstances in litigation of this type. The actual amount awarded Class
Counsel for fees and costs will be determined by the Court. No funds will be distributed to
Class Counsel at this time.
D. Conditions of the Settlement.
This settlement is conditioned upon the Court's Final Approval of the settlement,
which will be determined at the Fairness Hearing on November 21, 2003. If the Court does
not grant Final Approval of the Settlement, the Settlement Agreement might be terminated,
and, if terminated, will become null and void, and the parties to the Settlement Agreement
will be restored to the respective positions they held before the Settlement Agreement was
signed.
IV. OPTIONS FOR CLASS MEMBERS
Option # 1: Agree to Proposed Settlement.
IN ORDER TO RECEIVE A SHARE OF THE CASH BENEFITS OF THE
SETTLEMENT, YOU MUST COMPLETE AND DELIVER TO CLASS COUNSEL A
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 8 of 18
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LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 88401-1157
(253) 620-6500 • FACSIMILE (253) 620-6565
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PROOF OF CLAIM FORM ON OR BEFORE DECEMBER 15, 2003. (A blank Proof
of Claim Form is attached to this Notice for your use.) ANY CLASS MEMBER WHO
FAILS TO PROPERLY COMPLETE A PROOF OF CLAIM FORM AND DELIVER
IT TO CLASS COUNSEL BY THE DEADLINE WILL NOT RECEIVE ANY SHARE
OF THE CASH BENEFITS OF THIS SETTLEMENT BUT WILL STILL BE BOUND
BY THE SETTLEMENT AGREEMENT.
Class members who support the proposed City of Yakima settlement and the proposed
Plan of Distribution do not need to appear at the Court's Fairness Hearing but may submit
written statements of support to the Court by November 14, 2003.
B. Option # 2: Object to Proposed Settlement.
Objections by class members to the proposed settlement and/or the Plan of
Distribution will be considered by the Court, but only if the person raising such objections
mails to Class Counsel, no later than November 14, 2003, at the address set forth in Section
VI, below, a written statement of his or her objections and the legal and/or factual bases for
those objections. The written statement of objections must: (1) bear the case name and cause
number (Murphy, et al. v. City of Yakima, et al., Civil Action Number 99-2-00611-8); (2) be
identified as an "OBJECTION TO PROPOSED SETTLEMENT" or "OBJECTION TO THE
PLAN OF DISTRIBUTION;" and (3) contain the name, address, and telephone number of the
objecting party and his or her attorney, if any. Any person who properly delivers a written
statement of objection as specified herein may appear at the Fairness Hearing in person or
through counsel to show cause why the proposed settlement with the City of Yakima, and/or
the Plan of Distribution, should not be approved as fair, adequate and within the realm of
reasonableness. As long as an objection is properly delivered as set forth above, the Court
will consider it even if the objecting party is not present at the hearing.
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LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2290
POST OFFICE BOX 1157
TACOMA, WASHINGTON 86101.1157
(253) 620-6500 - FACSIMILE (253) 620-6565
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No objection, and no pleadings or papers relating to any objection, shall be heard
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or considered by the Court unless the objecting party has fully complied with the
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of the plaintiff class who �IAOC nA¢
requirements of the paragraph above. Any member the Yves net
of objections the manner specified herein shall
properly deliver a written statement objec ions in specified
be deemed to have waived any and all objections for all purposes. 'Attendance at the
hearing is not necessary; however, class members wishing to be heard orally in opposition to
the Proposed Settlement and/or the Plan of Distribution should indicate in their written
objection their intention to appear at the hearing.
C. Persons or Entities Who are Class Members Solely Because They Moved into or
Acquired Property in the Class Area After July 2001, Have the Option to Remain
a Class Member or Opt Out of the Proposed Settlement.
If you are a class member solely because you moved into the class area between July
2001 and October 10, 2003 and had not previously lived in the class area since June 30, 1990
and/or because you acquired property within the class area between July 2001 and October
10, 2003 and had not previously owned property in the class area since June 30, 1990, then
you are a "New Class Member" and have an opportunity to exclude yourself from the Class.
New Class Members may obtain a request for exclusion fonsi by mailing a written request for
the form to Class Counsel: at the address below, postmarked on or before November 1, 2003.
Yakima Treatment Plant Class Action Lawsuit
Office of the Claims Administrator
P.O. Box 1653
Tacoma, WA 98401-1653
In order to exclude yourself, you must return the completed exclusion form by mail,
postmarked no later than November 14, 2003. If you do not file an exclusion form, you will
be a Class Member and will be bound by the terms of the Settlement Agreement.
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LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2200
POST OFFICE BOX 1157
TACOMA. WASHINGTON 88401.1157
(253) 6208500 • FACSIMILE (253) 0204565
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If you are a New Class Member and choose to exclude yourself, you will have no
rights under the Settlement, you will not share in the distribution of any Settlement Fund and
you will not be bound by any settlement or judgment concerning the City of Yakima or Del
Monte in this action. You will be free to pursue whatever legal rights you may have, if any,
against the City of Yakima or Del Monte at your own expense and on your own behalf.
V. PROPOSED PLAN OF DISTRIBUTION
The proposed Plan of Distribution for the settlement with the City of Yakima and Del
Monte provides that the net settlement funds (the total amount of funds received from the City
of Yakima, Union Gap, and any of Yakima's insurers after deduction of Court -approved
litigation costs and attorneys' fees) will be distributed as follows.
A. Class Representative and Original Plaintiff Payments.
The lawsuit was initially filed in the names of almost 200 individuals. Approximately
140 submitted answers to written questions (the "Original Plaintiffs"). As compensation for
their time and services Class Counsel recommend that each Original Plaintiff receive $1,000.
Approximately twenty of the Original Plaintiffs were also interviewed or deposed by
lawyers for the City of Yakima or Del Monte (the "Deposed Plaintiffs"). Class Counsel
recommend that Deposed Plaintiffs receive an additional $1,500 as compensation for their
additional time and services, for a total compensation of $2,500.
Once the case was certified as a class action in April 2001, this lawsuit was led by the
efforts of eight individuals (the "Class Representatives"). The Class Representatives pursued
the lawsuit in their individual names, on behalf of themselves and the entire class they
represent. They were deposed multiple times, attended numerous meetings and court
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LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2200
POST OFFICE BOX 1157
TACOMA. WASHINGTON 06401.1157
(253) 620-8500 • FACSIMILE (253) 620-6585
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hearings, and participated in three separate mediations. Class Counsel recommend that each
Class Representative receive an additional $7,500 as compensation for their additional time
and services, for a total compensation of $10,000.
B. Creation of Personal Nuisance Fund and Property Damage Fund.
As described in more detail below, the remaining net settlement funds will be
allocated seventy percent (70%) to personal nuisance damages (the "Personal Nuisance
Fund"), percent (30%) to property damages (the "Property Damage Fund").
and thirty ar-�_-____ �_ � property _
The Personal Nuisance Fund will be distributed pro rata to those class members who
submit valid Proof of Claim forms (or who are identified on such forms) showing that they
resided in the class area between June 1995 and October 10, 2003 (the "Personal Nuisance
Class Period"). The Personal Nuisance Class Period is shorter than the Property Damages
Class Period because the time periods applicable to legal claims for personal nuisance -type
damages are shorter than time periods for property damages.. Allocations of the Personal
Nuisance Damages Fund will be based on the length of residency, subject to adjustments
of greatest Treatment Plant and proximity to the
discussed below that reflect the years blca�idij� Plant odors --- proximity
Treatment Plant.
The Property Damages Fund will be distributed to class members who submit valid
Proof of Claim forms showing that they owned property within the class area between June
30, 1990 and October 10, 2003 (the "Property Damages Class Period"). The formula for
allocating these funds among the various claimants uses the 2003 Yakima County Assessor's
Office assessed value of each claimant's property.
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LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SURE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401.1157
(253) 820-6500 - FACSIMILE (253) 620.8565
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The allocation formula for property damages looks at the length of time during the
Property Damages Class Period that a claimant owned a specific piece of property in relation
to the assessed values and periods of ownership of all other properties of all other claimants.
If two or more claimants owned a single property during the Property Damages Period, the
funds allocable to that property shall be divided between the claimants based on the periods.in
which they each owned the property. As discussed below, allocations of the Property
Damages Fund, like allocations of the Personal Nuisance Damages Fund, will be adjusted to
reflect the time period during which a claimant owned a particular piece of property and the
proximity of that property to the Treatment Plant.
In the case of properties on which homes were constructed during the Property
Damages Period, Yakima County Assessor records will be used to determine assessed value
before and after the construction. Claimants who owned such properties will receive a
distribution based on the value of the unimproved land until the year in which the new home
was constructed. From the year in which the Yakima County Assessor's Office's data reflects
that the home was completed, distribution from the Property Damages Fund will be calculated
on the total assessed value of the property and improvements.
C. Treatment Plant Impacts Multiplier.
In determining the amounts to be distributed from both the Personal Nuisance and
Property Damage Funds for each year, a weighting approach will be used to account for the
periods when the Treatment Plant caused the greatest relative impacts. Information obtained
in preparation for trial and from the work of plaintiffs' real estate, economic and odor experts
indicate that the Treatment Plant had the most severe odor impact on the Class Area during
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LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98101.1157
(253) 8208500 • FACSIMILE (253) 620-0585
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the period from June 1995 through October 2000. Therefore, each month during those years
will be given a "time/impact adjustment" value of 3. Each month in the periods June 30, 1990
through May 1995 and November 2000 through October 2003 will be given a "time/impact
adjustment"
value 1. This means, for example, that a person owning property for two years
Ja��1a.. of�---� between June 1990 and June 1995 would receive from the Property Damages Fund one-third
(1/3) of the amount that a person owning that same property for two years between June 1995
and June 2000 would receive.
An identical weighting approach will be used for computing allocations of the
Personal Nuisance Damages Fund. Each month from June 1995 to October 2009 will be
�: t adjustment" value of 3. Each month in the period from November 2000
given a tlliieitiTipa�� adjustment"
through October 2003 will be given a "time impact adjustment" value of 1. Again, everything
else being equal this means a person who, for example, lived in the class area for two years
between 1995 and 2000 will receive an award from the Personal Nuisance Damages Fund
three times greater than a person who lived there for two years after November 2000.
The final calculation and precise allocation of the Property Damages Fund and the
Personal Nuisance Damages Fund can only be calculated after Proof of Claim forms have
been received and verified. Those final calculations will depend on the total number of valid
claimants, the assessed values of their properties, the periods in which they resided in or
owned properties in the class area, and the proximity of their various properties to the
Treatment Plant.
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LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 48401.1157
(253) 820.8500 • FACSIMILE (253) 8208565
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D. Proximity Impact Allocation
In addition to causing greater impacts during certain years, the Treatment Plant also
caused relatively greater impacts to those properties and residents in closer proximity to the
Treatment Plant. To account for the proximity impact, the proposed Plan of Distribution
divides the class area into three geographic Zones. The boundaries of each Zone are based on
the results of computerized modeling of wind patterns done by plaintiffs' experts and on the
other work of the experts. The Zones are designed to correspond to the varying degrees of
odor impacts caused by the Treatment Plant in different parts of the class area. The portion of
the class area closest to the Treatment Plant and subject to the most severe odor impacts is
identified as Zone 1 on the attached map. Zone 2 includes the northwest corner of the class
area and an area from Valley Mall Boulevard north to the boundary of Zone 1. The portion of
the class area south of Valley Mall Boulevard is identified as Zone 3.
The computer modeling and expert analysis used to determine the boundaries of the
Zones are also used to determine the relative adjustments appropriate to each Zone. The
expert concluded that a release of odors from the Treatment Plant that was rated as having an
intensity of 5 in Zone 1 would have an intensity of 2 in Zone 2 and an intensity of 1 in Zone 3.
The Proximity Adjustment will maintain this relative ratio between individuals and properties
in the three Areas (5/8th in Area 1, 218th in Area 2, and 118th in Area 3) regardless of the rate at
which individuals return Proof of Claim Forms from each Area. In summary, and all things
being equal, if a person in Zone 1 receives $500, a similarly situated person in Zone 2 will
receive $200 and a similarly situated person in Zone 3 will receive $100.
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LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA.
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 88401.1157
(253) 820-0500 - FACSIMILE (253) 820-8565
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E. Money From Union Gap Settlement.
Plaintiffs' Counsel will request fees and costs, and whatever amount the Court awards
will be computed as a percentage of the aggregate $7.2 million in settlement funds. Both
funds will then be reduced by the same percentage, to assure that the class members in the
north do not carry a disproportionate share of the costs of the litigation. Once the net value of
the Union Gap settlement has been determined, the funds will be distributed among claimants
living or owning property in Zone 3. The calculations will be identical to the calculations
for distributing the of Yakima's settlement, except that each claim will be valued as
used I:�'r �zos, City of Yakima's a percentage of the total of Zone 3 claims instead of as a percentage of the total of claims
from all three Zones.
VL ADDITIONAL INFORMATION
Class Counsel will also hold two meetings for Class Members concerning the
proposed settlement. At those meetings, Class Counsel will answer questions about the
Settlement Agreement and proposed Plan of Distribution and also offer assistance in
completing Proof of Claim Forms. The meeting for Class Members are scheduled to
occur as follows:
Wednesday, November 5, 2003 at 7:00 p.m.
St. Joseph's Bingo Hall
Thursday, November 6, 2003 at 7:00 p.m.
St. Joseph's Bingo Hall
Spanish translators will be present at the second, (November 6) meeting.
Any questions you have concerning the matters contained in this notice (and any
corrections or changes of name or address) should NOT be directed to the Court but
should be directed to Class Counsel at the following address and/or telephone number:
Yakima Treatment Plant Class Action Lawsuit
P.O. Box 1653
Tacoma, WA 98401-1653
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LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401-1157
(253) 620-6500 - FACSIMILE (253) 820-6585
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1-877-347-4780
The pleadings, the Settlement Agreement, and other records in this litigation may be
examined and copied at any time during regular office hours at the office of the Clerk,
Superior Court, Yakima County Superior Court, 128 North Second Street, Yakima,
Washington. You may also obtain these documents from Class Counsel at the address listed
above.
VII. REMINDER AS TO TIME DEADLINES
1. In order to participate in the settlement, you must complete and send a Proof of
Claim Form to Class Counsel at the address set forth in Section V, by mail postmarked on or
before December 15, 2003.
If you wish to object to the proposed settlement and/or the proposed Plan of
Distribution, you must send an objection to Class Counsel in the manner described in Section
III.B above, by mail postmarked on or before November 14, 2003.
2. If you are a New Class Member, you can exclude yourself from this lawsuit by
sending your request for and returning an exclusion form to Class Counsel as described in
Section III C above, by mail postmarked on or before November 14, 2003.
3, The Court will hold a Fairness Hearing in the Courtroom of Judge Susan L.
Hahn, Superior Court of Yakima County, at Yakima County Courthouse, 128 North Second
Street, Yakima, Washington at 9:00 a.m. on November 21, 2003, to determine whether, as
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 17 of 18
(99-2-00611-8)
[ 1241104 v8.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401-1157
(253) 820-8500 - FACSIMILE (253) 620.6565
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recommended by both Class Counsel and the class representatives, it should finally approve
the proposed settlement and the Plan of Distribution.
DATED this day of October, 2003.
SUPERIOR COURT OF THE STATE OF
WASHINGTON FOR YAKIMA COUNTY
By:
Clerk of the Court
Yakima County Superior Court
128 North Second Street
Yakima, Washington
Enclosure: Map of Class Area
Proof of Claim Fnrm
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 18 of 18
(99-2-00611-8)
[1241104 v8.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2200
POST OFFICE BOX 1159
TACOMA. WASHINGTON 98401.1157
(253) 620-6500 • FACSIMILE (253) 6204565
Yakima Class
Area
0
Yakima Class Area
Zone 1
Zone
Zone 3
02
04 Miles
Mundy Associates LLC (9/2003)
98-1203
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SUPERIOR COURT OF THE STATE OF WASHINGTON
FOR YAKIMA COUNTY
WILFRED and KAREN MURPHY, husband and
wife, et al.,
Plaintiffs,
v.
CITY OF YAKIIvMA, a Washington municipal
corporation, et al.,
Defendants/Third Party Plaintiffs,
v.
CITY OF UNION GAP, a Washington municipal
corporation, et al.,
TO:
Third P . Defendants.
NO. 99-2-00611-8
PUBLISHED NOTICE OF PROPOSED
FINAL SETTLEMENT AND PLAN OF
DISTRIBUTION
ASSIGNED TO THE HONORABLE
SUSAN L. HAHN
HEARING DATE: October 10, 2003
THIS NOTICE MAY AFFECT YOUR RIGHTS
PLEASE READ CAREFULLY
ALL PERSONS, INCLUDING MINORS AND BUSINESS ENTITIES, WHO
SINCE JUNE 30, 1990 HAVE RESIDED IN AND/OR OWNED RESIDENTIAL
PROPERTY IN THE AREA DEPICTED ON THE MAP BELOW ("CLASS MEMBERS').
PUBLISHED NOTICE RE SETTLEMENT & DISTRIBUTION - 1 of 3
(99-2-00611-8)
[ 1241286 v7.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA.
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401-1157
(253) 820.8500 • FACSIMILE (253) 820.8585
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PLEASE NOTE THAT IF YOU ARE A CLASS MEMBER, YOU MAY BE
ENTITLED TO SHARE IN THE PROCEEDS OF THE SETTLEMENTS DESCRIBED IN
THIS NOTICE.
f S that the n ove=c t;,,„m lawsuit has been
A prior published notice uu�iiueu you �' >,-..-�up
certified as a class action. Plaintiffs allege that odors originating from the Yakima Regional
Wastewater Treatment Plant and adjacent Industrial Sprayfields have injured the named
plaintiffs and all other Class Members.
The Court has given preliminary approval to a settlement with defendant City of
Yakima that will end the lawsuit against the City of Yakima and Del Monte Corporation. In
addition, a Plan of Distribution for the net proceeds of all settlements has been proposed.
A hearing will be held in the courtroom of Judge Susan L. Hahn, Superior Court of
Yakima County, at 128 North Second Street, Yakima, Washington, at 9:00 a.m. on
November 21, 2003, to determine whether the proposed settlement should be approved by the
Court as fair, reasonable and adequate, and whether the Court should approve the Plan of
Distribution. Even if the Court approves the settlement, no distribution of any funds will be
made until a later date.
To share in the cash benefits of the proposed settlement you must be a class member
and you must complete a Proof of Claim Form that can be obtained from Class Counsel, by
writing or calling:
Yakima Treatment Plant Class Action Lawsuit
Claims Administrator
P.O. Box 1653
Tacoma, WA 98401-1653
1 (877) 347-4780
Class Members who owned property or resided in the class area prior to July, 2001
were given an opportunity to exclude themselves from the classes, and may no longer do so.
They will be bound by the settlement if it is approved by the Court. Those who are class
PUBLISHED NOTICE RE SETTLEMENT & DISTRIBUTION - 2 of 3
(99-2-00611-8)
[ 1241286 v7.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SURE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 08601.1157
(253) 8209500 • FACSIMILE (253) 1320-85155
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members solely because they acquired property or moved into the class area between July
2001 and October 10, 2003, may exclude themselves from the lawsuit. Those Class Members
may obtain a request for exclusion form by written request to Class Counsel at the address
above.
IF YOU ARE A MEMBER OF THE CLASS DESCRIBED ABOVE, YOUR
RIGHTS WILL BE AFFECTED AND YOU MAY BE ENTITLED TO SHARE IN THE
SETTLEMENT FUNDS. If you believe you are or may be a member of the class and you
have not yet received in the mail the full Notice of Proposed Final Settlement and Plan of
Distribution, you may obtain copies of these documents by writing to or calling the Claims
Administrator at the address or phone number specified above and identifying yourself as a
potential member of the Class.
Lawyers for the class will hold two meetings for class members to explain the terms of
the settlement in detail, describe the proposed plan for distributing net settlement proceeds to
Class Members, assist in completing claim forms and answer any questions. The meetings for
Class Members will occur:
Wednesday, November 5, 2003 at 7 p.m. at St. Joseph's Church bingo hall.
and
Thursday, November 6, 2003 at 7 p.m. at St. Joseph's Church bingo hall.
Spanish translators will be present at the second (November 6) meeting.
PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE FOR
INFORMATION.
SUPERIOR COURT OF THE STATE OF
- WASHINGTON FOR YAKIMA COUNTY
Clerk of the Court
Yakima County Superior Court
128 North Second Street
Yakima, Washington
PUBLISHED NOTICE RE SETTLEMENT & DISTRIBUTION - 3 of 3
(99-2-00611-8)
[1241286 v7.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITS 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401-1157
(253) 820-8500 - FACSIMILE (253) 820.8585
Yakima Class
Area
►�, r„Ir.s
11 tknn 1 n
..
1 l'1111.111L 1 11
I tn,I\ In
Dalton Ln
E Np 15.14 14I�.1
.y1,1111 -t
Botwess �'\
Birch St
gimp Lia
Iler I_n
Mai�
0
Yakima (_Mass Area
Zone 1
Zone
Zone
02
04 Miles
Mundy Associates LLC (912003)
98-1203
curt St
1V
'hit ' Si
wmi 1 St
11. Yak ma
APPRAISAL OF
1,054 Single Family Residences
in Yakima and Union Gap
Yakima County, Washington
as of
September 13, 2002
Prepared for
Brad Jones and Kenneth Kiefer, Attorneys
Gordon Thomas Honeywell Malanca Peterson &
Daheim
Report Date: November 26, 2002
by
Mundy Associates LLC
EXHIBIT 4
MUNDY ASSOCIATES LLC
ECONOMIC, MAR5 oKETEN ANNE VALUATION
AVE N.ANALYSTS
182SEATTLE, WASHINGTON 98109
(206) 623-2935 - FAX (206) 623-2985
November 26, 2002
Mr. Kenneth Kieffer
Mr. Bradley B. Jones
Gordon Thomas Honeywell Malanca Peterson & Daheim
1201 Pacific Ave. Suite 2200
-eeer' IV 044n1
vw
Dear Sirs:
Transmitted with this letter is our summary appraisal report of 1,054 residential
located within a designated "class area" in the cities of Yakima and Union
properties i.,.."��••Gap, Yakima County Washington. This report examines the loss of use and enjoyu ent of
these properties from 1990 through 2001 as a result of persistent noxious odors
emanating from the city of Yakima's Regional Wastewater Treatment Plant and its
associated composting and Industrial Spray field activities.
The valuation and all work performed in conjunction with it has been made in
conformance with standards established by the Appraisal Institute. This is a summary
report of a mass appraisal. The appraisers have invoked the departure provision of the
Uniform Standards of Professional Practice (USPAP), and have not conducted an
independent analysis of the highest and best use of the subject properties. The highest and
best use of those properties is assumed to be their current use, which is as residential
homes. The report contains a summary of the data obtained and analyzed in drawing our
conclusions. All supporting documentation is retained in our files, available to you upon
request.
This report documents the result of analysis conducted to date. Our work is still in
progress and may be supplemented with additional data and analysis. Estimates of
damages due to the Wastewater Treatment Plant are subject to change as a result of
ongoing research.
There are various assumptions and limiting conditions stated in the front of this report
that serve as an important foundation for our valuation analysis. -
Based upon the information and analyses presented herein, it is my opinion that the
damages to the combined 1,054 properties, as of September 13, 2002, resulting from the
loss of use and enjoyment over time tals $ interest$.34 million . The before -after interest on foross of use
2002 are
and enjoyment, $ 13.22 million with
estimated at $4.45 million. The damages to each individual property are summarized
within the body of this report.
analysis for you. If you have any questions regarding
It has been a pleasure preparing this
it, please do not hesitate to call upon us.
Sincerely,
MU]VDYASSOCLATES LLC
Bill Mundy, Ph.D., CRE, MAI, CEO
MUNDY ASSOCIATES LLC
SEATTLE, WASHINGTON
TABLE OF CONTENTS
i
GENERAL ASSUMPTIONS ii
GENERAL T Ir tITING CONDITIONS ;;;
SUMMARY OF PERTINENT INFORMATION
INTRODUCTION 1 1
Identification of the Subject Properties i
Legal Description 1
Ownership of the Class Properties 1
Purpose of the Appraisal
Intended Use of the Appraisal 16
1
Client 6
Compliance 66
Competency of the Appraiser 6
Property Interest Appraised
Definition of Market Value 6
6'
Research Participants and Property Inspection
Date of Valuation
7
Date ofthe Report ................ /
7
-- '
Scope of the Appraisal 8
Report Type 8
REGIONAL DESCRIPTION
Access .......• 8 8
Higher Education9
10
Health Care 1 0
Population
Labor Market 1
111
Financial Statistics 2
13
Taxes
Irrigation and Agriculture 13
13
Military Presence in Yakima County 4
15
CLASS AREA DESCRIPTION
THE NATURE OF THE CONTAMINATION PROBLEM 1g
28
Chronology of Events 0
21
Record of Compliants
HIGHEST AND BEST USE ANALYSIS 22
232
VALUATION ANALYSIS
Approaches To Value 23
243
Impairment and Value — An Overview of the Literature
Effects of Impairment on Property Values 230
5 25
Affects of Odor on Property Values 32
Lenders.. .. . ......... 33
National Lenders Survey .... ••• 37
Yakima Lenders Attitudes ...... .. . 37
Case Studies .. ............. .
38
Bremerton \\' astewater Facility
98-1203 Yakima
November 22, 2002
Cedar Hills/Cedar Grove .................... . .
39
Spokane Colbert Landfill ............................................................ 40
Case Studies Summary ........................ ...............................................
41
Stigma .,..............
Intuitive Toxicology .............................. ..............................
....... ......... . .
Stigma and Property Values ..............................
Yakima Class Area Valuation Impairment Model .......................... ..... 7
.......... 4
Impaired Value of Subject Properties .......................... ..................
.........................8
.... .48
9
Unimpaired Value of Subject Properties........................................................ 51
Companson of Class Area and ControlArea ..................•• ••• 1
Macro -Statistical Analysis of Class and Control Area Sales .................................... 5
5
Matched Pairs Analysis .•••••- •..' """
Hedonic Analysis of Class & Control
Area Property Value ................................. 65
of Annual Impact on .. 60
Summary '""'••
Unimpaired Value.............................................................................. 70
Calculation of U e Amount...............................................................
.....................•••••-•••••••••••."'-" 71
Calculation of Annual Damage 7�
Rates Used to Calculate Damage Amounts ............•......•••.•""'...
es to Class Area Properties .................... . 72
Calculation of Total Damages ... •••••••--
CERTIFICATION .••.•••-••••••••••.•-"
0
.....................................
LIST OF FIGURES 2
.........
Figure 1, Regional Location Map-..••.--.•••.--.,,.- . -••. 4
............................
Figure 2, Subject Area Location ............••••••••••--• 5
Are
Figure 3, Aerial Gloss Photograph
of Class tAreatand Treatment Plant ..
.. ................
Figure 4, Aerial Photograp ......................
Figure 5, Class Area Land Use ................................. •• -•.•""" '
3
Figure 7, Stigma Summary ••-•••••••• •.•....... "
6
...............
Figure 6, Levels of Concern ............................................................ ...... 4
....... 50
Figure 8, Selling Price to Assesed Value Ratio .........-.•••••••••••••••-•".........................
Figure 9, Class and Control Areas ..............................•.••••............ . . 52
53
Figure 10, Control Area Land Use Map .• ..... ••••• ....••• . 58
Figure 11, Median Sales Pnce............................................................ 58
.. ...................
69
Figure 12, Median Sales Price per Square Foot .............................. .
Figure 13, Median Days on the Market ...............................• .... 6l
Figure 14, Selling Price to Listing Pnce..................
Figure 15, Turnover Rate.... ....... .
.
LIST OF TABLES
Table 1. Population Comparison 1980 — 2000 .
Table 2. Labor Market
rkenStatliima for
aknna Count
Table 3, Retail Sales
Table 4. Effective Buying. Income in
BkIncome
ni iiauntyand the State
Table 5 Median Household Effect
in Yakima Count and the State of \\ ashinaton
Table 6. Y aklln.. Irrigation Proiect Statistics
. 10
11
12
of Washington 12
13
.. 14
9F-1203 Yakima
m canner 22, 2002
Table 7, Socio -Economic Characteristic Companson between the
Class Area and the Cities of Union Gap and Yakima —2 49 .
Table 8, Department of Revenue Yakima County Ratios2001 54
Table 9, Comparison of Class Area and Control AreaCharacteristics54
Table 10, Average Housing Sales Data 57
Table 11, Median Housing Sales Data 62
Table 12, Turnover Rates for 2000 and 2001 Yakima MLS Areas 64
Table 13, Adjustment Factors Utilized in Matched Pairs Analysis 4
Table 14, Summary of Matched Pairs 66
Table 15, Summary of Annual Price Discounts 6871
Table 16, Prime Rate and Treasury Bill Rates 1990-2000 73
r Sa pie Page of Value impairment Model 753
Table i �, 3aia��s�- Page .,. - ................ _
Table 18A, Opportunity Cost of Annual Loss of Use and Enjoyment
to Subject Properties97
Table 18B, Present Value of Compounded Annual Loss of Use and Enjoyment
LIST OF APPENDICES
A-1
Appendix A, Subject Property List A-1
Appendix B, Paired Sales C-1
Appendix C, Case Studies ............... D-1
Appendix D, Pacey Economic Analysis
Appendix E, Carlson Report.. ...... ... ........... .
Appendix F, 2002 Lenders Survery Report G-1
Appendix H, A Preliminary t1sac�a,,,..,,t o
Appendix G, Damage Calculations went of Fn„cisons of Odor -Causing EH --11
- A Wastewater
Chemicals and Odor Problems at the Yakima, WA,
Treatment Plant
1-1
Appendix I, Professional Qualifications
'8-1203 Yakima
November 22, 2002
65
In total, 58 sets of matched pairs were completed, averaging nearly five pairs for each of
the twelve years t" The sale price for class area properties is compared with the adjusted
price for each con-espondinu control area property in Table 14 (Summary of Matched
Pairs), along with the average and median price difference for each year. Overall, class
area properties have izenerally sold for between 2.12% and 15.81 % less than comparable
properties located in the control area." The mean and median difference indicated by the
58 pairings is —8.45% and 13% respectively However, there is considerable variation
in these price differences when examined on a year -by -year basis. The greatest price
differences between the class and control area properties are evident in the early half of
the decade. when class area properties were generally selling at a 9% to 16% discount
when compared to control area sales. The average pnce dispanty between the two areas
appears to have steadily declined from 1992 through 2001 with the exception of 1997 and
2000, when price discounts in the class area averaged over 9.2% and 11.0% respectively.
Hedonic Analysis of Class & Control Area Sales
The fine of Pace} Economics Group from Boulder, Colorado was contracted by the
clients to conduct an independent econometric analysis to investigate the change in sales
prices within the class area vis-a-vis the changes in sales prices of comparable hone
outside this area
The results of their study have been incorporated into our valuation analysis as an
additional method for estimating the impact of the odor pollution on the class area
properties. Through the use of econometnc modeling, the Pacey Economic Group
reported the class area properties have sold, on average for 11.6% less than the non -class
area properties over the 1992 — 2002 time penod with the exception of 1993, 1995 and
1996. The complete text of the Pace}, report is included in Appendix D of this report.
Summary of Annual Impact on Class Area Property Value
The impact of the odor pollution on the values of residential properties over time within
the class area has been examined through three independent methods of analysis. Each of
these methods demonstrates that class area property values are generally lower than
comparable properties located outside the influence of odor problems and/or have
appreciated at slower rates than those expenenced in otherwise comparable
neighborhoods Table 15 (Summary of Annual Price Discounts) summanzes the results
of the three methods and the appraisers' determination of an annual pnce discount, based
on this combined evidence, for the years 1990 — 2001
C r k tout matched pain \\ crc don. for 10°1 and 1 Q98 due to the limited number of class area sales.
! Icii ,Laid be closet\ mnLLht:J
1 nl` I: 1?_.' :'i;i `c! ` IC. Iunidic i I the dI tfIbuiion. thereb'• e\ciudul`_ the seven hlehest and lo\Ne\t
98-1203 }akcnur
V'ot entnc'r 2002
Table 15
Pacey Econometric Model Results
Summary of Annual Price Discounts
l ear
Sewage
Compost
Sprayfield
Matched Pairs
Pacey Econometric
Case Studies
Lit Review
Conclusion
Average
Median
Model
Bremerton
Cedar Hills
Spokane
See Table 14
1990
X
x
-10.08%
-7.84%
11.7%
11%
7.7%
5%- 17%
Some 100%
5%- 12%
11
1991
X
a
x
-11.32%
-13.20%
11 7%
11°%
7 7%
5%- 17%
Some 100%
5%- 12%
11
1992
®
x
-15.64%
-16 13%
11.7%
11%
7.7%
5% - 17%
Some 100%
5% - 12%
13
199;
O
x
-8 97%
-10 61%
None
11%
7.7%
5% - 17%
Some 100%
5% - 12%
12
--
x
-9.22%
-6.56%
l li 7%
11%
7.7%
5% - 17%
Some 100%
5% - 12%
12
1994
®
1995
199(i
X
O
x
-7.92%
-6.42%
None
11%
7.7%
5%- 17%
Some 100%
5%- 12%
12
X
x
x
-4.36%
-5.19%
11 7%
11%
7.7%
7.7%
5% - 17%
Some 100%
5%- 17%
Some 100%
5% - 12%
5%- 12%
11
12
1997
X
x
x
-9.86%
-12.01%,
11.7%
11%
98-1203 a
November 22, z002
Table 15 (continued)
1')V ,
-- --
1'),)',
'000
2001 —
2002
x
--- -----
\\
x —
x
x
--- ---
x
x
----
-3 57%
-3 43';4,
11 7%
11')A,
11%
7 7%
5% - 17%
Some 100%
5% - 12%
11
-3 45%,
-1 59%
11 7'1/0
7 7%
5%, - 17°„
Sonic 100°„
5% - 12"A,
10
10
x
-11 06%
-12 26"A,
11 70A,
11",,
7 7%
5% - 17',4,
Some 100%
5%, - 124A,
_
-5 61%
-7.74%
11 7%
11%,
7.7%
5% - 17%
Some 100%,
51,4 - 12'!,,
8
11 7%
11%
7 7%
5% - 17%
Some 1 00%
5% - 12%
6
.S'nur re A'/uiulm .1ssor oars LLC
98-1201 Yr/Amur
Novvmhr'r 22, 2002
70
There are considerable differences and independence between the various value
indicators First, the macro-statisticalanalysis general in
shows
market activity. Four of the fiveayesshow theeis�o clear pattern of market
activity. The turnover rate analysis clearly shows that the subject area housing market it
depressed. Second, the case study
analysis shows several things:
1. Odor does have an adverse affect on the value of residential property;.
2. There is considerable range in value affects rtfllocateds reflected ynearl anfacility emitting
3. If a taking is a proxy for damage, properties
noxious odors have a total loss in value as they were acquired for full market
value by the acquiring agency — that is, residents received 100% compensation.
Third, the literature review indicates that odor adversely affects the value of residential
property. Finally, the paired sales analysis and the Pacey analysis provides an indication
of the adverse value impacts that fall within the value impact ranges from the literature
and the case studies.
Based on the information and analyses presented above, the historic and current market
values within the class area reflect a diminution of between 6% and 13% per year
resulting from the odor pollution and other externalities affecting the class area
neighborhoods.
Calculation of Unimpaired Value
The factors specified above are applied to the impaired market values of each of the class
area properties dunng each of the thirteen years to yield the value of the property as if
unimpaired by the odor pollution. For example, to estimate the unimpaired value of a
property which has impaired market value of $50,000 in 1998, you would divide the
which an ----r-- .,., ,.,.,;,,,�,�,,,-Pd value in 1998 of $56,180.
impaired value by :89 (1.00-.11 j. This results in an un"paired
This process has been done for all the 1,054 properties for the years 1990 through 2002.
Calculation of Annual Damage Amount
Subtracting the impaired value from the unimpaired value denves the annual damage
amount. In the example cited above, the damage to the property is $6,180, which
represents the loss of use and enjoyment of the property dunng the year 1998. Damage
amounts were accordingly calculated for all 1,054 properties for the years 1990 through
2002 67
67 According to Assessor s records. four of the properne,: \\ ere Imnro\ed subsequent to 1990 in these
cases damage amounts were only calculated for the nears durum which the house actually existed. For
other parcels. assessed values were not included throughout the I.. -\ear time trames We have assumed
that these proper -ties were improved during the first year tor whigh assessed \alues were provided, and
damages calculated accordingly from that year forward The Assessor records do not have complete
information on the "1 ear Built" for other 1,054 class area properties. For properties where this information
was not included. we have also assumed that the house was built prior to 199n
98-1203 Yakima
November 22, 2002
71
Rates Used to Calculate Damage Amounts
Two rates are used in estimating damage amounts. The first is what appraisers commonly
call the capitalization rate In economics, it represents an opportunity cost rate or the
annual utility obtained from a good or service.
The second rate is an interest rate, which represents the typical return on an investment
with minimal risk, for example, the prime rate.
Rates are commonly used to convert a stream of future income (utility) provided by a
particular asset into a single indication of value. In this situation, the capitalization rate is
used to convert the damage amounts accruing on an annual basis from 1990 through 2001
to the cumulative loss of use and enjoyment over this time frame.
In order to arrive at appropriate rates for the subject properties, a variety of sources were
reviewed, to include current and histonc treasury bill rates, "convenience yields" on
home ownership, and prevailing capitalization rates for rental housing in the Yakima area
over time.
Table 16, (Prince Rate and Treasury Bill Rates 1990-2000) summarizes the annual
average Pnme Rate and Treasury Bill rates for the years 1990 — 2001. The pnme rate
varied from a low of 6 00% in 1993 to a high of 10.01% in 1990 It generally stayed
between 6.00% and 8 00% throughout the period. The annual average 1 year treasury bill
varied from 3.43% to 7 89%, though generally stayed between five and six percent for
most of the time frame.
Table 16
Prime Rate and Treasury Bill Rates 1990-2000
Year
Prime Rate
Average Annual
Treasury Bill
Avera a Annual
1990 10.01% 7.89%
1991 8.46% 5.86%
1992 6.25% 3.89%
1993 6.00% 3.43%
1994 7.15% 5.32°'
1995 8 83% 5 94%
1996 8 27% 5.52%
1997 8 44°x0 5 63%
1998 8 35% 5 05%
1999 8 00° 0 5 08%
2000 9 23° 6 11%
2001 6 91°o 3 49%
I c'(X1u B1 / -1 rc•ragc -1111111(1/ 1 ) cm- hill
9S-1 203 )akmm
�VrH1•c'/tthc'1 22 2002
Calculation of Total Damages to Class Area Properties
The above-specified elements have been combined in a model to estimate the total
of ., class area properties. A sample page, which illustrates the
damages to each the 1,054 �,�� r.�r....,...,. �---..r•-
inputs and calculations described above, is shown in Table 17, (Sample Page of Value
Impairment Model). The full model and the property specific year -by -year damage
amounts are included in Appendix F. The net present value of the annual damage
amounts from 1990 to 2001 are summarized by parcel in Table 18A (Opportunity Cost of
Annual Loss of Use and Enjoyment to Subject Properties). Table 18B (Present Value of
Compounded Annual Loss of Use and Enjoyment) calculates the interest on these
opportunity costs at a rate of 7%.
There are two components to the overall value diminution of class area properties due to
odor emissions from the Wastewater Treatment Plant. The first component is the
difference between the current (2002) unimpaired and impaired market values.
Commonly referred to as the Before and After approach, it is prospective because it
quantifies the present value (as of 2002) of the loss of future benefits. b8 Damages to the
1,054 class properties resulting from this diminution component is:
Unimpaired Value: (All Properties) $ 74.1 million
Impaired Value: (All Properties) $ -69.6 million
Total Damage: (All Properties) $ 4.5 million
The second component of the overall damages is the net present value of the loss of use
and enjoyment, accruing from 1990 — 2001, as measured in the above described model
and summarized in Tables 18A and 18B.
Damages to the combiner t 054 Macs area properties totals $ 8.34 million without
Damages ..w.av sas.+.+ •,�-- ----- area properties
interest, and $ 13.22 million with interest.
The value analysis above is based on average damage amounts for the class area. The
paired sales analysis, case studies, literature review and Pacey econometric analysis did
not differentiate between damages to property close to or farther away from the
Wastewater Treatment Plant. The damage amount we have estimated is for the entire
class area. As the Zanetti analysis, literature and Mundy Associates LLC analysis for
other communities shows property values increase with distance from the contamination
source. The differential affect is a damage distribution issue that we have not addressed
in this analysis.
68 As vas noted previously, the contamination of a property can be considered as a "taking" The Before
and After Rule is often referred to as the Federal Rule which i< a three-step rule and which states The
value of the property before the taking less the remainder hropert after the taken( leaves the difference
which is dust compensation. or in the case of contamination damage, Eaton. J D Real Estate Value in
Luiganon 2°" Ed . The Appraisal Institute. pg. 24
98-1203 Yakima
November 22, 2002
E52O0 0
693000
694000
695000
696000
yh�« short -Term, peak odor concentrations (l)-11 simulated �). ISC3
the \\ \\ | /` emn|,+ioo`.
Page 4'
cr, n1 nnA n7 11'25
LI.�V 1'lJJ t ^^^ V.-1
1,2,11 c 21 - possible scenario for the highest short-terf . peak odor concentrations
; simulated b) Is(3 for the spray field emissions.
lttorne�-Client/%ori: Product - Prk ileged Page 43
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Yakima Class Area
Zoite 1
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Zone 3
02
0 4 Aliles
Mundy Associates LLC (9/2003)
98-1203
S
Park A c
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r 4:FINED
OCT 0 2 ZOE
girt ( L dAL DEPT.
SUPERIOR COURT OF THE STATE OF WASHINGTON
FOR YAKIMA COUNTY
WILFRED and KAREN MURPHY, husband and
wife, et al.,
Plaintiffs,
v.
CITY OF YAKIMA, a Washington municipal
corporation, et al.,
Defendants/Third Party Plaintiffs,
v.
CITY OF UNION GAP, a Washington municipal
corporation, et al.,
Third Party Defendant.
NO. 99-2-00611-8
NOTICE OF PROPOSED FINAL
SETTLEMENT AND PLAN OF
DISTRIBUTION
ASSIGNED TO THE HONORABLE
SUSAN L. HAHN
IMPORTANT LEGAL NOTICE
This Notice may affect your legal rights. Please read carefully.
I. YOU MAY BE ELIGIBLE TO RECEIVE A SHARE OF CASH BENEFITS
FROM A PROPOSED SETTLEMENT
You may have been previously notified that you may be a member of the certified
class described below in a lawsuit against the City of Yakima and Del Monte Corporation
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 1 of 18
(99-2-00611-8)
[1241104 v8.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL. MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 06001.1157
(253) 620-0600. FACSIMILE (253) 620.6545
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concerning odors from the Yakima Regional Wastewater Treatment Plant and adjacent
Industrial Sprayfields (collectively the "Treatment Plant"). THIS NOTICE IS A
SUPPLEMENT TO THAT EARLIER NOTICE, AND MAY AFFECT YOUR RIGHTS.
A. Summary of Class Membership.
The Court has previously ruled that the following people and entities are class
members:
DEFINITION OF THE CLASS
ALL PERSONS, INCLUDING MINORS AND BUSINESS ENTITIES, WHO,
AT ANY TIME SINCE JUNE 30, 1990 HAVE RESIDED IN AND/OR OWNED
RESIDENTIAL REAL PROPERTY IN THE AREA DEPICTED ON THE MAP
ATTACHED AS EXHIBIT A.
B. Purpose of the Notice.
The purpose of this Notice is to inform you of:
• The status of the lawsuit;
• The essential terms of a proposed settlement with the City of Yakima, owner and
operator of the Treatment Plant. The settlement will also resolve claims against
Del Monte Corporation;
• The essential terms of a Plan of Distribution, which will govern payment to class
members of the net proceeds of all settlements;
• The requirement that you file a Proof of Claim Form in order to share in the
proposed Settlement Funds;
• The time and place of two meetings Class Counsel will hold for class members to
answer questions about the settlement and proposed Plan of Distribution and to
assist in completing Proof of Claim Forms;
• The hearing to be held by the Court to consider final approval of the proposed
settlement and Plan of Distribution;
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 2 of 18
(99-2-00611-8)
[1241104 v8.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 08101-1157
(253) 820-6500 - FACSIMILE (253) 62045585
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• Your rights and obligations as a result of this lawsuit and the settlement, and steps
you may take in relation to the settlement and this class action litigation.
C Summary of Options and Deadlines.
As a class member, you may choose to:
• Receive a portion of cash benefits of the proposed settlement. (To share in the
benefits of the proposed settlement, you must mail a Proof of Claim form by
December 15, 2003. For more on filing a claim, read Section IV);
• Object to the proposed settlement or plan of distribution. (To object, you must
mail a written objection by November 14, 2003. For more on objecting, read
Section IV).
• Do Nothing. (If you do nothing, you will be bound by the terms of the settlement,
including releasing any and all claims you may currently have against the City of
Yakima and Del Monte concerning the Treatment Plant, but will receive no cash
benefits).
By prior Notice, if you owned property or resided in the class area prior to July 2001
you were given an opportunity to exclude yourself from the class; therefore, you may no
longer exclude yourself and you will be bound by the settlement if it is approved by the Court.
However, those who are class members solely because they acquired property or moved into
the Class Area between July 2001 and October 10, 2003 ("New Class Members") may choose
to exclude themselves from the lawsuit. To do so, a New Class Member must file a request
for exclusion, in which case he or she will not be eligible to 'receive a share of the cash
benefits and will not be bound by the terms of the settlement. (New Class Members may
exclude themselves from the lawsuit by requesting an exclusion form in writing by
November 1, 2003 and mailing it to Class Counsel by November 14, 2003. For more detail,
read Section IV).
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 3 of 18
(99-2-00611-8)
[1241104 v8.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 68401.1157
(253)1120450D - FACSIMILE (253) 6248585
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II. STATUS OF THE LAWSUIT
The claims in the lawsuit against the City of Yakima and Del Monte were described in
the first Notice you received. If you want to receive another copy of that original Notice,
please refer to Section VI of this Notice. If you did not already file a timely exclusion from
the class and you fall within the definition of the class, you are a class member.
On April 19, 2001, the Court ruled that the claims against the City and Del Monte
would be certified as a class action. The parties proceeded to engage in lengthy discovery
involving hundreds of thousands of pages of documents, depositions of dozens of factual
witnesses, and the work of nearly a dozen expert witnesses. The parties also filed, and the
Court ruled upon, dozens of motions directed at a variety of issues.
Prior to class certification the City of Yakima and Del Monte entered into their own
settlement agreement. In return for Del Monte paying Yakima $500,000 and agreeing to
other expenses and activities designed to close down the Industrial Sprayfields and reduce
odors, Yakima agreed to assume any liability Del Monte had to the Class Members in this
lawsuit.
In October of 2001 the City of Yakima sued the City of Union Gap, claiming that
sewer collection and transportation facilities owned by Union Gap contributed to the alleged
odors Class Members claimed to experience. The plaintiff class never sued Union Gap
directly. Nonetheless, the City of Union Gap agreed to settle with the class for $200,000 in
order to avoid the expense and uncertainty of being a party to the lawsuit. The settlement
with the City of Union Gap provides that the net proceeds of that settlement will be
distributed only to class members living or owning residential property south of Valley Mall
Boulevard.
In August of 2001 the City of Yakima sued four (4) insurance companies, claiming the
policies the companies issued to Yakima covered the claims made in this lawsuit by the class.
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 4 of 18
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LAW OFFICES
GORDON, THOMAS, HONEYWELL. MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2200
POST OFFICE SOX 1157
TACOMA, WASHINGTON 56401-1157
(253) 0204500 - FACSIMILE (253) 6205665
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A federal judge ruled in favor of the insurance companies and dismissed Yakima's lawsuit.
That decision is currently on appeal to the Ninth Circuit Court of Appeals.
In April of 2003, Class Counsel filed a separate lawsuit on behalf of the class against
the same insurance companies. In that lawsuit the class seeks an order that the claims for
damages caused by the Treatment Plant are covered by the terms of the policies. That lawsuit
will be heard in Yakima County Superior Court. No trial date has been set.
Trial in this lawsuit was scheduled to begin on March 3, 2003. However, on
February 15, 2003, the Court certified an issue for appeal, The Court of Appeals accepted the
appeal in May 2003. This delayed the trial indefinitely. In the absence of a settlement, it is
unlikely the trial would occur sooner than the late fall of 2004.
In September 2003, the named class representatives and attorneys for the class reached
a settlement agreement with the City of Yakima, described below.
On October 10, 2003, Judge Susan L. Hahn, who has presided over this case for more
than four years, preliminarily approved the proposed settlement with the City of Yakima and
the proposed release of claims against Yakima and Del Monte.
The Court will hold a hearing (the "Fairness Hearing") in the Courtroom of Judge
Susan L. Hahn, Superior Court of Yakima County, at 128 North Second Street, Yakima,
Washington at 9:00 a.m. on November 21, 2003, to determine whether, as recommended by
both Class Counsel and the class representatives, the Court should finally approve the
proposed settlement with the City of Yakima. At that same hearing, the Court will consider
final approval of the Plan of Distribution for all the settlement proceeds (see Section V below)
and may consider Class Counsel's request for reimbursement of costs and an award of
attorneys' fees.
TO RECEIVE A SHARE OF THE SETTLEMENT BENEFITS, YOU MUST
MAIL THE ATTACHED PROOF OF CLAIM FORM, POSTMARKED ON OR
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 5 of 18
(99-2-00611-8)
[1241104 v8.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL MALANCA.
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 96401.1157
(253) 620-0500 • FACSIMILE (253)520-5505
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BEFORE DECEMBER 15, 2003, TO CLASS COUNSEL (SEE SECTION IV FOR
MORE DETAILS).
III. THE SETTLEMENT
A settlement has been reached in the litigation between plaintiffs and defendant the
City of Yakima. The settlement will end all claims in the lawsuit against both the City of
Yakima and Del Monte. That settlement is embodied in a Settlement Agreement which is on
file with the Court. Class Counsel believe that this settlement is fair, adequate, reasonable,
and in the best interest of the class. The Court has preliminarily approved the settlement. The
terms of the settlement are summarized below. You may obtain a copy of the Settlement
Agreement from Class Counsel at the address provided in Section VI, below, and are
encouraged to do so if you have any questions about the exact terms of the settlement.
A. Establishment of Common Fund.
Plaintiffs and defendant City of Yakima have entered into a proposed settlement.
Under the terms of the settlement, the City of Yakima agrees to the entry of a judgment
against it for $13,000,000. Following Final Approval of the settlement the City will pay
$7,000,000 into the trust account of Class Counsel, and will have no further financial
obligation to the Class Members.
Amounts between $7 million and $13 million can only be collected from Yakima's
insurance companies. The City of Yakima will continue its appeal of the dismissal of its
claims against its insurers and the class will continue its separate lawsuit against the same
insurers in Yakima County Superior Court. The City of Yakima and the class agree to
cooperate in their suits against the insurers, and have agreed on a formula for distributing any
money the City or the class receive from any settlement with or judgment against the insurers.
Under that formula the City of Yakima receives the first $500,000, the class receives the next
$500,000, the class receives 80% and Yakima 20% of any amounts between $1 and $3
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 6 of 18
(99-2-00611-8)
[1241104 v8.docj
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1151
TACOMA, WASHINGTON 05401.1157
(253) 6206500 - FACSIMILE (253) 620.0565
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million, and -the class and the City share equally in any amounts over $3 million.
Ultimate recovery of any amount above $7 million depends upon Class Counsels' and
the City of Yakima's success in pursuing such claims. At this point, it is uncertain what
amounts, if any, Class Counsel or the City will obtain from these insurance companies for the
benefit of the class.
B. Release of Claims Against the City of Yakima and Del Monte.
Upon Court approval of the settlement and entry of the final court order dismissing
claims against the City of Yakima and Del Monte, you and all other class members will be
releasing all claims you may have for acts or omissions of the City of Yakima and Del Monte
concerning the Treatment Plant prior to the date of final approval of the settlement. In
addition, the settlement limits a future type of property damage claim, called inverse
condemnation or "takings," to situations where there is additional activity by the City of
Yakima that causes an increase in odors over the level that has existed for the last t ree years.
The limit on future inverse condemnation or "takings" claims will bar current and
future property owners and residents from pursuing claims for such damages incurred prior to
November 21, 2003. The City of Yakima intends to file a copy of the Settlement Agreement
with the Yakima County Assessor's Office. A reference to the Settlement Agreement may
appear on property records.
Class members are advised that Washington law imposes a duty on sellers of
residential property to inform buyers of any important information that may affect a buyer's
decision to purchase the property. The fact that this odor lawsuit occurred and the basic terms
of the settlement may be the type of information the law would require a seller to disclose.
Class members are encouraged to either disclose the fact of the lawsuit and settlement at the
time they sell their property or consult with a lawyer regarding any disclosure obligations.
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 7 of 18
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[1241104 v8.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MAI.ANOA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SURE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 96401-1157
(253) 6200500 - FACSIMILE (253) 020.6565
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C. Attorneys' Fees and Costs.
Class Counsel intend to seek reimbursement from the Common Fund for costs
advanced during the litigation on behalf of the class and for the costs of administering the
settlement. Class Counsel will also seek one-third of the net settlement (the total settlement
amount minus litigation and administration costs) as payment of legal fees. To date, Class
Counsel have spent some five years working on behalf of the class and have received no
payment for their services. To date, Class Counsel have spent more than $1 million on
litigation costs (deposition transcripts, copying costs, etc.) without being reimbursed for any
of those payments. The fee requested by Class Counsel would compensate them for their
efforts in achieving a settlement fund for the benefit of the class, and for their risk in
undertaking this representation on a contingency basis for the last five years. If approved by
the Court, the fee request would be within the range of fees awarded to plaintiffs' counsel
under similar circumstances in litigation of this type. The actual amount awarded Class
Counsel for fees and costs will be determined by the Court. No funds will be distributed to
Class Counsel at this time.
D. Conditions of the Settlement.
This settlement is conditioned upon the Court's Final Approval of the settlement,
which will be determined at the Fairness Hearing on November 21, 2003. If the Court does
not grant Final Approval of the Settlement, the Settlement Agreement might be terminated,
and, if terminated, will become null and void, and the parties to the Settlement Agreement
will be restored to the respective positions they held before the Settlement Agreement was
signed.
IV. OPTIONS FOR CLASS MEMBERS
A. Option # 1: Agree to Proposed Settlement.
IN ORDER TO RECEIVE A SHARE OF THE CASH BENEFITS OF THE
SETTLEMENT, YOU MUST COMPLETE AND DELIVER TO CLASS COUNSEL A
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 8 of 18
(99-2-00611-8)
[1241104 v8.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 05101.1157
(253) 020-6500 - FACSIMILE (253) 6204505
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PROOF OF CLAIM FORM ON OR BEFORE DECEMBER 15, 2003. (A blank Proof
of Claim Form is attached to this Notice for your use.) ANY CLASS MEMBER WHO
FAILS TO PROPERLY COMPLETE A PROOF OF CLAIM FORM AND DELIVER
IT TO CLASS COUNSEL BY THE DEADLINE WILL NOT RECEIVE ANY SHARE
OF THE CASH BENEFITS OF THIS SETTLEMENT BUT WILL STILL BE BOUND
BY THE SETTLEMENT AGREEMENT.
Class members who support the proposed City of Yakima settlement and the proposed
Plan of Distribution do not need to appear at the Court's Fairness Hearing but may submit
written statements of support to the Court by November 14, 2003.
B. Option # 2: Object to Proposed Settlement.
Objections by class members to the proposed settlement and/or the Plan of
Distribution will be considered by the Court, but only if the person raising such objections
mails to Class Counsel, no later than November 14, 2003, at the address set forth in Section
VI, below, a written statement of his or her objections and the legal and/or factual bases for
those objections. The written statement of objections must: (1) bear the case name and cause
number (Murphy, et al. v. City of Yakima, et al., Civil Action Number 99-2-00611-8); (2) be
identified as an "OBJECTION TO PROPOSED SETTLEMENT" or "OBJECTION TO THE
PLAN OF DISTRIBUTION;" and (3) contain the name, address, and telephone number of the
objecting party and his or her attorney, if any. Any person who properly delivers a written
statement of objection as specified herein may appear at the Fairness Hearing in person or
through counsel to show cause why the proposed settlement with the City of Yakima, and/or
the Plan of Distribution, should not be approved as fair, adequate and within the realm of
reasonableness. As long as an objection is properly delivered as set forth above, the Court
will consider it even if the objecting party is not present at the hearing,
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 9 of 18
(99-2-00611-8)
[1241104 v8.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 09401-1157
(253) 920-0.500 - FACSIMILE (253) 020.9594
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No objection, and no pleadings or papers relating to any objection, shall be heard
or considered by the Court unless the objecting party has fully complied with the
requirements of the paragraph above. Any member of the plaintiff class who does not
properly deliver a written statement of objections in the manner specified herein shall
be deemed to have waived any and all objections for all purposes. Attendance at the
hearing is not necessary; however, class members wishing to be heard orally in opposition to
the Proposed Settlement and/or the Plan of Distribution should indicate in their written
objection their intention to appear at the hearing.
C. Persons or Entities Who are Class Members Solely Because They Moved into or
Acquired Property in the Class Area After July 2001, Have the Option to Remain
a Class Member or Opt Out of the Proposed Settlement.
If you are a class member solely because you moved into the class area between July
2001 and October 10, 2003 and had not previously lived in the class area since June 30, 1990
and/or because you acquired property within the class area between July 2001 and October
10, 2003 and had not previously owned property in the class area since June 30, 1990, then
you are a "New Class Member" and have an opportunity to exclude yourself from the Class.
New Class Members may obtain a request for exclusion form by mailing a written request for
the form to Class Counsel at the address below, postmarked on or before November 1, 2003.
Yakima Treatment Plant Class Action Lawsuit
Office of the Claims Administrator
P.O. Box 1653
Tacoma, WA 98401-1653
In order to exclude yourself, you must return the completed exclusion form by mail,
postmarked no later than November 14, 2003. If you do not file an exclusion form, you will
be a Class Member and will be bound by the terms of the Settlement Agreement.
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 10 of 18
(99-2-00611-8)
[1241104 v8.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2200
POST OFFICE BOX 1157
TACOMA. WASHINGTON 98401-1157
(253) 5204500 - FACSIMILE (253) 820.6565
If you are a New Class Member and choose to exclude yourself, you will have no
righ'.s under the Settlement, you will not share in the distribution of any Settlement Fund and
you will not be bound by any settlement or judgment concerning the City of Yakima or Del
Monte in this action. You will be free to pursue whatever legal rights you may have, if any,
against the City of Yakima or Del Monte at your own expense and on your own behalf.
V. PROPOSED PLAN OF DISTRIBUTION
TL.. ....,i Pl. n o f Distribution fort a settlement with the City of Yakima and Del
31:v pivp'u u-. Ian �'i 11,LX15-MStb Slat 1 -.US e••y ves�e.rew...... ..
Monte provides that the net settlement funds (the total amount of funds received from the City
of Yakima, Union Gap, and any of Yakima's insurers after deduction of Court -approved
litigation costs and attorneys' fees) will be distributed as follows.
A. Class Representative and Original Plaintiff Payments.
The lawsuit was initially filed in the names of almost 200 individuals. Approximately
140 submitted answers to written questions (the "Original Plaintiffs"). As compensation for
their time and services Class Counsel recommend that each Original Plaintiff receive $1,000.
Approximately twenty of the Original Plaintiffs were also interviewed or deposed by
lawyers for the City of Yakima or Del Monte (the "Deposed Plaintiffs"). Class Counsel
recommend that Deposed Plaintiffs receive an additional $1,500 as compensation for their
additional time and services, for a total compensation of $2,500.
Once the case was certified as a class action in April 2001, this lawsuit was led by the
efforts of eight individuals (the "Class Representatives"). The Class Representatives pursued
the lawsuit in their individual names, on behalf of themselves and the entire class they
represent. They were deposed multiple times, attended numerous meetings and court
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 11 of 18
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LAW OFFICES
GORDON, THOMAS, HONEYWELL MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2200
POST OFFICE BOX 1157
TACOMA. WASHINGTON 66401.1157
(253) 620.8500 • FACSIMILE (253) 620.6565
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hearings, and participated in three separate mediations. Class Counsel recommend that each
Class Representative receive an additional $7,500 as compensation for their additional time
and services, for a total compensation of $10,000.
B. Creation of Personal Nuisance Fund and Property Damage Fund.
As described in more detail below, the remaining net settlement funds will be
allocated seventy percent (70%) to personal nuisance damages (the "Personal Nuisance
Fund"), and thirty percent (30%) to property damages (the "Property Damage Fund").
The Personal Nuisance Fund will be distributed pro rata to thosd class members who
submit valid Proof of Claim forms (or who are identified on such forms) showing that they
resided in the class area between June 1995 and October 10, 2003 (the "Personal Nuisance
Class Period"). The Personal Nuisance Class Period is shorter than the Property Damages
Class Period because the time periods applicable to legal claims for personal nuisance -type
damages are shorter than time periods for property damages. Allocations of the Personal
Nuisance Damages Fund will be based on the length of residency, subject to adjustments
discussed below that reflect the years of greatest Treatment Plant odors and proximity to the
Treatment Plant.
The Property Damages Fund will be distributed to class members who submit valid
Proof of Claim forms showing that they owned property within the -class area between June
30, 1990 and October 10, 2003 (the "Property Damages Class Period"). The formula for
allocating these funds among the various claimants uses the 2003 Yakima County Assessor's
Office assessed value of each claimant's property.
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 12 of 18
(99-2-00611-8)
[1241104 v8.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL MALANCA.
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 96401.1157
(253) 6206500 • FACSIMILE (253) 5200565
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The allocation formula for property damages looks at the length of time during the
Property Damages Class Period that a claimant owned a specific piece of property in relation
to the assessed values and periods of ownership of all other properties of all other claimants.
If two or more claimants owned a single property during the Property Damages Period, the
funds allocable to that property shall be divided between the claimants based on the periods in
which they each owned the property. As discussed below, allocations of the Property
Damages Fund, allocations of the Perennal Nuisance Damages Fund, will be adjusted to
Damages like allocations ... ...� � �.......� Nuisance __ _ Damages _ _�
reflect the time period during which a claimant owned a particular piece of property and the
proximity of that property to the Treatment Plant.
In the case of properties on which homes were constructed during the Property
Damages Period, Yakima County Assessor records will be used to determine assessed value
before and after the construction. Claimants who owned such properties will receive a
distribution based on the value of the unimproved land until the year in which the new home
was constructed. From the year in which the Yakima County Assessor's Office's data reflects
that the home was completed, distribution from the Property Damages Fund will be calculated
on the total assessed value of the property and improvements.
C. Treatment Plant Impacts Multiplier.
In determining the amounts to be distributed from both the Personal Nuisance and
Property Damage Funds for each year, a weighting approach will be used to account for the
periods when the Treatment Plant caused the greatest relative impacts. Information obtained
in preparation for trial and from the work of plaintiffs' real estate, economic and odor experts
indicate that the Treatment Plant had the most severe odor impact on the Class Area during
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 13 of 18
(99-2-00611-8)
[1241104 v8.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON 8 DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2200
POST OFFICE BOX 1157
TACOMA. WASHINGTON 96401.1157
(253) 620.0500 - FACSIWLE (253) 620.6565
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the period from June 1995 through October 2000. Therefore, each month during those years
will be given a "time/impact adjustment" value of 3. Each month in the periods June 30, 1990
through May 1995 and November 2000 through October 2003 will be given a "time/impact
adjustment" value of 1. This means, for example, that a person owning property for two years
between June 1990 and June 1995 would receive from the Property Damages Fund one-third
(1/3) of the amount that a person owning that same property for two years between June 1995
and June 2000 would receive.
An identical weighting approach will be used for computing allocations of the
Personal Nuisance Damages Fund. Each month from June 1995 to October 2000 will be
given a "time/impact adjustment" value of 3. Each month in the period from November 2000
through October 2003 will be given a "time impact adjustment" value of 1. Again, everything
else being equal this means a person who, for example, lived in the class area for two years
between 1995 and 2000 will receive an award from the Personal Nuisance Damages Fund
three times greater than a person who lived there for two years after November 2000.
The final calculation and precise allocation of the Property Damages Fund and the
Personal Nuisance Damages Fund can only be calculated after Proof of Claim forms have
been received and verified. Those final calculations will depend on the total number of valid
claimants, the assessed values of their properties, the periods in which they resided in or
owned properties in the class area, and the proximity of their various properties to the
Treatment Plant.
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 14 of 18
(99-2-00611-8)
[1241104 v8.doc]
LAW OFFICES
GORDON, THOMAS. HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 7200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401-1157
(253) 8200500 • FACSIMILE (253) 8248585
D. Proximity Impact Allocation
In addition to causing greater impacts during certain years, the Treatment Plant also
caused relatively greater impacts to those properties and residents in closer proximity to the
Treatment Plant. To account for the proximity impact, the proposed Plan of Distribution
divides the class area into three geographic Zones. The boundaries of each Zone are based on
the results of computerized modeling of wind patterns done by plaintiffs' experts and on the
nth Pr work of the expertC The 7nnec are designed to correspond to the varying degrees of
.. vase .,A ...... .. .�..... ....____ -----'�'-- s varying .. .�
odor impacts caused by the Treatment Plant in different parts of the class area. The portion of
the class area closest to the Treatment Plant and subject to the most severe odol. impacts is
identified as Zone 1 on the attached map. Zone 2 includes the northwest corner of the class
area and an area from Valley Mall Boulevard north to the boundary of Zone 1. The portion of
the class area south of Valley Mail Boulevard is identified as Zone 3.
The computer modeling and expert analysis used to determine the boundaries of the
Zones are also used to determine the relative adjustments appropriate to each Zone. The
expert concluded that a release of odors from the Treatment Plant that was rated as ha`r'ing ala
intensity of 5 in Zone 1 would have an intensity of 2 in Zone 2 and an intensity of 1 in Zone 3.
The Proximity Adjustment will maintain this relative ratio between individuals and properties
in the three Areas (5/8th in Area 1, 2/8`h in Area 2, and 1/8`h in Area 3) regardless of the rate at
which individuals return Proof of Claim Forms from each Area.' In summary, and all things
being equal, if a person in Zone 1 receives $500, a similarly situated person in Zone 2 will
receive $200 and a similarly situated person in Zone 3 will receive $100.
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 15 of 18
(99-2-00611-8)
[1241104 v8.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2200
POST OFFICE BOX 1157
TACOMA. WASHINGTON 95401-1157
(253) 620-6500 - FACSIMILE (253) 8248585
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E. Money From Union Gap Settlement.
Plaintiffs' Counsel will request fees and costs, and whatever amount the Court awards
will be computed as a percentage of the aggregate $7.2 million in settlement funds. Both
funds will then be reduced by the same percentage, to assure that the class members in the
north do not carry a disproportionate share of the costs of the litigation. Once the net value of
the Union Gap settlement has been determined, the funds will be distributed among claimants
living or owning property in Zone 3. The calculations will be identical to the calculations
used for distributing the City of Yakima's settlement, except that each claim will be valued as
a percentage of the total of Zone 3 claims instead of as a percentage of the total of claims
from all three Zones.
VI. ADDITIONAL INFORMATION
Class Counsel will also hold two meetings for Class Members concerning the
proposed settlement. At those meetings, Class Counsel will answer questions about the
Settlement Agreement and proposed Plan of Distribution and also offer assistance in
completing Proof of Claim Forms. The meeting for Class Members are scheduled to
occur as follows:
Wednesday, November 5, 2003 at 7:00 p.m.
St. Joseph's Bingo Hall
Thursday, November 6, 2003 at 7:00 p.m.
St. Joseph's Bingo Hall
Spanish translators will be present at the second, (November 6) meeting.
Any questions you have concerning the matters contained in this notice (and any
corrections or changes of name or address) should NOT be directed to the Court but
should be directed to Class Counsel at the following address and/or telephone number:
Yakima Treatment Plant Class Action Lawsuit
P.O. Box 1653
Tacoma, WA 98401-1653
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 16 of 18
(99-2-00611-8)
[1241104 v8.docj
LAW OFFICES
GORDON, THOMAS, HONEYWELL. MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2200
POST OFFICE BOX 1157
TACOMA. WASHINGTON SM01.1157
(253) 520.5500. FACSIMILE (253) 820.555
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1-877-347-4780
The pleadings, the Settlement Agreement, and other records in this litigation may be
examined and copied at any time during regular office hours at the office of the Clerk,
Court,
C Supe Court, 128 North Second CT a-- Yakima, Superior Court, Yakima County Superior Court, North oc�ullu �ucc�,
Washington. You may also obtain these documents from Class Counsel at the address listed
above.
VII. REMINDER AS TO TIME DEADLINES
i. In order to participate in the settlement, you must complete and send a Proof of
9 Claim Form to Class Counsel at the address set forth in Section V, by mail postmarked on or
10 before December 15, 2003.
11 if you wish to object to the proposed settlement and/or the proposed Alan of
12 Distribution, you must send an objection to Class Counsel in the manner described in Section
13 III.B above, by mail postmarked on or before November 14, 2003.
14 2. If you are a New Class Member, you can exclude yourself from this lawsuit by
15 II sending your request for and returning an exclusion form to Class Counsel as described in
16 Section III C above, by mail postmarked on or before November 14, 2003.
17 3. The Court will hold a Fairness Hearing in the Courtroom of Judge Susan L.
18 Hahn, Superior Court of Yakima County, at Yakima County Courthouse, 128 North Second
19 Street, Yakima, Washington at 9:00 a.m. on November 21, 2003, to determine whether, as
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NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 17 of 18
(99-2-00611-8)
[ 1241104 v8 dm)
LAW OFF)CES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SU! TE 2204
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401.1157
(253) 8204500 - FACSIMILE (259)6208585
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recommended by both Class Counsel and the class representatives, it should finally approve
the proposed settlement and the Plan of Distribution.
DATED this day of October, 2003.
SUPERIOR COURT OF THE STATE OF
WASHINGTON FOR YAKIMA COUNTY
By:
Clerk of the Court
Yakima County Superior Court
128 North Second Street
Yakima, Washington
Enclosure: Map of Class Area
Proof of Claim Form
NOTICE OF FINAL STLMNT/PLAN OF DISTRIBUTION - 18 of 18
(99-2-00611-8)
[ 1241104 v8.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON 8 DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 96401.1157
(253) 620-6500 - FACSIMILE (253) 620.6565
Dalton Ln
FNt Hillt
Yakima Class
Area
0
Yakima Class Area
Zone 1
Zone
Zone
02
0 4 Mile
Mundy .Associates LLC (9/2003)
98-1203
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li S
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corporation, et al.,
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r"" IVED
OCT C2Z003
LEGAL DEPT.
SUPERIOR COURT OF THE STATE OF WASHINGTON
FOR YAKIMA COUNTY
WILFRED and KAREN MURPHY, husband and
Plaintiffs,
v.
CITY OF YAKIMA, a Washington municipal
corporation, et al.,
Defendants/Third Party Plaintiffs,
v.
CITY OF UNION GAP, a Washington municipal
Third P. Defendants.
NO. 99-2-00611-8
PUBLISHED NOTICE OF PROPOSED
FINAL SETTLEMENT AND PLAN OF
DISTRIBUTION
ASSIGNED TO THE HONORABLE
SUSAN L. HAHN
HEARING DATE: October 10, 2003
THIS NOTICE MAY AFFECT YOUR RIGHTS
PLEASE READ CAREFULLY
23 ALL PERSONS, INCLUDING MINORS AND BUSINESS ENTITIES, WHO
24 SINCE JUNE 30, 1990 HAVE RESIDED IN AND/OR OWNED RESIDENTIAL
25 PROPERTY IN THE AREA DEPICTED ON THE MAP BELOW ("CLASS MEMBERS").
26
PUBLISHED NOTICE RE SETTLEMENT & DISTRIBUTION - 1 of 3
(99-2-00611-8)
[ 1241286 v7.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON 8, DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2200
POST OFFICE BOX 1157
TACOMA. WASHINGTON 96401.1157
(253) 6204500. FACSIMILE (253) 620-0585
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PLEASE NOTE THAT IF YOU ARE A CLASS MEMBER, YOU MAY BE
ENTITLED TO SHARE IN THE PROCEEDS OF THE SETTLEMENTS DESCRIBED IN
THIS NOTICE.
A prior published notice informed you that the above -captioned lawsuit has been
certified as a class action. Plaintiffs allege that odors originating from the Yakima Regional
Wastewater Treatment Plant and adjacent Industrial Sprayfields have injured the named
plaintiffs and all other Class Members.
.�
_r
The Court has given preliminary approval to a settlement with defendant City of
9
Yakima that will end the lawsuit against the City of Yakima and Del Monte Corporation. In
10 II
addition, a Plan of Distribution for the net proceeds of all settlements has been proposed.
A hearing will be held in the courtroom of Judge Susan L. Hawn, Superior Court of
Yakima County, at 128 North Second Street, Yakima, Washington, at 9:00 a.m. on
November 21, 2003, to determine whether the proposed settlement should be approved by 13
e
Court as fair, reasonable and adequate, and whether the Court should approve the Plan of
14
15 I
Distribution. Even if the Court approves the settlement, no distribution of any funds will be
made until a later date.
17
To share in the cash benefits of the proposed settlement you must be a class member
18
and you must complete a Proof of Claim Form that can be obtained from Class Counsel, by
writing or calling:
Yakima Treatment Plant Class Action Lawsuit
21 Claims Administrator
P.O. Box 1653
22 Tacoma, WA 98401-1653
1 (877) 347-4780
Class Members who owned property or resided in the class area prior to July, 2001
25
were given an opportunity to exclude themselves from the classes, and may no longer do so.
They will be bound by the settlement if it is approved by the Court. Those who are class
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PUBLISHED NOTICE RE SETTLEMENT & DISTRIBUTION - 2 of 3
(99-2-00611-8)
[1241286 v7.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 06401-1957
(253) 620-5500 - FACSIMILE (253) 620-6565
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members solely because they acquired property or moved into the class area between July
2001 and October 10, 2003, may exclude themselves from the lawsuit. Those Class Members
may obtain a request for exclusion form by written request to Class Counsel at the address
above.
IF YOU ARE A MEMBER OF THE CLASS DESCRIBED ABOVE, YOUR
RIGHTS WILL BE Ali FECTED AND YOU MAY BE ENTITLED TO SHARE IN THE
SETTLEMENT FUNDS. If you believe you are or may be a member of the class and you
have not yet received in the mail the full Notice of Proposed Final Settlement and Plan of
Distribution, you may obtain copies of these documents by writing to or calling the Claims
Administrator at the address or phone number specified above and identifying yourself as a
potential member of the Class.
Lawyers for the class will hold two meetings for class members to explain the terms of
the settlement in detail, describe the proposed plan for distributing net settlement proceeds to
Class Members, assist in completing claim forms and answer any questions. The meetings for
Class Members will occur:
Wednesday, November 5, 2003 at 7 p.m. at St. Joseph's Church bingo hall.
and
Thursday, November 6, 2003 at 7 p.m. at St. Joseph's Church bingo hall.
Spanish translators will be present at the second (November 6) meeting.
PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE FOR
INFORMATION.
SUPERIOR COURT OF THE STATE OF
WASHINGTON FOR YAKIMA COUNTY
Clerk of the Court
Yakima County Superior Court
128 North Second Street
Yakima, Washington
PUBLISHED NOTICE RE SETTLEMENT & DISTRIBUTION - 3 of 3
(99-2-00611-8)
[1241286 v7.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2200
POST OFFICE BOX 1157
TACOMA. WASHINGTON 08101.1157
(253) 620-6500 - FACSIMILE (253)820.0555
Yakima Class
Area
}'OI—alcss(
\\ il.ol 1 n
Dalton Ln
t_: Nob hilt
Bongess t
Birch St
T'iliiii ii L it
Siui .t. '"
l>1
Her Ln
1 1,D
1- NI
F Alead_Aye
117. Carey A
LkirigSt awI.a
er McNair A0•
F Pierce St ,--akeata Ave
Lilac Ln
nt Ct
0
Yakima Class Area
Zone 1
Zone 2
Zone 3
02
0 4 Moles
Mundy Associates LLC (9!2003)
98-1203
V Calif )t7ti,t St
Yak no
E Chort St
Park Aye
shi gtor S
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''fie p
2003
Uci
CITY LEGAL DEPT
SUPERIOR COURT OF THE STATE OF WASHINGTON
FOR YAKIMA COUNTY
WILFRED and KAREN MURPHY, husband
and wife, et al.,
Plaintiffs,
v.
CITY OF YAKIMA, a Washington municipal
corporation, et al.,
Defendants.
NO. 99-2-0061108
CERTIFICATE OF SERVICE
ASSIGNED TO THE HONORABLE
SUSAN L. HAHN
I certify that on the _ day of October, 2003, true and correct copies of:
1. Plaintiffs' Motion for Preliminary Approval of Settlement and Plan of
Distribution and for Approval of Class Notice;
2. Memorandum in Support of Plaintiffs' Motion for Preliminary Approval of
Settlement;
3. Declaration of John C. Guadnola in Support of Motion for Preliminary
Approval;
4. Published Notice of Proposed Final Settlement and Plan of Distribution;
5. Notice of Proposed Final Settlement and Plan of Distribution
6. Note for Motion Calendar and
7. Certificate of Service
CERTIFICATE OF SERVICE - 1 of 2
[1212814 v2.doc]
LAW OFFICES
GORDON, THOMAS, HONEYWELL. MALANG&
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE, SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 96401-1157
(253) 620.6500 - FACSIMILE (253) 020.6565
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were delivered via facsimile by ABC Legal Messengers to counsel for the defendants as
follows:
Thomas H. Wolfendale
Preston Gates & Ellis
701 Fifth Avenue Suite 5000
Seattle, WA 98104-7078
Timothy Leyh
Danielson Harrigan & Tollefson
999 Third Avenue Suite 4400
Seattle WA 98104
and sent delivered by Federal Express to:
Ray Paolella
Yakima City Attorney
200 South 3rd Street
Yakima, 'WA 98901
Philip A. Lamb
City Attorney
102 West Ahtanum
Union Gap WA 98903
Fax No. 509-576-8918
Stephen J. Tan
Brown Reavis & Manning
1201 Third Avenue Suite 320
Seattle WA 98101
I declare under penalty and perjury under the laws of the State of Washington that the
foregoing is true and correct.
CERTIFICATE OF SERVICE - 2 of 2
[ 1212814 v2.doc]
,&144--) .J7(zzg,A,ee
Gina A. Mitchell
LAW OFFICES
GORDON, THOMAS, HONEYWELL, MA
PETERSON & DAHEIM LLP
1201 PACIFIC AVENUE. SUITE 2200
POST OFFICE BOX 1157
TACOMA, WASHINGTON 98401.1157
(253) 620.9500 - FACSIMILE (253) 620.6565
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No.
For Meeting Of 10/07/2003
ITEM TITLE: Legislation to implement the Settlement Agreement for the Wastewater Odor
Litigation and to Provide Funding for Capital Improvements to the
Wastewater System.
SUBMITTED BY: Dick Zais, Manage; ay Paolella, City Attorney;
Rita An on, Finance Director; Doug Mayo, Wastewater Utility Manager;
Cindy Epperson, Financial Services Manager; and Tim Jr sen, fireasury
Services Officer.
CONTACT PERSON/TELEPHONE: Ray Paolella, City Attorney; #575-6030
Doug Mayo, Wastewater Utility Manager; #575-6077-'
Tim Jensen, Treasul``Sices°Officer; #575-6070
SUMMARY EXPLANATION:
Attached to this agenda statement are the following items of legislation to implement the
Settlement Agreement for the wastewater odor litigation and to provide funding for capital
improvements to the wastewater system:
A. Resolution authorizing the execution of the Settlement Agreement
B. Ordinance amending wastewater rates
C. Bond Ordinance, and
D. Budget Appropriation Ordinance
Continued ...
Resolution X Ordinance XXX Other (Specify)
Contract Mail to (name and address): Phone
Funding Source All Wastewater Utility Customers
APPROVED FOR SUBMITTAL:
City Manager
STAFF RECOMMENDATION:
(A)Adopt Resolution authorizing Settlement Agreement;
(B) Pass Ordinance authorizing Wastewater Rate Increase;
(C) Pass Ordinance authorizing Bond Sale; and
(D) Appropriation Ordinance: Read Ordinance by title only at the October 7, 2003 meeting and
Pass Ordinance at the October 21, 2003 meeting.
BOARD/COMMISSION RECOMMENDATION:
COUNCIL ACTION: (A) Resolution adopted. RESOLUTION NO. R-2003-130
(B) Ordinance passed. ORDINANCE NO. 2003-63
(C) Ordinance passed ORDINANCE NO. 2003-64
(D) First reading of ordinance; second reading scheduled for 10-21-2003
Hard Disk:10-04-03AgendaStmt-Wastewat.doc
Last printed 10/02/03
Page 2 of 5
Overview:
The enclosed package of legislation will implement the settlement and release of all outstanding
claims by the 3,700 member class against the City arising from the perceived odors from the
City's wastewater treatment plant. The settlement must be presented to Yakima County Superior
Court Judge Susan Hahn, and must ultimately be approved by the Court to take effect.
Staff proposes to issue water/wastewater utility revenue bonds, the proceeds from which will be
used to provide the funding for the odor litigation settlement costs and certain wastewater utility
capital projects. The enclosed ordinance amending wastewater utility rates will provide the
necessary funding, in conjunction with existing operating revenues, to pay the debt service on
these bonds.
In order to process the litigation settlement payment, receive the proceeds from the bonds, if
these actions are authorized by Council, and record the proceeds in the appropriate funds and
accounts, the 2003 budget must be amended. The budget appropriation necessary to account for
the bond proceeds and uses contemplated to occur prior to year-end is enclosed.
A. Litigation Settlement: Copies of the September 16, 2003 Press Release regarding the
Wastewater Odor Litigation Settlement Agreement and the actual Settlement Agreement are
enclosed for your information and review. The Resolution authorizing the Settlement
Agreement is enclosed for your consideration and action at the October 7, 2003 Council
meeting. Also enclosed, as an Appendix, you will find other documents related to the
settlement, which were filed by the plaintiffs with the court.
B. Wastewater Utility Rate Increase: The need for the wastewater rate increase is two -fold:
1) In September 2003, the City of Yakima and the Plaintiffs in the action styled Murphy, et al.
v. City of Yakima, et al. reached a Settlement Agreement. This Settlement Agreement calls
for the payment from the City to the Plaintiffs of $7,000,000.
2) In March 2002, Council adopted the 2000 Wastewater Facilities Plan, which identified the
need for over $20 million of system investment during the next few years (2000-2006).
This investment was scheduled to be financed with a combination of cash and new debt.
To assist financing this cash and increased debt service, Council also enacted, by ordinance
2002-10, the 2001 Wastewater Cost of Service recommendations. Unfortunately, litigation
expenses prior to settlement expended all new revenue and reserves continue to be
depleted to unacceptable levels. The capital needs of the system to serve the community
regarding mandates, safety, replacement, or added capacity were all put on hold, as no
funding was available.
Hard Disk:10-04-03AgendaStmt-Wastewat.doc
Page 3 of 5
Staff has prepared and herein presents an additional adjusted rate schedule to retail
customers. This adjusted rate schedule increases rates to Owner (inside city) customers
approximately 5% for litigation settlement and 3% for capital improvements for a total of 8%.
Based upon the City's rate policies of utilizing a Utility Rate basis to calculate rates for Non -
owner customers, rates to Non -owner (outside city) customers were increased the same
monetary amount.
This proposal is estimated to increase revenues to the Wastewater Division annually by
approximately $920,500. This proposed rate increase addresses litigation settlement expenses
and previously anticipated construction, or rehabilitation costs. The Ordinance amending the
Wastewater Utility Rates is enclosed for your consideration and action at the October 7, 2003
Council meeting.
Rate Adjustment Summary:
Owner (inside City) Retail Customers:
• Ready -to -Serve Charge increased 8%; ($0.96) per month for a 3/4" water meter.
• Volume Charge increased 8%; ($0.17) per Unit of Consumption (100 cubic feet).
• Biochemical Oxygen Demand (BOD) increased 8%; ($0.022) per pound.
• Suspended Solids (SS) increased 8%; ($0.018) per pound.
• Rates for Pretreatment were also increased 8%.
• Monthly increase to average household from 5% Litigation Settlement increase -
$1.66.
• Monthly increase to average household from 3% Capital Project increase - $ 1.00
Non -owner (outside City) Retail Customers:
• Ready -to -Serve Charge increased $0.96 (5.1%) per month for a 3/4" water meter.
• Volume Charge increased $0.17 (5.1%) per Unit of Consumption (100 cubic feet).
• Biochemical Oxygen Demand (BOD) increased $0.022 (4.3%) per pound.
• Suspended Solids (SS) increased $0.018 (3.6%) per pound.
• Rates for Septage, Exceptional Waste, and Diverted Flow were also increased
approximately 4%.
Sunset Provision: The enclosed ordinance establishes that the dollar amount of the pro -
rata share of the annual debt obligation related to the settlement agreement be removed
from wastewater rates at the end of the 20 year bond payback period; ie: the portion of the
debt service payments tied to the litigation will sunset upon maturity of these bonds.
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C. Bond Sale Proposal:
At this time, staff proposes the issuance of a 20 -year water/wastewater utility revenue bond
in an amount not to exceed $17.7 million. These revenues would be used as follows: (a) $7
million Settlement Payment; (b) up to $8.7 million Capital Projects; and (c) approximately
$2,000,000 for bond reserve, insurance, and bond issuance costs. (Total interest cost is
currently estimated at 5.1 %.)
(Note: the actual amounts of (b) and (c) above are estimates and are dependent on the bond
market and other factors; thus the exact amount proceeds available for capital projects and
the bond issuance costs will not be known until the bond sale date. Until the actual date of
the sale, bond pricing and related costs can only be estimated; therefore, staff has requested
bond authorization for approximately $700,000 more than the existing estimates to allow for
market fluctuations between now and date of sale; thus, these numbers may be slightly
different than those previously discussed with Council. Any additional bond proceeds
received would be used for capital improvements.)
The annual debt obligation from this bond sale is anticipated to be approximately $1,900,000;
consisting of $1,350,000 in annual debt payment and $540,000 in annual debt coverage. (The
total par amount of bonds issued will be constrained by this debt service amount.) A copy of
the estimated debt service payment schedule is enclosed. The City intends to meet this debt
service obligation with a combination of a new 5% across the board general rate increase for
Litigation, a new 3% across the board general rate increase for Capital improvements, the 5%
rate increase enacted in 1999, the 5% rate increase enacted in May of 2003, and revenue from
other prior rate adjustments. (Note: Per 7.64.020.B.1 YMC, the City Utility Tax shall not be applied
against that portion of the total gross revenue of the wastewater operating fund which is collected as
debt coverage for the wastewater debt.)
Pursuant to Council authorization of the issuance of these bonds, the Next Steps in carrying
out this directive include:
1. Preparation of the Preliminary Official Statement (POS) and distribution to potential
investors
2. Hold Rating Agency Interview
3. Attain Utility Consultant Certification as to revenue available for coverage
4. Pricing and Sale of Bonds, Purchase of Insurance, etc.
5. Preparation of the final Official Statement (OS)
6. Ratification by Council of the Bond Purchase Offer and the Final Official Statement
7. Distribution of all required Disclosures upon Settlement of the Bond Sale and Receipt
of Proceeds
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D. Budget Appropriation (Amendment):
The City's 2003 budget needs to be amended in order to implement the settlement agreement
and the bond ordinance, if authorized by Council. Since staff anticipates selling bonds in
2003, a budget appropriation is attached which will account for the bond proceeds and uses
contemplated before the end of the year. (Note: The Wastewater Utility 2003 operating
budget is not affected by these transactions, as any revenue from the requested rate
adjustment will not be collected/spent until 2004.)
Note: as you read this section and compare the numbers presented herein to the bond ordinance information
presented above, keep in mind that the revenue estimates made in this appropriation are based on conservative
market conditions. Since the estimates in the bond ordinance (above) are written to allow for market
fluctuations and to provide the City with the opportunity to take advantage of any improvements in the interest
rates, the numbers in the bond ordinance (noted above) will be higher than that included in this budget
appropriation. However, any change in bond proceeds will not affect the 2003 expenditure estimates presented
in this appropriation.
Of the total estimated bond proceeds (note: the actual amount of bond proceeds will not be known
until bond sale date), $15 million is anticipated to be deposited in the Wastewater Facility
capital fund (478); Anticipated expenditures in this fund total $8,704,178 and include:
Odor litigation settlement costs ($7 million)
Interfund loan payment for costs related to sprayfield modification ($1,514,178)
Bond issuance /Other Project start-up costs ($190,000)
The Bond Ordinance also requires the establishment of 2 new funds to account for debt
service. A portion of the bond proceeds (estimated to be $1,692,000) will need to be deposited
in a revenue bond reserve fund (new fund 494). This transaction is also included in the
attached ordinance. Note: Since there will not be a debt service payment in 2003, an
appropriation will not be needed in the new debt service fund numbered 493. This fund will
be included in the 2004 budget.
Enclosed:
• List of Proposed Capital Improvements to Wastewater Plant
• Settlement Agreement Press Release
• Section A: Settlement Agreement Legislation and related information
• Section B: Wastewater Rate Increase Legislation
• Section C: Bond Ordinance Legislation and Debt Service Schedule
• Section D: Budget Appropriation Legislation
• Appendix: Plaintiffs Documents filed with the Court
Hard Disk:10-04-03AgendaStmt-Wastewat.doc
OFFICE OF THE CITY MANAGER
129 North Second Street
CITY HALL, Yakima, Washington 98901
Phone (509) 575-6040
PRESS RELEASE
Dick Zais
City Manager
September 16. 2003
SUBJECT: Tentative Wastewater Odor Litigation Settlement Agreement
A tentative settlement agreement has been reached, subject to final Yakima City Council and
Court approval, that will conclude the five-year long 3,700 -member, class action lawsuit alleging
significant damages against the City of Yakima's Wastewater Treatment Plant for perceived
odors and diminished property values.
In 1998, approximately 220 residents of the Cities of Union Gap and Yakima filed administrative
claims with the City of Yakima for $75,000 damages each, totaling $16.5 Million. The 220
residents subsequently filed a lawsuit in Yakima County Superior Court, which was eventually
expanded into a complex, class action case involving approximately 3,700 former and current
residential property owners seeking $39 million in damages
The settlement will conclude all outstanding claims by the 3,700 -member class against the City
arising from the perceived odors from the City's Wastewater Treatment Plant, which were
alleged to have been a nuisance and responsible for reducing property values. The class
consists of former and current residential property owners.
The settlement achieves a release of all claims against the City of any kind arising from the
perceived odors, the alleged diminished property values, and the alleged claims of negligence in
the operation of the wastewater treatment plant. The release is provided from former and
present residential property owners and, in addition, bars subsequent claims for property
damages resulting from odors at the plant. The plaintiffs also agree that the settlement and
release language will be recorded against the property
The class action lawsuit will be dismissed in exchange for the City paying the class members $7
million and agreeing to the entry of a judgment with the Court for $13 million. The settlement'
provides that the $6 million difference between the City's payment and the judgment wili'not be
collected from the City, but instead the Plaintiffs may seek to recover the difference from the
City's insurance carriers Also, the settlement leaves open the potential that the City may also
recover from the insurance carriers some, if not all, of its defense costs and possibly some of
the $7 million that it will pay to the Plaintiffs.
The settlement provides that the City may continue to operate the Wastewater Treatment
Facility within normal, operational conditions that have been in existence since October 2000,
when the City terminated the use of the sprayfield and Del Monte's fruit processing waste was
transferred to the Plant for treatment
(over)
Yakima
IBI
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994
Press Release
City of Yakima
September 16, 2003
Page - 2
The City's $7 million settlement will be paid for through a revenue bond A utility rate increase
of 5% will be enacted to help pay a portion of the debt service expense of the bond, together
with using existing resources from previous rate adjustments enacted for litigation costs.
The City will also issue another $8 million in revenue bonds to begin making essential capital
improvements to the Wastewater Treatment Facility, which have been deferred for the past five
years as a result of the ongoing litigation and its costs, which have depleted the City's
wastewater utility reserves.
At the end of the twenty-year revenue bond, the increase in utility rate revenues needed for the
litigation settlement will end.
Over the past fifteen years, the City of Yakima has spent over $17 million in capital
improvements to control and limit odor emissions from the Plant, and additional odor control
projects are planned in the future for the Plant.
The City has operated the Plant within the terms and conditions of its Wastewater Discharge
Permit from the Department of Ecology, and has always been committed to serving the regional
sewer needs of the community in an environmentally responsible, cost effective and efficient
manner.
For the past five years, however, the City has been forced to vigorously defend itself against the
extraordinary damage claims asserted by the Plaintiffs in this case. The City has, at this time,
decided, as a business decision, to settle this case through mediation.
The City prepared a strong defense of this case. However, given the operational history of the
Plant, the case law on nuisance claims and rulings of the trial court, we have reached a
settlement to avoid expensive, ongoing litigation costs, to limit our exposure and the risk of
incurring unknown and potentially significant damages, through an adverse jury verdict.
The settlement enables the City to obtain certainty in this matter, sets a finite limit on its financial
exposure in this class action case, and secures a protective release from future claims. The
City also preserved the right to pursue a potential recovery of insurance coverage for a portion
of its costs to date and the settlement amount.
This tentative settlement and final enabling legislation for the bond sale and sewer rate
adjustment will still require formal, open, public action by the City Council to approve and ratify
the terms and conditions of the settlement. This legislation will be presented at the Council
meeting on October 7, 2003.
The settlement must be presented to Yakima County Superior Court Judge Susan Hahn, who
has presided over the case. If approved by Judge Hahn, written notices concerning the final
settlement will be mailed to area residents.
City of Yakima
Wastewater Treatment Plant Capital Improvements
In the City of Yakima's approved Wastewater Facilities Plan the Wastewater Division has identified
several priorities that need to be implemented at the Wastewater Treatment Plant to comply with new and
existing environmental rules and regulations. Compliance is required to meet the Washington Department
of Ecology (WDOE) criteria to provide adequate capacity and backup operations to major processes of the
plant as identified in the City's NPDES Permit and associated rules and regulations. The following areas
have been identified and prioritized as the Yakima Wastewater Treatment Plants most important operations
to be implemented:
Solids dewatering — only one of two centrifuges is functional any longer for dewatering
Biosolids and it requires extensive maintenance to continue operating. A new
centrifuge or alternate source of dewatering the biosolids is required to maintain
compliance when the older centrifuge is out of service.
Solids thickening - the waste activated sludge (WAS) thickening process reduces the
volume of solids sent to the dewatering processes. There is
currently only one dissolved air flotation thickener (DAFT) to
thicken secondary sludge. A second thickening unit is needed to meet Ecology
criteria.
Secondary clarification — the secondary clarifiers are the final sedimentation process prior
to discharge to the Yakima River. Reliability standards for WDOE
require that 75% of the design flow for this final process should be
handled with one unit off line. Based on this the two existing
secondary clarifiers are at or near hydraulic capacity and an additional
secondary clarifier is required to meet Ecology criteria.
New RAS/WAS Pump Station — the RAS/WAS pump station is used to transport Return
Activated Sludge (RAS) from the secondary clarifiers back to the
aeration basin flow control system through two constant speed open
screw pumps. Waste activated sludge is pumped from the two
existing secondary clarifiers through two pumping systems. With the
addition of a new secondary clarifier or future new aeration basins a
new RAS/WAS pumping station would be required. With a new
RAS/WAS pumping station current problems with the control of the
RAS pumping flow split would be resolved as well as having sufficient
capacity to handle peak hour flow conditions.
Emergency Power — the emergency power system supplies a second source of power to assure minimum
treatment is provided under utility power failures. The existing generator set was
installed in 1972 and at a minimum requires a complete inspection/overhaul. Another
generator set is required to operate the minimum treatment processes at present.
Replacement of Blower VFDs — the VFDs that operate the four 400 horsepower blowers are far less
efficient and generate more harmonic distortion on the electrical power system than
newer technology. They are at the end of their useful life and are hard to find parts for.
All four need to be replaced.
If additional funds are available after completing the prioritized projects above, there are several other
improvements and upgrades identified in the approved facilities plan that need to be completed. These
projects are required to comply with current and future regulatory requirements and mandates also. The
costs for the mandated improvements to the wastewater treatment plant and collection system identified in
the approved facilities plan have been estimated at over 20 million dollars.