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HomeMy WebLinkAboutR-2004-129 Naches & Cowiche Canal Company Contract (re: water supply)RESOLUTION NO. R-2004-129 A RESOLUTION authorizing and directing the City Manager of the City of Yakima to execute a "Long -Term Water Supply Contract" between the City and the Naches and Cowiche Canal Company. WHEREAS, the City is a shareholder of long standing in the Naches and Cowiche Canal Company ("Company"); and WHEREAS, as a shareholder, the City receives water from and pays assessments to the Company in proportion to the City's shareholdings; and WHEREAS, the City delivers that water to lands within the City and to customers of the City's Irrigation Utility; and WHEREAS, the City's continued delivery of Company water to those lands and irrigation customers is consistent with the City's obligations to its customers; and WHEREAS, the City believes that it is authorized to own shares in the Company, but recognizes that the City's share ownership might be subject to challenge; and WHEREAS, regardless of any challenge to the City's share ownership, the Company's continued supply of water to the City and the City's continued delivery of that water to the City's irrigation customers is in the best interests of the City and the City's customers; and WHEREAS, the Long -Term Water Supply Contract between the City and the Company effectively continues the existing relationship between the City and the Company, under which the City has received water from, and paid assessments to the Company for decades; and WHEREAS, the additional stability in water supply provided by the Long -Term Water Supply Contract is in support of the City's anticipated issuance of Irrigation System Revenue Bonds for rehabilitation of the City irrigation system; and WHEREAS, the City Council deems it to be in the best interest of the City of Yakima to authorize and direct execution of the attached Long -Term Water Supply Contract between the City and the Naches and Cowiche Canal Company, 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 and incorporated "Long -Term Water Supply Contract" between the City and the Naches and Cowiche Canal Company. ADOPTED BY THE CITY COUNCIL this 17th day of August, 2004. ATTEST: City Clerk czA-(12? Paul P. George, Mayor LONG-TERM WATER SUPPLY CONTRACT BETWEEN THE CITY OF YAKIMA, WASHINGTON AND THE NACHES AND COWICHE CANAL COMPANY THIS AGREEMENT is entered into between the City of Yakima ("City"), a municipal corporation of the State of Washington, and the Naches and Cowiche Canal Company ("Irrigation Company"), a Washington Corporation, to ensure the continued supply of water from the Irrigation Company to the City RECITALS WHEREAS, the Irrigation Company holds certain water rights, confirmed in the Yakima River General Adjudication and subject to the conditions set forth in Conditional Final Order on Claim No. 1796 dated March 12, 1998; WHEREAS, the City is a shareholder in the Irrigation Company of long standing; WHEREAS, the City, as of the date of execution of this agreement, holds 99 0985 shares in the Irrigation Company out of 187.1380 total shares issued, WHEREAS, the City receives water from and pays assessments to the Irrigation Company in proportion to the City's shareholdings; WHEREAS, the assessments for all shareholders, including the City, are set by the Irrigation Company's Board of Directors, WHEREAS, the City delivers that water to lands and irrigation customers within the Irrigation Company's designated place of use; WHEREAS, the City's continued delivery of Irrigation Company water to those lands and irrigation customers is consistent with the Irrigation Company's purposes and with the City's obligations to its customers, WHEREAS, the City's continued payment of assessments is important to the continued operation and financial stability of the Irrigation Company; WHEREAS, the City and the Irrigation Company (collectively, the "Parties") believe that the City is authorized to own shares in the Irrigation Company but the Parties recognize that the City's ownership of shares in the Irrigation Company might be subject to challenge, and WHEREAS, regardless of any challenge to the City's ownership of shares in the Irrigation Company, the continued delivery of water to the City, the City's payment of Long-term Water Supply Contract Nachos and Cowiche Canal Company Page 1 of 7 assessments, and the City's delivery of water to its customers are in the best interests of the Irrigation Company, the Irrigation Company's customers, the City and landowners NOW, 1FitK PUKr., in consideration of the mutual covenants herein, the Parties agree as follows: I. DEFINITIONS For the purposes of this Agreement, the following terms have been defined as. "Assessment" — The amount of money due to the Irrigation Company from the City for delivery of the City's Percentage of Available Water. Assessments are determined by the Board of Directors of the Irrigation Company and are proportional to the number of shares in the Irrigation Company held by the City at the time of the determination. If the City's status as a shareholder in the Irrigation Company is invalidated, Assessments shall be proportional to the number of shares the City held in the Irrigation Company immediately prior to the invalidation. "Available Water" — The total quantity of the Irrigation Company's confirmed water rights that are available in any given year "City's Percentage" — The percentage of the Irrigation Company's Available Water deliverable to the City. The City's Percentage is determined by dividing the number of shares the City holds at the time of the determination by the total number of issued shares of the Irrigation Company. If the City's status as a shareholder is invalidated, the City's Percentage shall be calculated by dividing the number of shares the City held immediately prior to the invalidation by the total number of issued shares of the Irrigation wuIpairy. "Place of Delivery" — The City turn outs and facilities where the City takes delivery of water from the Irrigation Company's canal. "Place of Use" — The place of use confirmed in the Yakima River General Adjudication for the water right(s) under which the Irrigation Company delivers water to the City. "Yakima River General Adjudication" — The legal proceeding captioned The State of Washington, Department of Ecology v. Acquavella, et al., in the Superior Court for Yakima County, Washington, Case No. 77-2-01484-5 H. TERMS OF AGREEMENT H.A. Duration of Agreement 1 Term of Agreement. This Agreement shall become effective as of the date of its complete execution by both Parties. The Agreement shall remain in effect for Long-term Water Supply Contract Naches and Cowiche Canal Company Page 2 of 7 fifty (50) years from the date it becomes effective unless it is terminated earlier pursuant to Section IV 2 below 2 Automatic Renewal. At the end of the term of this Agreement, it shall automatically be renewed for successive fifty (50) year terms unless either Party provides five years' advance written notice to the other Party of its intention to cancel the Agreement II.B. Irrigation Company Obligations Supply of Water to Yakima. The Irrigation Company shall deliver water, up to an amount equal to the City's Percentage of Available Water, to the City at the Place of Delivery H.C. City Obligations Payment. The City shall pay Assessments to the Irrigation Company at the same time and in the same manner as all other shareholders in the Irrigation Company. 2 Compliance with State Water Law. The City shall deliver water from the Irrigation Company to lands and customers within the Place of Use III. DEFAULT LILA. Conditions Resulting in Default 1 Irrigation Company Default. In the event that the Irrigation Company fails to deliver the City's Percentage of Available Water as required in this Agreement, the Irrigation Company shall be in default and the City shall not be obligated to pay any outstanding portion of its Assessments 2 City Default. The City's failure to pay Assessments when due shall constitute an event of default and the Irrigation Company shall have no further obligation to deliver water to the City until the City has paid all past -due Assessments 3 Insolvency. In the event that the Irrigation Company becomes insolvent, it shall be considered in default III.B. Default Procedures In the event a default condition, as defined in Section LILA above, exists, the non - defaulting Party shall issue written notice to the other Party setting forth the nature of the default. If the default is for monetary payments due under this Agreement, the defaulting Party shall have thirty (30) days to cure the condition of default. If the default arises out of other conditions, the defaulting Party shall Long-term Water Supply Contract Naches and Cowiche Canal Company Page 3 of 7 use its best efforts to cure the default within thirty (30) days. If the default condition cannot be reasonably cured within such thirty (30) day period, the defaulting Party may submit a written request to the non -defaulting party prior to the expiration of the thirty (30) clay period for an additional thirty (30) days to cure the default condition, the approval of which should not be unreasonably withheld. IV. REMEDIES 1 Specific Performance. In the event that either Party fails to act in accordance with its obligations, the aggrieved Party may seek specific performance Termination. In the event that either Party remains in default after notice and an opportunity to cure as set forth above, either Party may terminate this Agreement upon 30 days' notice to the other Party V. INDEMNITY Each Party shall indemnify, defend against and hold harmless the other Party from any and all claims for liability to the extent arising from the first Party's failure to meet its obligations under this Agreement. VI. TERMINATION This Agreement shall remain in effect for the duration of its term. The Agreement may be terminated only with the approval of a majority of both the Board of Directors of the Irrigation Company and the City of Yakima City Council, or upon default as set forth in Section 1V.2 above VII. JURISDICTION AND VENUE In the event of litigation between the Parties relating to the terms of this Agreement, venue and jurisdiction shall lie with the Yakima County Superior Court in the State of Washington. VIII. ASSIGNMENT This Agreement shall inure to the benefit of and be binding upon the Parties and their successors and assigns. No Party shall assign its rights or obligations under this Agreement without the prior written consent of the other Party, which consent shall not be unreasonably withheld. IX. SURVIVAL Longterm Water Supply Contract Naches and Cowiche Canal Company Page 4 of 7 This Agreement and the terms and obligations herein shall survive in the event that, for any reason, the City's ownership of shares in the Irrigation Company is challenged or invalidated X. MISCELLANEOUS X.A. Representations and Warranties 1 The Irrigation Company represents and warrants that it has the legal authority to divert and deliver to the City the quantity of Available Water required under this Agreement and that it has the authority to enter into this Agreement. 2 The City represents and warrants that it has the legal authority to deliver water to its customers in the Irrigation Company's Place of Use and that it has the authority to enter into this Agreement. X.B. Non -waiver No delay or failure by a Party to exercise any of its rights, powers or remedies under this Agreement following any default by another Party shall be construed to be a waiver of any such default, or any acquiescence therein, or of or in any similar default thereafter occurring. X.C. No Third Party Beneficiary; No Joint Venture This is not an agreement of joint -venture or partnership, and no provision of this Agreement shall be construed so as to make the Irrigation Company a partner or joint venturer with the City. Neither party is an agent of the other. Neither the Irrigation Company nor the City shall be liable for the acts of the other in any representative capacity whatsoever. Parties not party to this agreement shall not be construed as beneficiaries of this agreement. X.D. Entire Agreement This Agreement, together with the Articles of Incorporation and By -Laws of the Irrigation Company (collectively "Charter Documents"), represents the entire agreement between the Parties hereto concerning the subject matter hereof. To the extent of any inconsistency between this Agreement and the Charter Documents, this Agreement shall control. X.E. Amendment The Parties to this Agreement may amend this Agreement only in a written document, signed by authorized representatives of the parties, that has been Long-term Water Supply Contract Naches and Cowiche Canal Company Page 5 of 7 approved by a majority of both the Board of Directors of the Irrigation Company and the City of Yakima City Council. X.F. Force Majeure The time periods for each party's performance under any provisions of this Agreement shall be extended for a reasonable period of time during which either party's performance is prevented, in good faith, due to fire, flood, earthquake, lockouts, strikes, embargoes, acts of God, war and civil disobedience. If this provision is invoked, the invoking party agrees to immediately take all reasonable steps to alleviate, cure, minimize or avoid the cause of preventing such performance, at its sole expense X.G. Notifications Whenever written notification is required by this Agreement, that notice shall be given to the following representatives by actual delivery or by the United States Mail (registered or certified with return receipt requested) addressed the requested) J k V.]JVU to V respective party at the following addresses or to a different address if designated in writing by the parties City of Yakima: Water/Irrigation Manager Water/Irrigation Division 2301 Fruitvale Blvd. Yakima, WA 98902 With wth a copy to: City Attorney 200 South 3rd Street Yakima, WA 98901-2830 Naches and Cowiche Canal Company Dorselene Watson 3305 Powerhouse Road Yakima, WA 98902 With a copy to: James E. Davis Talbott, Simpson, Gibson and Davis 308 North Second Street Yakima, WA 98901 The date of giving notice shall be the postmarked date of the mailing. Long-term Water Supply Contract Naches and Cowiche Canal Company Page 6 of .1 X.H Permission to Use Water on Land not Owned by City Pursuant to Section 23 of the Irrigation Company's bylaws, the Irrigation Company hereby provides permission to the City to use water received from the Company on lands not owned by the City, and to permit such use by the landowners and irrigation customers served by the City. IN WITNESS WHEREOF, the Parties hereby execute this Agreement. THE NACRES AND COWICHE CANAL COMPANY BY: TITLE: DATE: THE CITY OE YAKIMA BY: TITLE: City Manager DATE: f'a- AUTHORIZED BY RESOLUTION 2004 -R - CITY CONTRAC r NO: ,%.1.4/- q(to" RESOLUTION NO:OD +- /a 9 Long-term Water Supply Contract Naches and Cowiche Canal Company Page 7 of 7 BUSINESS OF THE CITY COUNCIL YAKEVIA, WASHINGTON AGENDA STATEMENT Item No. * / 3 For Meeting of 8/17/2004 ITEM TITLE: Consideration of four resolutions authorizing and directing the City Manager of the City of Yakima to execute Long -Term Water Supply Contracts between the City and: the Naches and Cowiche Canal Company; New Schanno Ditch Company; Old Union Irrigation Company; and Yakima Valley Canal Company. SUBMITTED BY: Dave Brown, Water/Irrigation Manager, 575-6204 Matthew Wells, Attorney (Preston Gates & Ellis LLP), (206) 370-7651 CONTACT PERSON/TELEPHONE: Dave Brown, Water/Irrigation Manager, 575-6204 SUMMARY EXPLANATION: This resolution authorizes and directs the City Manager of the City of Yakima to execute Long -Term Water Supply Contracts between the City and the four private irrigation companies that supply water to the City's Irrigation Utility. The Contracts provide for the continued supply of water to the City in the unlikely event that the City's ownership of shares in the irrigation companies were successfully challenged. The Contracts effectively continue the existing relationships between the City and the irrigation companies, under which the City has received water from, and paid annual assessments to the irrigation companies for over 50 years. Execution of the Contracts is in support of the City's anticipated issuance of Irrigation System Revenue Bonds for rehabilitation of the City's Irrigation System. Attached are the four contracts as executed by the irrigation companies. Resolution X Ordinance Other (Specify) Contract X Mail to (name and address): Naches Cowiche contract to James Davis, Talbott, Simpson, Gibson & Davis PS, 308 North 2nd Street, Yakima, WA 98901 (509.575.7501); New Schanno and Old Union contracts to Joe Falk, Jr., Finney, Falk, Lawrence-Berrey & Naught PLLP, 117 North 3rd Street, Yakima, WA 98901 (509.575.5604); and Yakima Valley contract to Paul Dempsey, Halverson & Applegate, 311 North 4th Street, Yakima, WA 98901 (509.575.6611) Funding Source: 479 Irrigation CIP APPROVED FOR SUBMITTAL: , tzt, J > City Manager STAFF RECOMMENDATION: Adopt Resolution. BOARD/COMMISSION RECOMMENDATION: COUNCIL ACTION: