HomeMy WebLinkAboutR-2004-131 Old Union Irrigation Company ContractRESOLUTION NO. R-2004-131
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 Old Union
Irrigation Company.
WHEREAS, the City is a shareholder of long standing in the Old Union Irrigation
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 Old Union Irrigation 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 Old
Union Irrigation Company.
ADOPTED BY THE CITY COUNCIL this 17th day of August, 2004.
ATTEST:
City Clerk
LONG-TERM WATER SUPPLY CONTRACT
BETWEEN
THE CITY OF YAKIMA, WASHINGTON
AND
THE OLD UNION IRRIGATION COMPANY
THIS AGREEMENT is entered into between the City of Yakima ("City"), a municipal
corporation of the State of Washington, and the Old Union Irrigation 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. 1212 dated April 10, 2003;
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 11.739 shares
in the Irrigation Company out of 23.508 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
Old Union Irrigation Company 1
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, THEREFORE, 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 Company.
"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.
Long-term Water Supply Contract
Old Union Irrigation Company 2
II. TERMS OF AGREEMENT
ILA. 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
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
1. 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.
II.C. City Obligations
1. 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
III.A. 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.
Long-term Water Supply Contract
Old Union Irrigation Company 3
III.B. Default Procedures
Tn the event a default r onrlition as defined in Section I T A ..b,
�_ the ., event ».,a»».. .,".��.... ., ,� �.vuuvt.a Section ....n above, V, 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
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) day period for an additional thirty (30) days to
.� 1
cure the default condition, the approval of which should not be unreasonably
withheld.
IV. REMEDIES
Specific Performance. 111 the event that either Party fails to act in accordance
with its obligations, the aggrieved Party may seek specific performance.
2. 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
----- ----J--^ ^----^---�� ��— .�»......,J ry v�wsvaas arising from 1110, first Party's
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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 IV.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
Long-term Water Supply Contract
Old Union Irrigation Company 4
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
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
Long-term Water Supply Contract
Old Union Irrigation Company 5
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
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 ofpreventing 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 to the
respective party at the following addresses or to a different address if designated
in writing parties:
in writing by the parties:
City of Yakima:
Water/Irrigation Manager
Water/Irrigation Division
2301 Fruitvale Blvd,
Yakima, WA 98902
With a copy to:
City Attorney
200 South 3rd Street
Yakima, WA 98901-2830
Old Union Irrigation Company
c/o Finney, Falk, Lawrence-Berrey & Naught, PLLP
117 North 3rd Street
Suite 201
Yakima, WA 98901
Long-term Water Supply Contract
Old Union Irrigation Company - ® -
The date of giving notice shall be the postmarked date of the mailing.
IN WITNESS WHEREOF, the Parties hereby execute this Agreement.
THE OLD UNION IRRIGATION COMPANY
BY: r ,L%
TITLE: P/L ' 5 orAlr
DATE: 14 b &-r 9, k1
THE CITY OE Y AKIMA
BY: Richard A. Zais r.
TITLE: City Manager
DATE: V
AUTHORIZED BY RESOLUTION 2004 -R -
Long -term Water Supply Contract
Old Union Irrigation Company 7
CITY CONTRAC r No: "2OD Y-98
P1ESO1UT10N Na ,4
BUSINESS OF THE CITY COUNCIL
YAKI A, WASHINGTON
AGENDA STATEMENT
Item No. *1 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:c City Manager
STAFF RECOMMENDATION: Adopt Resolution.
BOARD/COMMJSSION RECOMiVIENDATION:
COUNCIL ACTION: