HomeMy WebLinkAboutPW07-148 - Amendment - #8 - The City of Tacoma - The Second Supply Project Partnership Agreement - 09/10/2010 AMENDMENT NO. 8 TO
SECOND SUPPLY PROJECT AGREEMENT
BETWEEN
THE CITY OF TACOMA, DEPARTMENT OF PUBLIC UTILITIES,WATER
DIVISION,
THE CITY OF KENT,
COVINGTON WATER DISTRICT, AND
LAKEHAVEN UTILITY DISTRICT,
THIS AMENDMENT is made and entered into effective this day of
20_, between the City of Tacoma, Department of Public Utilities, Water Division
(Tacoma), the City of Kent (Kent); Covington Water District (CWD), and Lakehaven
Utility District(Lakehaven), collectively the Participants, and
WHEREAS,the Participants entered into the Second Supply Project Agreement on
December 19, 2002, and
WHEREAS, beginning in 2006, the first full year of operation of the Regional Water
Supply System, the Regional Water Supply System has at times operated at a negative
balance due to the lag in time between bill issuance and receipt of payment, and
WHEREAS, Tacoma, as project operator, based on prudent utility practices has
determined it is necessary and in the best interests of the Partnership to have available
operating cash to cover Fixed O&M Costs and Variable O&M Costs during the period of
time when expenses are incurred until the costs are reimbursed, and
WHEREAS, establishing an operating reserve account equal to two months Fixed O&M
Costs and Variable O&M Costs as projected in the Project Annual Budget takes into
consideration the approximately 30-day time period between bill issuance and receipt of
payment, and
WHEREAS, the Agreement as originally written does not address providing for a true-
up of Fixed O&M Costs to billed Fixed O&M Costs following the completion of a
calendar year, and
WHEREAS, a procedure to maintain the Regional Water Supply System Operating
Reserve Account equal to two months Fixed O&M Costs and Variable O&M Costs as
projected in the Project Annual Budget is needed.
NOW, THEREFORE, the Participants agree to amend the Agreement as follows:
Section 26 of the Agreement is revised to read as follows:
26. TRUE-UP OF VARIABLE AND FIXED O&M COSTS
26 2. If the cost or costs per MG as calculated pursuant to subsection 26.1 vary from the
cost per MG set forth in the Project Annual Budget for the immediately prior calendar
year for such Project uses, Tacoma shall calculate for each Participant either the
additional payment required or the credit due based on the actual usage of Project Water
by each Participant during the prior calendar year. If any additional payment is due from
a Participant, Tacoma shall issue an invoice for such payment pursuant to section 25. If a
credit is due to a Participant, Tacoma shall first apply the credit to the reimbursement of
the Regional Water Supply System Operating Reserve Account, in the event such
payment is needed pursuant to section 43. No interest shall be paid on any adjustment
calculated pursuant to this section 26.
26.4 Not later than sixty (60 days) after the first day of each calendar year, Tacoma shall
calculate the difference between the actual Fixed O&M Costs incurred during the
previous calendar year and the Fixed O&M Costs billed to each Participant.
26.5 If the Fixed O&M Costs actually incurred as calculated pursuant to subsection 26.4
varies from that billed, Tacoma shall calculate for each Participant either the additional
payment required or the credit due. If any additional payment is due from a Participant,
Tacoma shall issue an invoice for such payment pursuant to section 25. If a credit is due
to a Participant, Tacoma shall first apply the credit to the reimbursement of the Regional
Water Supply System Operating Reserve Account in the event such payment is needed
pursuant to section 43. No interest shall be paid on any adjustment calculated pursuant to
this section 26.
New Section 43 of the Agreement as follows.
43. REGIONAL WATER SUPPLY SYSTEM OPERATING RESERVE ACCOUNT
43.1 To provide for operating cash to cover Regional Water Supply System Fixed O&M
Costs and Variable O&M Costs during the period of time from when expenses are
incurred by Tacoma until the costs are reimbursed, Tacoma shall maintain an operating
reserve account equal to two-months Fixed O&M Costs and Variable O&M Costs as
projected in the current Project Annual Budget. Each Participant shall pay into the
operating reserve account an amount equal to its two-month Participant Share of Fixed
O&M Costs pursuant to subsection 1.1.21 and, for Variable O&M Costs, an amount
equal to two-months of its Variable O&M Costs as projected in the current Project
Annual Budget.
43.2 Not later than sixty (60 days) after the first day of each calendar year, Tacoma shall
calculate the funds necessary to maintain the Regional Water Supply System Operating
Reserve Account equal to two-months Fixed O&M Costs and Variable O&M Costs as
projected in the current year Project Annual Budget for each Participant, consistent with
the payment requirements in subsection 43.1.
Amendment No. 8
Second Supply Agreement
Page 2
43.3 If the funds necessary to maintain the Regional Water Supply System Operating
Reserve Account equal to two-months Fixed O&M Costs and Variable O&M Costs as
projected in the Project Annual Budget vary from the actual amount in the Regional
Water Supply System Operating Reserve Account after the calculation is made in section
43.2, Tacoma shall calculate for each Participant either the additional payment required
or the credit due to maintain the Regional Water Supply System Operating Reserve
Account equal to two-months Fixed O&M Costs and Variable O&M Costs of the current
Project Annual Budget. If a payment is required, Tacoma shall issue an invoice for such
payment pursuant to section 25. No interest shall be paid on any adjustment calculated
pursuant to this section 43.
43 4 Any interest earned on the Regional Water Supply System Operating Reserve
Account shall be used as a credit, based on each Participant's cash balance in the
Regional Water Supply System Operating Reserve Account, in the annual calculation
performed pursuant to Section 43.2.
43.5 Should the Regional Water System Reserve Account be dissolved for any reason,
the funds shall be returned to the Project Participants consistent with each Participant's
cash balance in the Regional Water Supply System Operating Reserve Account
Except as set forth herein, all other provisions of the original Agreement remain in full
force and effect.
IN WITNESS WHEREOF the Participants hereto have executed this Amendment No. 8
to the Second Supply Project Agreement as of the day and year first written above.
City of Tacoma City of Kent
Department of Public Utilities
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Covington Water District Lakehaven Utility District
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Amendment No 8
Second Supply Agreement
Page 3