AG 98-144 - CITY OF DES MOINES
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After recording, return to:
Federal Way City Attorney
33530 1st Way So.
Federal Way, WA 98003
INTERLOCAL AGREEMENT
BETWEEN THE CITIES OF DES MOINES AND
FEDERAL WAY CONCERNING ASSUMPTION
AND DISSOLUTION OF LAKEHA VEN UTILITY DISTRICT
This Agreement is made and entered into this tZ- ~day of JII1aY'c..-t, , 1998,
by and between the City of Des Moines, Washington, a non-charter code municipal corporation
("Des Moines") and City of Federal Way, Washington, a non-charter code municipal corporation
("Federal Way"). Des Moines and Federal Way are referred to collectively as the "parties",
RECITALS
I. Pursuant to the Growth Management Act, RCW 36.70A.llO, cities are the
appropriate local government entity to provide urban services such as water and sewer service; and
2. Pursuant to King County Countywide Planning Policy FW-13, "Cities are the
appropriate provider oflocal urban services to Urban Areas either directly or by contract," and
"witlùn the Urban Area, as time and conditions warrant, cities should assume local urban services
provided by special purpose districts"; and
3. Pursuant to RCW 35.13A.030, whenever sixty percent (60%) ofthe area or sixty
percent (60%) of the assessed valuation of real property within a special purpose district such as
a water and sewer district is included within a city, that city may assume the ownership, operation,
and control of that portion of the district not contained within the boundaries of another city; and
4. Pursuant to RCW 35.13A.060, a city assuming that portion of a water and sewer
district not contained witlùn another city may enter into an interlocal agreement with another city
in which a portion of the to-be-assumed special purpose district is located, to assume responsibility
for operation and maintenance of the district's property, facilities and equipment within the other
city;
ORIGIN/~L
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Interlocal Agreement between the Cities of Des Moines and
Federal Way Concerning Assumption
and Dissolution of Lakehaven Utility District
Page 2
5. The Interlocal Cooperation Act, as amended, and codified in Chapter 39.34 ofthe
Revised Code of Washington provides for interlocal cooperation and agreements between
municipal corporations; and
6. The Federal Way City CoWlcil adopted Ordinance No. 97-302 on October 21, 1997,
directing its staff to prepare Notices of Intent to Assume and Dissolve the Lakehaven Utility
District ("District"), and to file said Notices with the King and Pierce COWlty BoWldary Review
Boards; and;
7. As part of the assumption/dissolution of the District, Federal Way and Des Moines
wish for Federal Way to assume responsibility for operation and maintenance of District property
and facilities currently within the City of Des Moines (including specifically but not limited to the
Redondo Sewage Treatment Plant) Wltil such time as Des Moines wishes to obtain ownership of
some or all of that property and facilities and begin providing water or sewer services to its
citizens; and
8. Des Moines and Federal Way agree that mutual cooperation between the two cities
is in the best interests of their citizens, and that the assumption/dissolution of the District, is
appropriate under RCW 35.I3A, RCW 36.70A, and RCW 36.93; and
9. Des Moines' cooperation is contingent upon Federal Way's agreement to relinquish
ownership, operation and maintenance of District property and facilities located witlùn Des Moines
and its Potential Annexation Area ("P AA"), as set forth in the Interlocal Agreement between
Federal Way and Des Moines dated December 16, 1996 or as it may be amended; and upon Federal
Way's agreement to provide, prior to relinquishing ownership, operation and maintenance of such
facilities, water and sewer service to Des Moines ratepayers at a reasonable rate, with no surcharge
or tax attributable to Des Moines residents solely due to their residency; and
10. Des Moines and Federal Way have determined that it is in the best interests of the
citizens of both cities to enter into an Interlocal Agreement as an expression of Des Moines'
cooperation with Federal Way in its assumption of the District, and to set forth the cities' rights,
duties and responsibilities with respect to Federal Way's ownership, operation and maintenance
of property, facilities and equipment located within the corporate boundaries of Des Moines and
its P AA;
NOW, THEREFORE, for and in consideration of the mutual agreements contained herein,
the parties hereto agree as follows:
Interlocal Agreement between the Cities of Des Moines and
Federal Way Concerning Assumption
and Dissolution of Lake haven Utility District
Page 3
AGREEMENT
I. Existing District Agreements. Federal Way shall, upon the effective date of
assumption and/or dissolution of the Lakehaven Utility District ("District"), assume all rights and
responsibilities of the District with respect to any interlocal agreements or contracts between the
City of Des Moines and the District. Federal Way shall perform the terms of any such agreement
or contract in the same manner as the District would be required to perform if the City had not
assumed and dissolved the District.
2. Federal Way Facilities, Upon the effective date of Federal Way's assumption
and/or dissolution of the District, Des Moines agrees that Federal Way shall be entitled to full legal
title and ownership of all District assets, facilities, and real property associated with them, located
within the City of Des Moines and its PAA, including but not limited to the following:
a, Redondo Sewage Treatment Plant;
.... b. Sewage Lift Station No.7;
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:1ì e. Sewage Lift Station No. 30;
f, Sewer mains, collection and distribution lines, and any other infi:astructure
associated with the Redondo Sewage Treatment Plant, Sewage Lift Station Nos, 6, 7, 8 and 30, and
located within Des Moines' corporate boundaries or Des Moines' Potential Annexation Area
("P AA") as set forth in the lnterlocal Agreement dated December 16, 1996 or as may be amended.
g,
16th Avenue Water Tanks "A" and "B"; and
h, Water mains, distribution lines, meters and any other infi:astructure
associated with the 16th Avenue Water Tanks "A" and "B" and located within Des Moines'
corporate boundaries or Des Moines' Potential Annexation Area ("PAA") as set forth in the
Interlocal Agreement dated December 16, 1996 or as may be amended.
3, Maintenance/Operation and Indebtedness. Federal Way shall be responsible for the
operation, maintenance, permitting, taxes and contractual or bonded indebtedness associated with
the facilities and property allocated in Paragraphs 2 above.
Interlocal Agreement between the Cities of Des Moines and
Federal Way Concerning Assumption
and Dissolution of Lakehaven Utility District
Page 4
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4. Continued Provision of Service. Federal Way shall, upon the effective date of
Federal Way's assumption and/or dissolution of the District, provide water and sewer service to
former District ratepayers residing in Des Moines or in Des Moines' P AA at a reasonable rate that
is uniform for the same class of customer or service. The rate shall be based on the cost of
providing service, which shall be determined according to, among other things, the costs of
maintenance, operation and repair of the system, the costs of any special indebtedness bonds or
warrants, the location of various customers and the difference, if any, in cost of maintenance,
operation, repair, and replacement of system parts, the different character service being furnished,
capital contributions made to the system, including but not limited to assessments, provision for
reasonable operational reserves for the facilities described in Paragraph 2, and any other matters
which present a reasonable difference as a ground for distinction. Federal Way agrees to consult
with Des Moines and discern Des Moines' position, before increasing rates to ratepayers residing
in Des Moines or Des Moines' PAA. Federal Way shall not impose a surcharge upon Des Moines
ratepayers in excess of any surcharge upon any other ratepayers being served by Federal Way,
unless the costs of providing service as determined according to tlùs paragraph reasonably warrant
imposition of the surcharge. Federal Way shall not impose a utility tax upon ratepayers in Des
Moines or Des Moines' PAA. The parties recognize that the Lakehaven Utility District has
represented that the current surcharge applied to Des Moines residents served by the utility will
expire on or before December 31, 1998, However, in the event such surcharge remains in place
upon the effective date of Federal Way's assumption of the district, Federal Way expressly agrees
to waive and/or extinguish such surcharge at no cost to the City of Des Moines or its residents.
5. Capital Improvements. To the extent authorized by law, Federal Way agrees to
submit its plans for capital and major maintenance improvements to the facilities listed in
Paragraph 2, and whose projected cost is greater than $200,000, to the Des Moines City Council
for its review and approval; except Federal Way need not submit plans for Des Moines approval
for any improvements or maintenance required to ensure compliance with state or federal
requirements. Federal Way will include with the plans a proposed funding mechanism and
anticipated debt repayment schedule, if any. Des Moines agrees to review and convey its decision
to Federal Way within 30 days ofreceiving plans for the proposed capital improvements, and
agrees that its approval shall not be unreasonably withheld; e.g., Des Moines shall not disapprove
a proposed capital improvement because of the type of proposed funding mechanism; Federal Way
shall not construct a proposed capital or major maintenance improvement subject to tlùs paragraph
until it has received Des Moines's approval, Nothing in tlùs paragraph shall be construed to limit
or extend Des Moines authority under applicable law, including but not limited to the State
Enviromnental Policy Act, RCW 43.2lC or the Shoreline Management Act, RCW 98,58.
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Interlocal Agreement between the Cities of Des Moines and
Federal Way Concerning Assumption
and Dissolution of Lakehaven Utility District
Page 5
6, Transfer of Ownership, OperationlMaintenance, and Provision of Service
Obligations. As consideration for the City of Des Moines' cooperation with Federal Way's effort
to Assume and Dissolve the Lakehaven Utility District, and within 180 days of receipt of written
notice fÌ'om Des Moines delivered to contact person set forth in Paragraph 8.6 below, Federal Way
shall transfer, via quit claim deed, ownership of some or all of those assets, facilities and real
property specified in Paragraph 2 above as identified by Des Moines in the written notice. The
transfer shall be at no cost to the City of Des Moines, except that, upon transfer of ownership, Des
Moines agrees to assume all of the obligations of Paragraphs 3, 4, and 5 above with respect to the
facilities and property transferred pursuant to this Paragraph. This means that, with respect to
facilities and property transferred, Des Moines shall, among other things:
6.1 be responsible for the operation, maintenance, permitting, and payment of taxes and
contractual or bonded indebtedness that benefits or is associated with the facilities and
property, or any capital or major maintenance improvements thereto, at the time of the
transfer. Specifically, if there are outstanding general obligation bonds issued by Federal
Way associated with facilities and property to be transferred, Des Moines shall extinguish
such bonds prior to the effective date of transfer to Federal Way. If there are revenue
bonds, Federal Way and Des Moines shall enter into a supplemental agreement prior to the
effective date of the transfer providing for the mechanism for Des Moines' payment of the
associated revenue bonded indebtedness. Such mechanisms may include, but are not
limited to, issuance of new revenue bonds by Des Moines to extinguish bonds issued by
Federal Way, or the pledging and payment by Des Moines to Federal Way of the revenues
received fÌ'om customers served by the transferred facilities. Des Moines also agrees that
any revenues it receives fÌ'om ratepayers residing in Federal Way or its PAA shall be used
to satisfy indebtedness associated with the facilities in Paragraph 2, and not for any other
facilities.
6,2, provide water and sewer service to ratepayers residing in Federal Way or in Federal
Way's PAA at a reasonable rate that is uniform for the same class of customer or service.
The rate shall be based on the cost of providing service, which shall be determined
according to, among other things, the costs of maintenance, operation and repair of the
system, the costs of any special indebtedness bonds or warrants, the location of various
customers and the difference, if any, in cost of maintenance, operation, repair, and
replacement of system parts, the different character service being furnished, capital
contributions made to the system, including but not limited to assessments, provision for
reasonable operational reserves for the facilities described in Paragraph 2, and any other
matters which present a reasonable difference as a ground for distinction, Prior to the
effective date of the transfer, Des Moines and Federal Way shall enter into a supplemental
agreement allocating costs of treatment and collection, and providing for reimbursement
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Interlocal Agreement between the Cities of Des Moines and
Federal Way Concerning Assumption
and Dissolution of Lakehaven Utility District
Page 6
to Federal Way of the costs of maintenance and operation of the collection system located
within the City of Federal Way or its PAA and discharging to the Redondo STP.
6.3. consult with Federal Way and discern Federal Way's position, before increasing rates
to ratepayers residing in Federal Way or Federal Way's PAA.
6.4, Not impose a surcharge upon Federal Way ratepayers in excess of any surcharge upon
any other ratepayers being served by Des Moines, unless the costs of providing service as
determined according to this paragraph reasonably warrant imposition of the surcharge,
Des Moines agrees not to impose a utility tax upon ratepayers residing in Federal Way or
Federal Way's PAA.
6.5. To the extent authorized by law, Des Moines agrees to submit its plans for capital
and major maintenance improvements to the facilities listed in Paragraph 2, and whose
projected cost is greater than $200,000, to the City of Federal Way for review and approval.
Des Moines will include with the plans a proposed funding mechanism and anticipated
debt repayment schedule, if any. Federal Way agrees to review and convey its decision to
Des Moines within 30 days of receiving plans for the proposed capital improvements, and
agrees that its approval shall not be unreasonably withheld; e.g., Federal Way shall not
disapprove a proposed capital improvement because of the type of proposed funding
mechanism, Des Moines shall not construct a proposed capital improvement until it has
received Federal Way's approval.
7. Expression of Mutual Cooperation.
In consideration for Federal Way's agreement to provide for future transfer, Des Moines
agrees that this Interlocal Agreement shall serve as its official expression of mutual cooperation
with the City of Federal Way in its effort to assume and dissolve the Lakehaven Utility District.
Accordingly, the City of Des Moines expressly authorizes and approves the filing of this
Agreement, including but not limited to a specific expression of mutual cooperation as set forth
herein, before the Washington State Boundary Review Board for King County, the King County
Superior Court, or any other entity with review or approval authority over the
assumption/dissolution. To the extent any entity has review or approval authority over the transfer
of facilities to Des Moines as provided for in Paragraph 6 above, Federal Way agrees to express
its mutual cooperation with Des Moines in accomplishing such transfer in writing to that entity,
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lnterlocal Agreement between the Cities of Des Moines and
Federal Way Concerning Assumption
and Dissolution of Lake haven Utility District
Page 7
8. General Provisions.
8,1 This Agreement may be amended at any time by the mutual written consent of the
parties.
8.2 This Agreement shall take effect immediately and shall continue in effect until
terminated by mutual agreement of the parties.
8.3, Neither party may assign this Agreement without the written consent ofthe other
party.
8.4. Each party shall be responsible for the consequences of any negligent or wrongful
act or failure to act on the part of itself, its elected official, agents, volunteers and
employees. Neither party assumes responsibility to the other party for the consequences
of an act or admission of any person, firm or corporation not a party to tlùs Agreement.
8.5. Any provision of this Agreement which is prohibited or unenforceable, shall be
ineffective to the extent of such prohibition or lack of enforceability, without invalidating
the remaining provisions or affecting the validity of enforcement to such provisions.
8,6,
The following persons shall be the contact person for their respective jurisdiction.
a.
City of Des Moines:
Robert 1. Olander, or his successor in interest
City Manager
21630 lIth S.
Des Moines, WA 98198
(206) 878-4595/Fax: (206) 870-6540
b,
City of Federal Way:
Kenneth E, Nyberg, or his successor in interest
City Manager
33530 1st Way S.
Federal Way, WA 98003
(253) 66l-4013/Fax: (253) 661-4024
Interlocal Agreement between the Cities of Des Moines and
Federal Way Concerning Assumption
and Dissolution of Lake haven Utility District
Page 8
8.7. A copy of this Agreement shall be filed with the City Clerk of the Cities of Des
Moines and Federal Way, and the County Recorder for the County of King.
8.8 The parties shall negotiate in good faith any supplemental agreements necessary to
effectuate the terms of tlùs Agreement or to continue to facilitate the sound operation and
maintenance of the Redondo STP and the sewage collection system it serves, Notwithstanding
anything to the contrary in Paragraph 6, the obligation to transfer ownership of any property or
facilities to Des Moines shall not be triggered until all necessary supplemental agreements have
been mutually agreed upon and executed by the parties.
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Dispute Resolution Procedures.
9.
9.1
If, within 180 days of Des Moines' official notice of its intent to assume
ownership, operation and control of some or all of the assets, facilities and
real property specified in Paragraph 2, the parties are unable to mutually
agree on any necessary supplemental agreement(s) related to the transfer of
ownership of such property or facilities, or if a dispute arises trom or relates
to this Agreement or the breach thereof and if the dispute cannot be
resolved through direct discussions, the parties agree to endeavor first to
settle the dispute in an amicable manner by mediation administered by a
mediator under the American Arbitration Association's Rules before
resorting to arbitration. The mediator may be selected by agreement of the
parties or through the American Arbitration Association.
9.2
Following mediation, or a written agreement by the parties to expressly
waive the mediation process, any unresolved controversy or claim arising
ITom or relating to tlùs Agreement or breach thereof shall be settled through
arbitration which shall be conducted under the American Arbitration
Association's Arbitration Rules. The arbitrator may be selected by
agreement of the parties or through the American Arbitration Association,
All fees and expenses for mediation or arbitration services shall be borne
by the parties equally. However, each party shall bear the expense of its
own counsel, experts, witnesses, and preparation and presentation of
evidence.
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Interlocal Agreement between the Cities of Des Moines and
Federal Way Concerning Assumption
and Dissolution of Lakehaven Utility District
Page 9
9.3
All questions related to tlùs Agreement shall be resolved under the laws of
the State of Washington. In the event that either party deems it necessary
to institute legal action arising from this Agreement, such action shall be
instituted in the King County Superior Court. The parties each consent to
the personal jurisdiction of such court. Except as otherwise provided by
law, it is expressly understood that neither party can institute any legal
action against the other based on this Agreement until the parties have
exhausted the arbitration procedures required by the previous paragraph.
IN WITNESS WHEREOF the parties have hereunto placed their hand and seals on the day
and year indicated.
CITY OF DES MOINES
BY: ~~ -~ ~- ~-
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Robert L. Olander
City Manager
At the Direction of the Des Moines
City Council by motion regularly
passed at an open public meeting on
February 12, 1998.
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Date:
Gary N, Mc an, City Attorney
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ATTEST: ~L day of
/J1 cl/!j: ,1998.
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Dellis Staab
Des Moines City Clerk
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CORTRACT, PEDBRALNAY -LAKEHAVBN/,,-m
CITY OF FEDERAL WAY
BY: f f!!A~
City Manager
At the Direction of the Federal Way
City Council by motion regularly
passed at an open public meeting on
Date: Mar~~¡ì,f;998,
Approved as to Form for
City of Federal Way:
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LonÆK.LindelÎ, City Attorney
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Federal Way City Clerk