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HomeMy WebLinkAbout4240RESOLUTION N0.4 2 4 0 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AUBURN, WASHINGTON, APPROVING THE REAL ESTATE PURCHASE AND SALE AGREEMENT BETWEEN PUGET SOUND ENERGY AND THE CITIES OF AUBURN, BONNEY LAKE AND SUMNER WHEREAS, in connection with the need by the three cities to provide to their water customers presently and prospectively, water resources, the cities have endeavored to assure adequate water rights to meet their needs; and WHEREAS, in connection with those efforts, the cities have sought to explore purchase of Lake Tapps from Puget Sound Energy as that entity needs or uses Lake Tapps for its hydroelectric uses; and WHEREAS, in order secure for their present and future customers, adequate water supplies to meet the needs of the cities, it is appropriate that the City purchase Lake Tapps not only to provide adequate sources of water but to protect the current aquifer levels and spring levels from which water resources are currently obtained; and WHEREAS, in connection with the purchase and sale agreement for Lake Tapps, there are other agreements that are appropriate including interlocal agreement between the three cities to help define how they will operate the resources jointly and how resources and responsibilities are to be divided in connection therewith; and NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AUBURN, HEREBY RESOLVES as follows: Resolution No. 4240 September 17, 2007 Page 1 of 3 Section 1. That the Real Estate Purchase and Sale Agreement between Puget Sound Energy and the cities of Auburn, Bonney Lake and Sumner, in substantial conformity to the agreement a copy of which is attached hereto, marked as Exhibit "A" and incorporated herein by this reference, is hereby approved. Section 2. That the Interlocal Agreement between the cities implementing the Purchase and Sale, in substantial conformity to the agreement a copy of which is attached hereto, marked as Exhibit "B" and incorporated herein by this reference, is also approved to implement the purchase and sale agreement. Section 3. That the Mayor and/or designee are authorized to implement such administrative procedures as may be necessary to carry out the directives of this legislation, including execution of a joint representation agreement between the cities of Auburn, Bonney Lake and Sumner. Section 4. That this Resolution shall take effect and be in full force upon passage and signatures hereon. ~ - /_ Dated and Signed this ~ ~~~ day of ~ ~.~.~.+°t-~ , 2007. CI 41~ . UR _~. __ _..__ PETER B. LEWIS MAYOR ATTEST: '~ ~ ~~~~~ l~ t Dan Ile E. Daskam, City Clerk Resolution No. 4240 September 17, 2007 Page 2 of 3 APPBrpVE~? AS TO riiel B. Heid, Ci{'~i A Resolution No. 4240 September 17, 2007 Page 3 of 3 .~ REAL ESTATE PURCHASE AND SALE AGREEMENT PUGET SOUND ENERGY AND THE CITIES OF AUBURN, BONNEY LAKE AND SUMNER This Agreement is made and entered into thisl ay of 2007, by and between the purchasers, CITIES OF AUBURN, NNE E and SUMNER (the "Cities"), and PUGET SOUND ENERGY ("PSE"). WITNESSETH: Whereas, the Cities and PSE are desirous of entering into an agreement whereby the Cities will purchase property owned by PSE. NOW, THEREFORE, in consideration of the following terms, conditions and covenants and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, IT IS AGREED by the parties as follows: 1. SALE OF PROPERTY. PSE shall sell, convey and transfer to the Cities, and the Cities shall purchase, acquire and take from PSE, the real property, located in Pierce County, Washington, generally known as Lake Tapps, and legally described as follows: LEGAL DESCRIPTION TO BE PROVIDED IN GENERAL CONFORMITY WITH THE BELOW DESCRIPTIONS and all rights, herediments, appurtenances, easements, licenses, improvements, and buildings belonging or in any way appertaining to said property, including all interests relating to the White River Hydroelectric Project. PSE shall also specifically sell, convey and transfer to the Cities, and the Cities shall purchase, acquire and take from the PSE, all rights to the waters of Lake Tapps held by PSE, whether perfected or not, and whether said rights exist as an appurtenance to said property or for the use of the water on other land or for other purposes. Without limiting in any way any of the foregoing, PSE shall also specifically sell, convey and transfer to the Cities, and the Cities shall purchase, acquire and take from the PSE, all existing claims, permits and pending permit applications associated in any way with said property and/or the White River Hydroelectric Project to the fullest extent such claims, permits and/or permit applications may be transferred. The property, assets, and all other rights/entitlements of any kind identified in this paragraph to be sold, conveyed and or transferred from PSE to the Cities shall hereinafter be referred to collectively as "the Lake Tapps Property." 2. EARNEST MONEY DEPOSIT. The Cities agree to pay herewith Five Hundred, Ten Thousand US Dollars ($510,000.00) as earnest money, in the form of checks or warrants from the Cities to be deposited with the closing agent as part payment on the purchase price, payable to PSE upon closing, subject to the conditions set forth in Paragraph 4. The earnest money will be delivered to the closing agent upon approval of 1 this Agreement by the City Council of the respective cities in accordance with Section 22 but no later than September 27, 2007 if this Offer is accepted by PSE. 3. PURCHASE PRICE. The purchase price for the Lake Tapps Property is Thirty- Three Million US Dollars ($33,000,000.00). The parties acknowledge that the purchase price represents the fair market value of the Property. The agreed upon amount is payable by checks or warrants from the Cities at closing. 4. DUE DILIGENCE. The Cities shall have the right for a period of one hundred eighty (180) days from the date of PSE's written confirmation that it has delivered all documents set forth in Paragraph 6 of this Agreement to the City of Auburn at the address set forth in Paragraph 19 (the "Due Diligence Period") to conduct the Cities' due diligence review, examination and inspection of all matters pertaining to their acquisition of the Lake Tapps Property, including such inspections, tests, and surveys as the Cities deem appropriate to determine the suitability of the Lake Tapps Property for the Cities' intended use. The Cities' obligation to purchase the Lake Tapps Property shall be contingent upon the Cities' approval of the Lake Tapps Property after conducting their due diligence review. If, based upon the Cities' review, examination and inspection, the Cities shall determine in their sole discretion that they intend to acquire the Lake Tapps Property, then the Cities shall promptly notify PSE of such determination in writing prior to the expiration of the Due Diligence Period, whereupon the Cities' due diligence contingency shall be deemed satisfied and waived, the Earnest Money shall become nonrefundable (except as otherwise provided herein), and the Cities shall proceed to Closing. In the event that the Cities shall fail to have delivered such notice to PSE on or before the expiration of the Due Diligence Period, then this Agreement shall automatically terminate, the Earnest Money shall be returned to the Cities, and the Cities' rights under this Agreement shall be of no further force or effect. 5. INSPECTION OF PROPERTY. PSE grants to the Cities the right to enter onto the Lake Tapps Property, including areas not open to the public, to conduct such investigations and testing as the Cities may find necessary to assess the feasibility of purchasing the Lake Tapps Property. The Cities shall give PSE three (3) days written notice of any investigations or testing that require the collection of samples or other physical investigations on the Lake Tapps Property. 6. INVESTIGATION OF WATER RIGHTS AND OTHER RECORDS. PSE agrees to share with the Cities all of its records relating in any way to the Lake Tapps Property and/or the water rights associated with it. This includes but is not limited to all records, data, studies, assessments, etc. which exist in any form whatsoever and includes, but is not limited to; environmental, hazardous waste, endangered species, hydrological, engineering, dike safety and any related geotechnical assessments and studies; dike safety improvements and state approvals thereof; all materials associated with PSE's current and pending water rights; information on any pending litigation relating to or impacting the Lake Tapps Property; all agreements of any kind relating to lake level maintenance or minimum instream flows; and such other materials as the Cities may require to assess the feasibility of purchasing the property. This provision shall be interpreted to the broadest extent possible to facilitate full disclosure of all information which exists concerning the Lake Tapps Property. 2 7. MAINTENANCE OF FACILITIES. During the period of this Agreement, PSE shall continue to maintain and operate the Lake Tapps Property in conformance with state and federal law, existing binding legal agreements, and with accepted industry standards. The Cities have taken on no duty for such maintenance and operation by entering into this Agreement. 8. REPRESENTATIONS OF PSE. PSE hereby represents to the Cities the following: (A) To the best of PSE's knowledge there are no pending special assessments or condemnation actions with respect to the Lake Tapps Property or any part thereof, and PSE has no knowledge of any special assessment or condemnation actions being contemplated, and; (B) There is no pending litigation or suit threatened or asserted which could result in a lis pendens being lawfully filed against the Lake Tapps Property or any part thereof, and; (C) PSE will cooperate with the Cities and execute all documents necessary to remove or release liens, assessments, encumbrances, mortgages or deeds of trust in order to deliver to the Cities marketable title to the Lake Tapps Property and all parts thereof; (D) PSE has good and marketable title and fee simple to the Lake Tapps Property and all parts thereof, which is not subject to any liens, encumbrances, restrictions, or easements of any kind except those which have been disclosed on the Commitment for Title Insurance received by the Cities. (E) PSE will cooperate with the Cities and execute all documents necessary to transfer to the Cities the existing permits and pending permit applications set forth in Paragraph 1. 9. LEGAL AUTHORITY TO ENTER INTO AGREEMENT. The Cities and PSE affirm that they have the full legal right to enter into this Agreement. PSE also affirms that it is not a party to any agreement with Cascade Water Alliance, or any other potential purchaser of the Lake Tapps Property or its water .rights, that precludes it from entering into this agreement or transferring clear title to the Lake Tapps Property to the Cities. 10. CLOSING. The closing date and place shall be mutually agreed upon by the parties upon the Cities notifying PSE of their intention to purchase the Lake Tapps Property under Paragraph 4 of this Agreement. All parties shall be responsible and entitled to have all closing documents reviewed by its own counsel or agent prior to closing. The risk of loss to the improvements, if any, on the Lake Tapps Property prior to closing shall be PSE's and in the event of damage or destruction, the Cities shall be entitled to terminate this agreement, and the Earnest Money shall be returned to the Cities. Either the Cities or PSE may propose delays in closing and/or extensions to the Due Diligence Period, that shall become effective upon written, mutual agreement of the parties. 11. PSE'S CLOSING DOCUMENTS. At the closing, PSE shall produce and execute: (A) a Warranty Deed (The "Deed"), duly executed and acknowledged in a recordable form, conveying to the Cities marketable title to the Lake Tapps Property free 3 and clear of all liens, assessments, deeds of trust, mortgages, or encumbrances except those expressly agreed to by the Cities; (B) a detailed statement, prepared by the escrow officer and/or the closing attorney, setting forth the appropriate adjustments and prorations to be made at the closing; (C) a completed PSE's Disclosure Statement; and (D) all other documentation reasonably required by the Cities. 12. EXPENSES. (A) Expenses of PSE. PSE shall pay: (i) real estate taxes prorated to the date of closing; (ii) all assessments, liens, mortgages, deeds of trust or other encumbrances (i.e. real estate excise tax); (iii) PSE's attorney fees; and (iv) all other expenses incurred by PSE which relate to the Lake Tapps Property; (v) title insurance premiums. (B) Expenses of Cities. The Cities shall pay: (i) all recording fees; (ii) their attorney fees; (iii) real estate taxes due after the closing date, if any. 13. POSSESSION. PSE shall deliver possession of the Property to the Cities on the date of closing. 14. TIME. Time is of the essence of this Agreement. 15. TITLE EXAMINATION. This Agreement is subject to and conditioned on PSE providing to the Cities clear title to the real property, to the Cities' satisfaction, as shown on a Policy of Title Insurance covering the purchase of the Property in the amount of the cash purchase price, provided and paid for by PSE. In the event that PSE is unable to cure any title encumbrances which are unacceptable to the Cities, the Cities may at their option: (1) terminate this agreement by written notice, whereupon no party shall have any further liability under this agreement; or (2) postpone the date of closing for up to sixty (60) days, during which time PSE shall use all reasonable efforts and expend reasonable sums as may be necessary to cure the objections of the Cities. If the objections to title are not cured on or before the closing date, as postponed, the Cities may terminate this agreement or waive the objections to title. 16. COMMISSION. PSE warrants and represents to the Cities that if any real estate brokerage commission or fees are payable, PSE hereby indemnifies the Cities from and against any and all claims for any real estate brokerage commission fees which may arise as a result of any acts of PSE. PSE will pay any real estate fees at closing, unless agreed otherwise. 17. HAZARDOUS WASTE. To the best of PSE's knowledge the Lake Tapps Property is not in violation of any federal, state or local law, ordinance, or regulation relating to the environmental conditions on, under, or about the Lake Tapps Property, 4 including but not limited to, soil and surface and ground water conditions, and that during the time in which PSE owned the Lake Tapps Property, neither PSE nor, to the best of PSE's knowledge, any third party has used, generated, stored, or disposed of, on, under, or about the Lake Tapps Property or transported to or from the Property any hazardous waste, toxic substances, or related materials (the "Hazardous Materials"). For the purposes of this paragraph, Hazardous Materials shall include, but is not limited to, substances defined as "Hazardous Substances," "Hazardous Materials," "Hazardous Waste," "Toxic Substances," in the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, and RCW Title 7 and the regulations promulgated pursuant to such laws. PSE will indemnify and hold harmless the Cities from all required remediation, damage, claim or loss (including attorney fees incurred in defending any claim) arising from the placement, storage, disposal or release on the Lake Tapps Property of any Hazardous Materials during such time as PSE was in possession or had any interest in the Lake Tapps Property. This indemnification and hold harmless shall survive and not be merged into the deed delivered by PSE to the Cities for the Lake Tapps Property. If prior to the closing date the Cities discover that the Lake Tapps Property contains any Hazardous Waste, of which it has not been previously advised, the Cities may terminate this Agreement, and the Earnest Money shall be returned to the Cities. 18. CONDEMNATION. The Cities and PSE acknowledge that the Property being sold/purchased is not being purchased under the threat of condemnation pursuant to RCW Title 8. 19. NOTICES. Any notices required or permitted to be given shall be in writing and delivered either in person or by certified mail, return receipt requested, postage pre-paid, addressed as follows or such other address as may be designated by either party: Cities: Office of the Mayor City of Auburn 25 W. Main St. Auburn WA 98001 Office of the Mayor City of Bonney Lake 19306 Bonney Lake Blvd. Bonney Lake, WA 98391 Office of the Mayor City of Sumner 1104 Maple Street, Sumner, WA 98390 PSE: 5 Any notice given pursuant to this Agreement shall be deemed effective the day it is personally delivered or three (3) business days after the date it is deposited in the United States mails. 20. ENTIRE AGREEMENT/MODIFICATION. This written Agreement constitutes the entire and complete Agreement between the parties hereto and supersedes any prior oral or written agreements between the Parties with respect to the Property. It is expressly agreed that there are no verbal understandings or agreements, which in any way change the terms, covenants, and conditions herein set forth. No modifications of this Agreement and waiver of any of its terms and conditions shall be effective unless in writing and duly executed by the parties hereto. 21. BINDING EFFECT. All covenants, agreements, warranties and provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, personal representatives, successors and assigns. 22. CITY COUNCIL APPROVALS. PSE acknowledges that this Agreement does not bind the Cities until (1) the Mayors of Auburn, Bonney Lake and Sumner execute the Agreement and (2) their City Councils approve the Agreement. 23. PSE DISCLOSURE STATEMENT. PSE shall, within five (5) days of accepting this Agreement, deliver to the Cities a completed, signed and dated Real Property Transfer Disclosure Statement substantially in the form set forth in RCW 64.06.020. The Cities shall within three business days, or as otherwise agreed to, after receipt of the Real Property Transfer Disclosure Statement have the right to (1) approve and accept the Real Property Disclosure Statement; or (2) rescind this Agreement pursuant to the Cities' sole discretion. If the Cities elect to rescind the Agreement, the Cities will deliver written notice of rescission to PSE within the above three (3) business day period, or as otherwise agreed. Upon delivery of a rescission statement, the Cities shall be entitled to immediate return of all deposits and other consideration paid to PSE. If the Cities do not deliver a written rescission notice, the Real Property Transfer Disclosure Statement will be deemed approved. 24. DEFAULT AND ATTORNEY'S FEES. In the event that any party fails, without legal excuse, to perform any obligation under this Agreement, then the other parties may, at their option, bring suit against the party failing to perform for the other parties' actual damages, or pursue any other rights or remedies available at law or in equity. If one or more parties institute suit concerning this Agreement, the prevailing party or parties shall be entitled to court costs and reasonable attorney's fees. In the event of trial, the court shall fix the amount of the attorney's fees. Venue of any suit shall be in Pierce County, and this Agreement is to be governed by the laws of the State of Washington. 25. LEGAL RIGHTS. EACH OF THE PARTIES SHALL SUBMIT THIS AGREEMENT TO THEIR ATTORNEYS AND TAX SPECIALISTS FOR THEIR REVIEW AND APPROVAL PRIOR TO SIGNING THIS AGREEMENT. NO REPRESENTATIONS 6 OR WARRANTIES ARE MADE BY ONE PARTY TO THE OTHER PARTY AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT OR TAX CONSEQUENCES OF THIS AGREEMENT, THE TRANSACTION DESCRIBED HEREIN, OR ANY ATTACHMENTS TO THIS AGREEMENT. 26. TIME LIMIT FOR ACCEPTANCE. The Cities offer to buy the property on the above terms and conditions. PSE has until midnight of September 27, 2007 to accept this offer (if not filled in, the day following the Cities' signature date below.) Acceptance is not effective until a signed copy hereof along with any earnest money is actually received by the office of Closing Agent. If this offer is not so accepted, it shall lapse. 27. ASSIGNMENT. No party to this Agreement shall assign any right or obligation hereunder in whole or in part, without the prior written consent of the other parties hereto; provided, one or more of the Cities may assign its rights and obligations hereunder to the remaining Cities (or City) without such written consent. No assignment or transfer of any interest under this Agreement shall be deemed to release the assignor from any liability or obligation under this Agreement, or to cause any such liability or obligation to be reduced to a secondary liability or obligation. 28. AMENDMENT, MODIFICATION OR WAIVER. No amendment, modification or waiver of any condition, provision or term of this Agreement shall be valid or of any effect unless made in writing, signed by the party or parties to be bound, or such party's or parties' duly authorized representative(s) and specifying with particularity the nature and extent of such amendment, modification or waiver. Any waiver by any party of any default of another party shall not effector impair any right arising from any subsequent default. Nothing herein shall limit the remedies or rights of the parties hereto under and pursuant to this Agreement. 29. INDEMNIFICATION. Each party hereto ("Indemnifying Party") shall indemnify, defend and hold harmless the other parties hereto and their officers, agents and employees, or any of them ("Indemnified Party or Parties") from any and all claims, actions, suits, liability, loss, costs, expenses, and damages of any nature whatsoever, including attorney fees, by any reason of or arising out of the act or omission of the Indemnifying Party, its officers, agents, employees, or any of them relating to or arising out of the performance of this Agreement except to the extent a court of competent jurisdiction finds that the claim, action, suit, liability, loss, cost, expense, or damage is caused by the Indemnified Party or Parties. If a final judgment is rendered against an Indemnified Party or Parties, or jointly against an Indemnified Party or Parties and the Indemnifying Party, the Indemnifying Party shall satisfy the same to the extent that such judgment was due to the Indemnifying Party's negligent acts or omissions. 30. CAPTIONS, HEADINGS AND TITLES. All captions, headings or titles in the paragraphs or sections of this Agreement are inserted for convenience of reference only and shall not constitute a part of this Agreement or act as a limitation of the scope of the particular paragraph or sections to which they apply. As used herein, where appropriate, the singular shall include the plural and vice versa and masculine, feminine and neuter expressions shall be interchangeable. Interpretation or construction of this Agreement 7 shall not be affected by any determination as to who is the drafter of this Agreement, this Agreement having been drafted by mutual agreement of the parties. 31. SEVERABLE PROVISIONS. Each provision of this Agreement is intended to be severable. If any provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the validity of the remainder of this Agreement. 32. ENTIRE AGREEMENT. This Agreement contains the entire understanding of the parties hereto in respect to the transactions contemplated hereby and supersedes all prior agreements and understandings between the parties with respect to such subject matter. 33. COUNTERPARTS. This Agreement may be executed in multiple counterparts, each of which shall be one and the same Agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party. 34. SIGNATURES: CI I CITY OF BONNEY LAKE _~ --~ .~-- ~ Peter . Le is, M yor Neil J hnson, Jr., May -, `~ ~ d . Date Date CITY OF SUMNER David Enslow, Mayor 9-/L -a7 Date ACCEPTED, the date shown below. PUGET SOUND ENERGY By Date 8 CITIES OF AUBURN, BONNEY LAKE, AND SUMNER INTERLOCAL AGREEMENT FOR PROPERTY PURCHASE THIS INTERLOCAL AGREEMENT made and entered into, pursuant to the Interlocal Cooperation Act, Chapter 39.34 of the Revised Code of Washington, on the day of September, 2007, by and between the CITY OF AUBURN, the CITY OF BONNEY LAKE, and the CITY OF SUMNER, municipal corporations of the State of Washington (the "Cities" or individually "City"). WITNESSETH: WHEREAS, Puget Sound Energy ("PSE") owns Lake Tapps, the water rights thereto, and the property on which the lake is located; and, WHEREAS, the Cities wish to jointly make an offer to purchase the Lake Tapps Property; and, WHEREAS, the Cities wish to establish the nature of their respective rights and responsibilities in making the offer and conducting a Due Diligence Investigation of the Lake Tapps Property, NOW THEREFORE in consideration of their mutual covenants, conditions and promises, THE PARTIES HERETO DO HEREBY AGREE as follows: OFFER OF PURCHASE. The Cities shall make an offer to purchase the Lake Tapps Property from PSE by delivering to PSE a copy of the Purchase and Sale Agreement between the Cities and PSE ("Purchase and Sale Agreement"). 2. TERMS OF OFFER. The Cities mutually agree that the terms of their offer to purchase the Lake Tapps Property are set forth in the Purchase and Sale Agreement attached hereto as Exhibit "A," and hereby incorporated by reference, including any amendments thereto resulting from negotiations between the Cities and PSE. 3. EARNEST MONEY. The City Councils for each of the Cities, in approving this Interlocal Agreement have authorized the expenditure of One Hundred, Seventy Thousand US Dollars ($170,000.00) earnest money by each of their respective Cities. 4. FUNDS FOR DUE DILIGENCE INVESTIGATION. The City Councils for each of the Cities, in approving this Interlocal Agreement have authorized the expenditure of One Hundred Thousand Dollars ($100,000.00) by each of their respective Cities to pay that City's one-third of the costs of conducting the Due Diligence Investigations set forth in Page 1 Paragraph 5. 5. OPERATIONS BOARD AND WORK PLAN FOR DUE DILIGENCE INVESTIGATION. The Cities shall conduct the Due Diligence Investigations set forth in the Work Plan, attached hereto as Exhibit "B" and incorporated by reference in the following manner: a. Operations Board. An Operations Board is hereby created to govern and manage the Due Diligence Investigation. (1) The Due Diligence Investigation shall be governed by an Operations Board composed of three (3) members from each of the Cities; comprised of the following individuals, as follows: the Mayor, City Administrator or designees; and City Attorney from each of the respective Cities. Each board member shall have an equal vote and voice in all board decisions. Unless otherwise provided, Robert's Revised Rules of Order shall generally govern all procedural matters relating to the business of the Board. (2) The Operations Board shall be responsible for managing the Due Diligence funds authorized in Paragraph 4 of this Interlocal Agreement. The Board is authorized to seek Requests for Proposals (RFPs) for various components of the Due Diligence Investigation and components of the Work Plan described below. For any contract greater than Thirty Thousand Dollars, the consensus of not less than seven (7) members of the Operations Board must be obtained. The Operations Board shall submit all contracts to the Cities' respective City Attorneys for review and approval as to form at least two weeks before execution of the contract. An accounting of all expenditures and the remaining balance of the fund shall be provided to the respective City Councils not less than monthly. In instances where approval of the contract is required by the City Council, such approval must be obtained prior to execution of the contract. b. Work Plan Tasks. In conducting the Due Diligence Investigation, the Operations Board will be guided by the tasks as set forth in the Work Plan. For every task in the Work Plan, each City shall have a Primary Contact, who is charged with overseeing that Task, communicating with the Primary s The designee for the Cities of Bonney Lake and Sumner shall be the designee appointed by the City Administrators of these Cities, if a designee is so appointed from such City, and the designee for the City of Auburn shall be as appointed by the Mayor of such City. Page 2 Contacts for the other Cities regarding that task, and disseminating information about that Task within his or her city. (1) For every Task, there shall be a Lead City. The Contact Person for the Lead City shall administer the execution of that Task. (2) Tasks, or portions of Tasks, that can be performed in-house will be performed by the Lead City's staff, at that city's cost; provided, the Three Primary Contacts for the Task Operations Board, acting by consensus and with consent of the Mayor of the City which the tasks are to be assigned, may assign portions of a Task to another City's staff, as necessary. (3) The Contact Person for the Lead City shall oversee any consultants retained for that Task but does not have the authority to modify or increase the scope of work without the consent of the Operations Board. (4) Consultants retained for a Task shall be retained by the Lead City, on behalf of the Cities, consistent with Subparagraph 5(b)(5) below. However, the Consultant's contract shall include indemnification provisions that holds Sumner, Bonney Lake, and Auburn harmless. The Lead City shall invoice the other two Cities for payment commensurate with its percentage of contribution for each consultant invoice received and shall pay the consultant. (5) The Primary Contacts for a Task shall make a consensus recommendation to the Cities regarding which consultants to retain. The three Mayors, or City Councils if council action is required, shall jointly select the consultant by consensus. 6. INDEPENDENT REVIEW. Any City may retain a consultant, at its own cost, to assist that City in evaluating the results of a Task or to assist that City in evaluating the purchase of the Lake Tapps Property. 7. WITHDRAWAL. The Cities have the right to withdraw their participation in the purchase of the Lake Tapps Property up until the end of the Due Diligence Period as defined in the Purchase and Sale Agreement. If any City determines that it no longer wishes to pursue its participation in the purchase of the Lake Tapps Property, it may do so by giving written notice to the other Cities. Any City withdrawing during the Due Diligence Period shall be relieved from the obligation to pay, any and all Due Diligence Investigation expenses obligated after the receipt of the withdrawal notice, and shall be entitled to the refund from Page 3 the remaining Cities of its contribution of Earnest Money funds, unless, pursuant to the Purchase and Sale Agreement, the Earnest Money funds are not refundable; PROVIDED that if two or more Cities withdraw, each City will be responsible for its proportionate share of the total costs of the Due Diligence Investigation based upon its percentage of participation. 8. SATISFACTION OF DUE DILIGENCE. The City Councils of the Cities shall determine whether the Due Diligence contingency has been satisfied, and whether the Cities shall proceed with the purchase of the Lake Tapps Property. Should the Cities be unable to reach consensus, the City or Cities wishing to proceed with the purchase may do so, and the City or Cities choosing not to proceed shall withdraw under the provisions of Paragraph 7. 9. DETERMINATION OF OPERATIONAL STRUCTURE AND OWNERSHIP. The Cities shall work in good faith to develop a mutually acceptable plan for maintenance of the Lake Tapps Property and operation of the resources, including ownership and the pricing for water to be sold. 10. EXTENSION OF DUE DILIGENCE PERIOD. Prior to expiration of the Due Diligence Period, the Mayors of the Cities, acting by consensus, may request an extension of the Due Diligence Period, or a delay in closing under the provisions of the Purchase and Sale Agreement. The Mayors, acting by consensus, may also agree to, or reject, a request from PSE for such an extension or delay. 11. DEFINITION OF TERMS. All terms used in this Interlocal Agreement not otherwise defined herein shall have the same meaning as that given in the Purchase and Sale Agreement. 12. INDEMNIFICATION. Each City ("Indemnifying City") shall indemnify and hold the other Cities ("Indemnified Cities") and their agents, employees, and/or officers, harmless from and shall process and defend at its own expense any and all claims, demands, suits, at law or equity, actions, penalties, losses, damages, or costs, of whatsoever kind or nature, brought against one or more of the Indemnified Cities arising out of, in connection with, or incident to the Indemnifying City's performance or failure to perform any aspect of this Interlocal Agreement; provided, however, that if such claims are caused by or result from the concurrent negligence of an Indemnified City, its agents, employees, and/or officers, this indemnity provision shall be valid and enforceable only to the extent of the negligence of the Indemnifying City; and provided further, that nothing herein shall require the Indemnifying City to hold harmless or defend an Indemnified City, its agents, employees and/or officers from any claims arising from the sole negligence of said Indemnified City, its agents, employees, and/or officers. No liability shall attach to any City by reason of entering into this Interlocal Agreement except as expressly provided herein. Page 4 13. COMPLIANCE WITH REGULATIONS AND LAWS. The Cities shall comply with all applicable rules and regulations pertaining to them in connection with the matters covered herein. 14. ASSIGNMENT. A City shall not assign this Interlocal Agreement or any interest, obligation or duty therein without the express written consent of the other Cities. 15. ATTORNEYS' FEES. Each City shall be responsible for its own attorney fees and costs. 16. DISPUTE RESOLUTION. Any dispute between the any of the Cities as to this Interlocal Agreement or any other Interlocal Agreement related to Lake Tapps, the joint operations boards, water rights, water usage retention, sale of water to third parties or any other issue or decision required by the Cities or boards related hereto shall be resolved by mediation and/or non-binding arbitration as agreed to by the Cities. The Cities may also agree to binding arbitration on a case-by-case basis. 17. NOTICES. All notices and payments hereunder may be delivered or mailed. If mailed, they shall be sent to the following respective addresses: To the City of Auburn: City of Auburn 25 West Main Auburn, WA 98001-4998 Attn: Mayor Phone:(253) 931-3000 FAX: (253) 931-3053 To the City of Bonney Lake: City of Bonney Lake 19306 Bonney Lake Blvd. Bonney lake WA 98391 Attn: Mayor Phone:(253) 862-8602 FAX: (253) 862-8538 To the City of Sumner: City of Sumner 1104 Maple St. Sumner, WA 98390 Attn: Mayor Phone: (253) 863-8300 FAX: (253) 863-2850 Page 5 or to such other respective addresses as any party hereto may hereafter from time to time designate in writing. All notices and payments mailed by regular post (including first class) shall be deemed to have been given on the second business day following the date of mailing, if properly mailed and addressed. Notices and payments sent by certified or registered mail shall be deemed to have been given on the day next following the date of mailing, if properly mailed and addressed. For all types of mail, the postmark affixed by the United States Postal Service shall be conclusive evidence of the date of mailing. 18. MISCELLANEOUS. a. This Interlocal Agreement shall be deemed to be made and construed in accordance with the laws of the State of Washington. Jurisdiction and venue for any action arising out of this Interlocal Agreement shall be in Pierce County, Washington. b. The captions in this Interlocal Agreement are for convenience only and do not in any- way limit or amplify the provisions of this Interlocal Agreement. c. This Interlocal Agreement shall continue until terminated by all of the Cities. d. No separate legal entity is created hereby, as each of the Cities is contracting in its capacity as a municipal corporation of the State of Washington. The identity of the parties hereto is as set forth hereinabove. e. The purpose of this Interlocal Agreement is to accomplish the objectives of this Interlocal Agreement. f. The performances of the duties of the Cities provided hereby shall be done in accordance with standard operating procedures and customary practices of the Cities. g. No provision of this Interlocal Agreement shall relieve any City of its public agency obligations and or responsibilities imposed by law. h. If any term or provision of this Interlocal Agreement or the application thereof to any person or circumstance shall, to any extent, be held to be invalid or unenforceable by a final decision of any court having jurisdiction on the matter, the remainder of this Interlocal Agreement or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby and shall continue in full force and effect, unless such court determines that such invalidity or unenforceability materially interferes with or defeats the purposes hereof, at which time the Cities shall have the right to terminate the Interlocal Agreement. i. This Agreement constitutes the entire agreement between the Cities. There are no terms, obligations, covenants or conditions other than those contained herein. No modifications or amendments of this Agreement shall be valid or effective unless evidenced by an agreement in writing signed by all Cities. j. Copies of this Agreement shall be filed with the King County Auditor's Office, the Page 6 Pierce County Auditor's Office, the Secretary of State of the State of Washington, and the respective Clerks of the parties hereto. IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year first above written. CITY OF AU _ __ ,.~ ,. ~\ CITY OF BONNEY LAKE Peter B. Lewis, Mayor Attest: ~~ ~~~~ Ci lerk CITY OF SUMNER David Enslow, Mayor Attest: City Clerk Neil Johnson Jr., Mayor Attest: City Clerk Approved as to form: Bonney Lake City Attorney Page 7 Approved as to form: Approved as to form: Sumner City Attorney Page 8 STATE OF WASHINGTON COUNTY OF ss. ON~HIS % ~~1day of ~ ~ ~ f. , 200 ~, before me, personally appeared f-~/ .~. /~t~ ~.r and ,,D~zti ,`f ~1~. ~aka,~- , to me known to be the Mayor and City Clerk of the CITY OF AUBURN, a municipal corporation, the corporation that executed the within and foregoing instrument, and acknowledged said instrument to be the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned, and on oath stated that they were authorized to execute said instrument. WITNESS my hand and official seal hereto the day and year in this certificate first above written. \`~a`a\\1\~~tt1.~F ~.~ dpi ~kA+~NC~ ~: QL~ =~ Q~ AR y ~d+''.~ ,w=~ z ~ '~ Asa _ ' ~. cI~ , u ~~~® s~~'I,' 3 2~ \1a ~~~~T r~~rr~ ~'~ Q~~,'~, STATE OF WASHINGTON ) ss. COUNTY OF ) r N A Y PUBLIC i and for th State of Washington, residing at ~f ~ ~-`~. My Commission Expires: Q 3 • ~ ~ I / ON THIS day of , 200_, before me, personally appeared and , to me known to be the Mayor and City Clerk of the CITY OF BONNEY LAKE, a municipal corporation, the corporation that executed the within and foregoing instrument, and acknowledged said instrument to be the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned, and on oath stated that they were authorized to execute said instrument. WITNESS my hand and official seal hereto the day and year in this certificate first above written. NOTARY PUBLIC in and for the State of Washington, residing at My Commission Expires: Page 9 STATE OF WASHINGTON ) ss. COUNTY OF ) ON THIS day of , 200_, before me, personally appeared and , to me known to be the Mayor and City Clerk of the CITY OF SUMNER, a municipal corporation, the corporation that executed the within and foregoing instrument, and acknowledged said instrument to be the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned, and on oath stated that they were authorized to execute said instrument. WITNESS my hand and official seal hereto the day and year in this certificate first above written. NOTARY PUBLIC in Washington, residing at _ My Commission Expires: and for the State of Page 10 Exhibit B Due Diligence Investigations 1. Retain and manage consultants for review of PSE's current and pending water rights. 2. Retain and manage consultants for environmental review of Lake Tapps property, including hazardous waste, shoreline management, and water quality. 3. Retain and manage consultants for engineering review of dikes and all other structures on property, including costs and time frames for any necessary or recommended repairs/replacement of facilities. 4. Retain and manage consultants for hydrological review of lake and surrounding area. 5. Retain and manage consultants for endangered species review. 6. Retain and manage consultants for feasibility study of using water for potable water supply for Cities and for third parties, including analysis of water quality, cost and options for treatment facilities, and cost and options for distribution systems. 7. Retain and manage consultants for analysis of lake management options, incorporating a range of municipal water usage volumes, instream flows, lake levels, and annual rainfall. 8. Retain and manage consultants for review of PSE records regarding maintenance and operation actions and costs for the Lake Tapps Property for the past ten years. 9. Undertake such other investigations as the Cities jointly agree should be conducted.