PRWSA — proposed revisions


From: C. Paul Smith
To: Mayor Holtzinger and BOA
Date: March 9, 2006
Re: PRWSA — proposed revisions


Following the BOA workshop yesterday, I have drafted some language that addresses my concerns with certain of the Sections of the PRWSA. I also have a few additional concerns that are addressed below.


Proposed language:

Except as otherwise provided in this Agreement, all project costs (including but not limited to design, construction, and ancillary items) will be apportioned between the City and the County based upon consideration of each entity's proportionate share of the water system capacity provided by the improvements.

Comment: At this point I don't understand what specific improvements are referred to by the language: “when the benefit received is disproportionate to each entity's share of the water system capacity.”


Comment: Subparts (3) and (4) should be removed from this “Contingency”

section. Paragraph 28 adequately addresses the issue of potential late payments by the City and includes interest/penalty provisions that are adequate to protect the County. The County has made it clear that it is not its intent to use the Contingency section to cut water going to the City. But as written, by making the City's payment responsibilities a “contingency” and a “condition precedent,” the effect would be to empower the County to withhold water from the City if the City had not fully paid its share for even one element of infrastructure improvements (subpart (3)) or if the City disputed or was late in payment of a commodity or usage charge (subpart (4)). Therefore, it is not appropriate to make subparts (3) and (4) as contingencies. The County is already adequately protected in both of these matters without making them conditions precedent before the County has an obligation to continue supplying water to the City.

In addition, and most importantly, because of the wording in Section 33, B, including subsections (3) and (4) in the Contingency Section (Section 10) jeopardizes the City's right to permanent use of the PRWSA infrastructure if there should be some minor dispute with regard to payments due to the County from the City.

11. CHANGE IN WAUP CAPACITY — Third Paragraph:

Proposed language:

Any reduction in the water allocation under the WAUP shall be borne proportionately by the parties according to their respective responsibilities for such reduction, to the extent it can be ascertained. If it is impossible to ascertain the proportionate responsibilities of the parties, then the reduction shall be allocated according to the parties' respective usages. In the event of such a reduction, the County shall determine the reductions that it finds appropriate as provided above, and thereafter it shall promptly notify the City of this determination. If the City disagrees with this determination, both parties agree to attempt to resolve the disagreement. If the parties are unable to resolve the disagreement within thirty (30) days, then the City may immediately bring suit in the Circuit Court to resolve the disagreement.

Comment: As I understand it, the “proportionately” standard is adequate to address this problem, and adding the language “or assessed against the appropriate party” is not helpful and actually introduces some possible confusion. The language I have added about appeal rights clarifies the respective relations of the City and the County with respect to potential reduction disputes. Since the County makes the determination, then it is the City who has a right to appeal. Obviously the County would never be appealing. Identifying a specific time limit for mediation prior to appeal is necessary to make sure that the mediation provision does not trump the right to appeal.


Proposed added sentence in the first paragraph:

The City's supply and usage charges will be based on what the County's cost is for the supply and usage, and that the purpose of Subsections A through D is to attempt to calculate such an amount.

Comment: The first paragraph of Section 27 should include a statement that it is the objective of the parties that the City should pay for the cost of the water used to the extent that it is practicable to determine it. Having said this, I do not yet understand what the “availability” charge is and why such a charge should be assessed in addition to the water usage charge.

33. TERMS OF AGREEMENT — Sections C and D:

Comment on Section C: Section C appears to give each party the right to unilaterally terminate the agreement after July 1, 2015. Assuming the City secured its right to the permanent allocation of water capacity (under Section B), what is the purpose and what would be the effect of any such termination? It is my current view that the better language in Section C would be that this agreement should be perpetual unless both parties agree otherwise.

Comment on Section D: As I mentioned at the BOA workshop yesterday, I need to know what specific effects and consequences the County intends to be covered by this paragraph. Only after I understand the specific concern and proposal will I be in a position to agree. And then, those specifics should be spelled out in the Agreement. I don't believe I can be prevailed upon to agree that the broad and vague language in paragraph D would ever be appropriate.

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