Loading...
HomeMy WebLinkAbout05-050 - Cascade Water Alliance - Water System Operation05-050(a) Council Approval 12/5/11 INTERLOCAL CONTRACT Amended and Restated October 26, 2411 12 M1611V,4zS Cascade Interlocal Contract i Amended and Restated October 26, 2011 TABLE OF CONTENTS ARTICLE1. AGREEMENT ..............................1 ARTICLE2. DEFINITIONS ..............................1 ARTICLE 3. FORMATION OF ENTITY; PURPOSE AND POWERS 7 Section3.1 Formation 7 Section3.2 Membership 7 Section 3.3 Conversion to Municipal Corporation Status 9 Section3.4 Purposes 9 Section3.5 Powers .............................10 ARTICLE 4. ORGANIZATION STRUCTURE; BOARD .............................11 Section 4.1 Composition, ByLaws and Meetings .............................11 Section 4.2 Powers of the Board .............................12 Section4.3 Voting .............................12 Section 4.4 Officers and Committees .............................12 Section 4.5 Executive Committee .............................13 Section 4.6 Staff, Consultants and Contractors .............................14 Section 4.7 Budget; Dues; Financial Management .............................14 ARTICLE 5. ASSET DEVELOPMENT AND SUPPLY COMMITMENT .............................15 Section 5.1 Property Acquisition, Ownership and Disposition .............................15 Section5.2 Supply Commitment .............................16 Section 5.2.1 Commitment to Members .............................16 Section 5.2.2 Additional Rules for Members Retaining Independent Supply .....................18 Section 5.2.3 Additional Rules for Source Exchange .............................19 Section 5.3 Financing of Assets 20 Section 5.3.1 Issuance of Bonds 20 Section 5.3.2 Pledge of Revenues 21 Section 5.3.3 Continuing Disclosure .............................23 Section 5.3.4 Preservation of Tax Exemption for Interest on the Bonds 23 Cascade Interlocal Contract Amended and Restated October 26, 2011 Section 5.3.5 Additional Certificates 23 Section 5.4 Supply Expansions and System Extensions .............................23 Section 5.5 Regional Capital Facilities Charges 24 Section 5.6 Transfer Upon Mergers, Consolidations and Assumptions .............................26 ARTICLE 6. NEW INDEPENDENT SUPPLY 27 ARTICLE 7. ASSET MANAGEMENT 27 Section 7.1 Supply System Management .............................28 Section7.2 Conservation 28 Section 7.3 Shortages and Emergency .............................29 Section7.3.1 Shortages 29 Section7.3.2. Emergency 30 Section7.4 Water Quality 30 Section 7.5 Water Supply Rates and Charges 31 Section 7.6 New Water Surcharge 33 Section 7.7 Franchises and Easements 33 Section 7.8 Sales of Water to Non Members 33 Section 7.9 Payment Procedures; Default; Step -Up Provisions 34 Section 7.9.1 Invoice and Payment 34 Section7.9.2 Default and Step- Up .............................35 ARTICLE8. PLANNING 36 Section8.1 Water Supply Plan 36 Section 8.2 Watershed Management Plan 37 Section 8.3 System Reliability Methodology 37 ARTICLE9. FILINGS 37 ARTICLE 10. DURATION AND DISSOLUTION; WITHDRAWAL 37 Section10.1 Duration .............................38 Section10.2 Withdrawals 38 Section10.3 Dissolution 40 Section 10.4 Successor Entity 40 ARTICLE 11. AMENDMENTS 41 ARTICLE 12. APPLICABLE LAW AND VENUE .............................41 Cascade Interlocal Contract Amended and Restated October 26, 2011 ARTICLE 13. NO THIRD PARTY BENEFICIARIES 41 ARTICLE SEVERABILITY 41 ARTICLE ENTIRE AGREEMENT 42 ARTICLE16. EXECUTION 44 Cascade Interlocal Contract iv Amended and Restated October 26, 2011 CASCADE WATER ALLIANCE INTERLOCAL CONTRACT Recitals WHEREAS, the Cascade Water Alliance, an intergovernmental organization created by Interlocal Contract effective April 1, 1999 (as amended July 2000 and November 2002) to further the interests of its Members with respect to water supply and to work cooperatively with other water supply entities in the region; and WHEREAS, Members of the Cascade Water Alliance have determined to amend the Cascade Water Alliance's Interlocal Contract to better facilitate the purpose of the Cascade Water Alliance; NOW, THEREFORE, it is agreed as follows: ARTICLE 1. Agreement The Cascade Interlocal Contract, effective April 1, 1999, and entered into under authority of the Interlocal Cooperation Act, Chapter 39.34 RCW is amended and re- stated as provided herein. ARTICLE 2. Definitions "Asset Transfer Agreement" means an agreement between Cascade and a Member by which the Member transfers title to Water Supply Assets to Cascade, with or without monetary consideration, to be operated and maintained as part of the Cascade Water System. "Authorized Issuer" means either: (a) Cascade (or a successor entity); or (b) a Member or other entity authorized to issue Bonds for the benefit of Cascade approved by Resolution of the Board. "Board" means the Board of Directors of Cascade. Cascade Interlocal Contract I Amended and Restated October 26, 2011 "Bonds" means short-term or long -term bonds, notes, warrants, certificates of indebtedness, or other obligations issued by, or on behalf of Cascade. "ByLaws" means the ByLaws of Cascade, as adopted and amended by the Board. "Cascade" means Cascade Water Alliance. "Cascade ERUs" "CERUs means equivalent residential units, calculated according to the Regional Capital Facilities Charge Methodology. "Cascade Source Exchange Program" means a program adopted by Resolution of the Board for the replacement of all or a portion of a public water systems existing water supply to benefit stream flow and fish without serving growth or increasing that system's water supply. A program utilizing Lake Tapps Water Supply shall include the terms and conditions for source exchange contained in the Lake Tapps' Water Right Report of Examination. "Cascade Source Exchange Program Agreement" means an agreement between Cascade and a Member or another public water supplier to implement the Cascade Source Exchange Program. "Cascade Supply Date" means the date for the Founding Members and each new Member, established by Resolution of the Board, upon which Cascade undertakes a Supply Commitment. "Contract" means this Cascade Water Alliance Interlocal Contract. "Demand Share" means either a Member's current share of water provided through the Supply System, or estimated share of water to be provided through the Supply System, Cascade Interlocal Contract -2- Amended and Restated October 26, 2011 whether Full Supply or Interruptible Supply, expressed in millions of gallons per day. Demand Share is calculated according to the Rate Calculation Methodology. "Dual Majority Vote" means Board approval of a proposal on the basis of a simple majority of all Members, allowing one vote per Member, together with a simple majority of all Members on the basis of each Member's Weighted Vote. A "simple majority" means a majority of all Members of Cascade, not just the Members present and voting. "65% Dual Majority Vote" means Board approval of a proposal on the basis of a 65% supermajority of all Members, allowing one vote per Member, together with 65% supermajority of all Members on the basis of each Member's Weighted Vote. A supermajority" means 65% of all Members of Cascade, not just the Members present and voting. "Founding Member" means the City of Bellevue, Covington Water District, the City of Issaquah, the City of Kirkland, the City of Redmond, Sammamish Plateau Water and Sewer District, Skyway Water and Sewer District, and the City of Tukwila. "Gross Cascade Revenue" means all of the earnings and revenues received by Cascade from any source whatsoever including but not limited to: (a) Member Charges; (b) revenues from the sale, lease or furnishing of other commodities, services, properties or facilities; (c) the receipt of earnings from the investment of money in any maintenance fund or similar fund; (d) and withdrawals from any rate reserve or rate stabilization fund or account. However, Gross Cascade Revenue shall not include: (a) principal proceeds of Bonds or any other borrowings, or earnings or proceeds from any investments in a trust, defeasance or escrow fund created to defease or refund obligations relating to the Water Supply System Cascade Interlocal Contract -3- Amended and Restated October 26, 2011 (until commingled with other earnings and revenues included in Gross Cascade Revenue) or held in a special account for the purpose of paying a rebate to the United States Government under the Code; (b) taxes and other income and revenue which may not legally be pledged for revenue bond debt service; (c) improvement district assessments; (d) federal or state grants allocated to capital projects; (e) payments under Bond Insurance or other credit enhancement policy or device; (f) insurance or condemnation proceeds used for the replacement of capital projects or equipment; (g) earnings in any construction fund or bond redemption fund; (h) deposits to any rate reserve or rate stabilization fund or account; or (i) any revenues generated by any Independent Supply except those amounts that are payable to Cascade pursuant to this Contract or another interlocal agreement. "Independent Supply" or "Independent Supplies" means a Member's Water Supply Assets that are not part of the Supply System. "Member" or "Members" means one or more member agencies of Cascade. "Member Charges" means all payments that Cascade Members are required by this Contract to make to Cascade, including but not limited to all Rates and Charges, RCFCs, dues, assessments and other payments from Members. "Net Cascade Revenue" means Gross Cascade Revenue less Operations and Maintenance Costs. "Non- Member" means any person or agency that is not a party to this Contract. "Operations and Maintenance Costs" or "O &M Costs" means all expenses incurred by Cascade to operate and maintain the Supply System in good repair, working order and condition, including without limitation, payments made to any other public or private Cascade Interlocal Contract -4- Amended and Restated October 26, 2011 entity for water or other utility service. Except as approved by the Board, Operations and Maintenance Costs shall not include any depreciation, capital additions or capital replacements to the Supply System. "Rates and Charges" means the rates and charges (not including RCFCs) chargeable to each Member using the Rate Calculation Methodology plus any late payment or other charge that may be due. "Rate Calculation Methodology" means the method of setting Rates and Charges adopted by the Board in accordance with Section 7.5 "Regional Capital Facilities Charges" "RCFCs means the charges to each Member for new CERUs connected to that Member's water distribution system. "Regional Capital Facilities Charge Methodology" ("RCFC Methodology means the method of determining the RCFCs adopted by the Board in accordance with Section 5.5. "Satellite Systems" means water supply facilities identified as such by the Board, including but not limited to facilities that serve a portion of a Member's customers but that are not part of the Member's main water system. "Seattle Contract Purveyor" or "Seattle Contract Purveyors" means a Member that is or was a party to The City of Seattle Water Purveyor Contracts, Version A or Version B, dated November 1981 (as amended) executed prior to July 1, 1998. "Supply Commitment" means the obligation undertaken by Cascade, established by Resolution of the Board to supply water to a Member. With respect to Members, that Cascade Interlocal Contract -5 Amended and Restated October 26, 2011 obligation shall be characterized as "Full Supply Commitment," or an "Interruptible Supply Commitment" defined as follows: "Full Supply Commitment" for any or all of a Member's water needs means that those needs, as projected in the Member's lawfully adopted water supply plan, shall be met from the Supply System, net of independent supply and subject to the other limitations established in this agreement, on an equal parity with all other Full Supply Commitments, and with a guaranteed priority no lower than for any other Supply Commitment made by Cascade; provided that no Member is guaranteed any given amount of supply or capacity. "Interruptible Supply Commitment" means a supply of all or part of a Member's water needs from the Supply System on an as- available basis on a lower priority than any Full Supply Commitment. The Supply Commitment for a Member shall be defined by this Interlocal Contract, the terms and conditions of membership, and the Supply Commitment resolution. "Supply System" means the Water Supply Assets owned or controlled by Cascade. "Water Supply Assets" means tangible and intangible assets usable in connection with the provision of water supply, including without limitation, real property, physical facilities (e.g., dams, wells, treatment plants, pump stations, reservoirs, and transmission lines), water rights, capacity and /or contractual rights in facilities or resources owned by other entities, and investments in conservation programs and facilities. "Watershed Management Plan" means a plan adopted by Cascade for purposes of regional water supply, water transmission, water quality or protection, or any other water- related purpose, including but not limited to the plans identified in RCW 39.34.190(3). Cascade Interlocal Contract -6- Amended and Restated October 26, 2011 "Water Supply Plan" means the Cascade Regional Water Supply Plan (which may include the Cascade Watershed Management Plan) adopted by the Board as provided in Section 8.1 and 8.2. "Weighted Vote" means a vote in which each Member's vote is counted according to the Member's Demand Share, but no Member shall have a Weighted Vote of less than one. ARTICLE 3. Formation of Entity; Purpose and Powers Section 3.1 Formation. The Cascade Water Alliance was created on April 1, 1999 as a public body and an instrumentality of its Members, which exercises essential governmental functions on its Members' behalf as authorized by the Interlocal Cooperation Act (RCW 39.34). Cascade is incorporated under RCW 39.34.040(3) as a public nonprofit corporation in the manner set forth in RCW 24.03 or 24.06 and it may, with Board approval, be incorporated as a partnership in the manner set forth in RCW 25.04, or the Board may organize the form of Cascade in any other manner permitted by law. In addition to its status under any other applicable law, Cascade shall constitute a "watershed management partnership" as provided in Chapter 39.34 RCW. The Board may approve the filing of Articles of Incorporation or similar documents in connection with incorporating Cascade or organizing it in some other manner. Section 3.2 Membership. Subject to restrictions on future Cascade water rights, or to limitations upon water's place of use imposed by contract or permit, any municipal water utility serving within the Central Puget Sound Region may be admitted to Cascade. The decision to admit new Members rests with the sole discretion of the Board, which shall Cascade Interlocal Contract -7- Amended and Restated October 26, 2011 determine whether to extend a membership offer taking into consideration the audit findings, Cascade water resources, and any other factors the Board deems advisable. When a municipality applies for membership, Cascade shall conduct a water supply audit according to the methodology and within the period determined by the Board. Audit results shall be provided to the Board and to the applicant. If a membership offer is extended, it shall address the nature of the Water Supply Assets being transferred or retained and the "value" of those assets in terms of the calculation of an applicant's Demand Share, RCFCs and other matters relating to the rights and obligations of the applicant and Cascade, which must be recorded in the form that the Board determines and which will constitute, along with this Contract, the conditions under which an applicant becomes a Member of Cascade. An applicant for membership shall be admitted by adoption of a Resolution of the Board accepting the application for membership and incorporating the terms and conditions of membership. Each membership application must be accompanied by a nonrefundable application fee based on the cost of the audit and other costs related to the admission of a new Member or a request for new supply. The Board shall set the application fee for each applicant based on the estimated cost of processing the application, including the cost of the audit. As a condition of membership, each new Member admitted to Cascade shall, in addition to any other applicable fees, rates, charges or assessments, pay to Cascade the membership fee, as established by the Board. Cascade Interlocal Contract -8- Amended and Restated October 26, 2011 If an applicant's planning process or plans are materially out of compliance with the requirements of the Growth Management Act, the Board may condition an offer of membership upon the applicant's compliance with that act. Section 3.3 Conversion to Municipal Corporation Status. In accordance with Section 10.4, Cascade may be converted into a separate municipal corporation if, and as permitted by law. Upon the creation of such a separate municipal corporation, all Cascade rights and obligations and all Member rights an obligations under this Contract shall transfer to that new municipal corporation. Section 3.4 Purposes. Cascade's purposes include only those related to water resources, and do not include the provision of other general services to the public, and are to: a. provide a safe, reliable and high quality drinking water supply to meet the current and projected demands of Cascade Members serving the Central Puget Sound Region, and for non Members as determined by Cascade, and to carry out this task in a coordinated, cost effective, and environmentally sensitive manner; b. develop, contract for, manage, acquire, own, maintain and operate Water Supply Assets, including without limitation, surface water supplies, groundwater supplies, reclaimed water supplies, and other water supply resources as determined by the Board; c. contract with Seattle to transfer to Cascade and to modify Seattle's rights and duties with respect to Seattle Contract Purveyors; d. contract for, or assume certain contractual rights and duties related to the Tacoma Second Supply Pipeline project; e. purchase and provide water supply, transmission services, treatment facilities and other related services; f. provide conservation programs to promote the wise and efficient use of resources; g. carry out emergency water supply and shortage management programs for its Members when demands exceed available supply; Cascade Interlocal Contract -9- Amended and Restated October 26, 2011 h. coordinate and plan cooperatively with other regional or local water utilities and other entities to maximize supply availability and to minimize system costs; i. develop a Water Supply Plan addressing the needs of its Members and develop a Watershed Management Plan serving the needs of its Members and Cascade itself and develop a regional water supply plan with other water providers as Cascade may find convenient or necessary to meet regional, state and federal planning requirements, and to take a leadership role in developing and coordinating those supply plans; j. share costs and risks among Members commensurate with benefits received; and k. carry out, or to further other water supply purposes that the Members determine, consistent with the provisions of this Contract. Section 3.5 Powers. To further its purposes, Cascade has the full power and authority to exercise all powers authorized or permitted under RCW 39.34 and any other laws that are now, or in the future may be, applicable or available to Cascade and to engage in all activities incidental or conducive to the attainment of the purposes set forth in Section 3.4 of this Contract, including but not limited to the authority to: a. acquire, construct, receive, own, manage, lease and sell real property, personal property, intangible property and other Water Supply Assets; b. operate and maintain facilities; c. enter into contracts; d. hire and fire personnel; e. sue and be sued; f. exercise the power or eminent domain (through its Members at their individual discretion, unless and until Cascade has that power under applicable law); g. impose, alter, regulate, control and collect rates, charges, and assessments, h. purchase and sell water and services within and outside the geographical boundaries of its Members; Cascade Interlocal Contract -10- Amended and Restated October 26, 2011 i. borrow money (through its Members or other entities at their individual discretion or as authorized by Chapter 39.34 RCW now or in the future), or enter into other financing arrangements; j. lend money or provide services or facilities to any Member, other governmental water utilities, or governmental service providers; k. invest its funds; 1. establish policies, guidelines, or regulations to carry out its powers and responsibilities; m. purchase insurance, including participation in pooled insurance and self insurance programs, and indemnify its Members, officers and employees in accordance with law; n. exercise all other powers within the authority of, and that may be exercised individually by all of its Members with respect to water supply, conservation, reuse, treatment and transmission, or any of the other purposes set forth in Section 3.4; o. exercise all other powers within the authority of, and that may be exercised individually by all its Members with respect to watershed planning and management; and p. exercise all other corporate powers that Cascade may exercise under the law relating to its formation and that are not inconsistent with this Interlocal Contract or with Chapter 39.34 RCW or other applicable law. ARTICLE 4. Organization Structure; Board Section 4.1 Composition, ByLaws and Meetings. Cascade is governed by a Board of Directors consisting of one individual representative appointed by Resolution of the Member's legislative authority. Members may similarly appoint Alternate Board Members. Each Board Member and each Alternate Board Member must be an elected official of the Member. Cascade Interlocal Contract Amended and Restated October 26, 2011 The Board shall adopt ByLaws consistent with this Interlocal Contract that specify, among other matters, the month of Cascade's Annual Meeting, Board powers and duties and those of the Executive Committee, Standing Committees, Officers and employees. The Board shall meet as required by the ByLaws, but not less than quarterly. Section 4.2 Powers of the Board. The Board has the power to take all actions on Cascade's behalf in accordance with voting provisions set forth in Section 4.3. The Board may delegate to the Executive Committee or to specific Cascade Officers or employees any action that does not require Board approval under this Contract. Section 4.3 Voting. All Board actions must be approved by Dual Majority Vote of all Members, except where this Contract requires either a 65% Dual Majority Vote, as provided in Sections 5.2, 5.5, 7.1, 7.3, 8.3, 10.3, 10.4, and Article 11; or ratification by the Members' legislative authority, as provided in Section 10.4 and Article 11. The Board may act by voice votes, as set forth in the ByLaws. Any Member may require a recorded tabulation of votes either before or immediately after a voice vote is taken. Although voting is, in part, based on Weighted Vote, the Members expressly agree that there is only one class of voting membership, and voting occurs within that single class. Any Member that has been declared to be in default of its obligations under this Interlocal Contract by the Board shall lose its right to vote until the Board has declared the default to be cured. Section 4.4 Officers and Committees. Cascade Officers shall include a Chair, a Vice Chair, a Secretary and a Treasurer. The Chair serves as the chair of the Board (and may Cascade Interlocal Contract -12- Amended and Restated October 26, 2011 be known as the "President if the ByLaws so designate) and performs those duties set forth in the ByLaws. The Vice Chair shall perform the duties of the Chair in the Chair's absence and shall perform other duties as set forth in the ByLaws. The Secretary shall be responsible for Cascade records and performs other duties as set forth in the ByLaws. The Treasurer shall be responsible for Cascade accounts and financial records and performs other duties as set forth in the ByLaws. Consistent with the provisions of this Contract, the Board may, in the ByLaws, establish additional Officers and set forth their duties. The Board may create and appoint Members to Standing Committees and special committees as it deems appropriate. Committee Members need not be elected officials or employees of Members, but Standing Committee Chairs must be Board Members or Alternate Board Members. Section 4.5 Executive Committee. The Chair, Vice Chair, Secretary, Treasurer and chairpersons of Standing Committees together constitute Cascade's Executive Committee. The Chair (or acting Chair) shall vote on matters before the Executive Committee only if necessary to break a tie. The Executive Committee's duties and responsibilities are set forth in the ByLaws. The Executive Committee shall not have the power to: a. approve any contract for a term longer than three years; b. approve any contract involving expenditure by, or revenue to Cascade in excess of such amounts and under such circumstances as set forth in the ByLaws; Cascade Interlocal Contract 13 Amended and Restated October 26, 2011 C. retain or dismiss the chief executive officer or determine the chief executive officer's compensation; or d. take any actions expressly reserved to the Board by this Contract or the ByLaws. The Executive Committee shall have the authority, if necessary, to avoid default on any Bond, to withdraw from any capital reserve fund or rate stabilization fund, an amount equal to the amount necessary to avoid a default and to authorize payment of that amount to avoid default. Section 4.6 Staff, Consultants and Contractors. Cascade staff shall consist of a chief executive officer and other positions established by the Board. The Board shall appoint, designate the title of, and establish the compensation range of the chief executive officer. The Board shall hire or retain legal counsel and independent accountants and auditors for Cascade. The authority to hire other consultants may be delegated to the Executive Committee. The chief executive officer appoints persons to fill other staff positions, and those appointments may be subject to ratification by the Board or the Executive Committee if the ByLaws so provide. The Board may also provide that administrative, professional or technical services be performed by contract. Section 4.7 Budget; Dues; Financial Management. The Board must approve an annual budget determining Cascade's revenues and expenditures no later than sixty (60) days before the beginning of the fiscal year in which that budget will be in effect. The budget will be developed and approved according to a schedule established by the ByLaws. The budget must identify the levels of Member Charges on which revenue projections are based. The Board may amend the budget. Cascade Interlocal Contract -14- Amended and Restated October 26, 2011 Each Member must pay annual dues to defray part or all of Cascade's administrative costs based on the number of CERUs served by its water system, regardless of water usage or capacity, and regardless of whether those units are served by the Supply System or by Independent Supply. Total administrative dues collected from all Members may not exceed the 9feater of $1,000,000.00 e. C 9% of Cascade's annual revenue requirement less debt ser This limit may be amended in the budget by a 65% Dual Maioritv Vote of the Board. The Board may establish minimum annual dues per Member and may provide that less than all of a Member's CERUs be taken into account in establishing dues. All Cascade books and records shall be open to inspection by the Washington State Auditor. ARTICLE 5. Asset Development and Supply Commitment Section 5.1 Property Acquisition, Ownership and Disposition. Cascade may construct, purchase, rent, lease, manage, contract for, or otherwise acquire and dispose of Water Supply Assets and other assets. Cascade may control and manage both the assets it owns and the assets that are owned by Members that have transferred control and management of those assets to Cascade. This Contract does not vest in Cascade any authority with respect to Members' other facilities or assets, such as Water Supply Assets retained by Members as Independent Supply. Subject to Cascade's agreement, a Member may transfer to Cascade its title to, or operational control and management of Water Supply Assets. Water Supply Assets may also be fully retained Members as Independent Supply, subject to the provisions of Article 6. At the discretion of the Board, Cascade may accept title to, or operational control and Cascade Interlocal Contract 15 Amended and Restated October 26, 2011 management of Water Supply Assets offered by Members or accept supply assets that constitute all or part of a Member's Satellite System(s). The Board may accept supply assets subject to the terms and conditions arrange between Cascade and the Member, based on the result of the audit process and mutual needs. Cascade may enter into Asset Transfer Agreements which shall provide for the terms and conditions of. (a) Cascade's operation of the transferred Water Supply Asset with respect to the Member transferring the asset; (b) Cascade's operation, maintenance and replacement of the Water Supply Asset as part of the Supply System; (c) return or disposition of the Water Supply Asset if Cascade terminates its existence or the Member withdraws; (d) continuation of service (if appropriate) to Members or former Members by the Member receiving the Water Supply Asset at reasonable rates and charges or payment to Cascade of the cost of replacing the Water Supply Asset; and (e) such other conditions as the Board and the Member agree upon. Members shall not be deemed to hold legal ownership rights in any Water Supply Assets owned by Cascade whether those Water Supply Assets have been developed by, purchased by, or transferred to Cascade, and regardless of the accounting treatment of RCFC payments and other payments made to Cascade. Section 5.2 Supply Commitment Section 5.2.1 Commitment to Members. Beginning on the Cascade Supply Date, Cascade shall provide a Fully Supply Commitment to each Founding Member. Thereafter, Cascade shall provide a Full Supply Commitment to meet all current and future water supply needs of a Member that joins with Water Supply Assets sufficient to provide for Cascade Interlocal Contract -16- Amended and Restated October 26, 2011 its needs during the following fifteen (15) years (whether or not those Water Supply Assets are transferred to Cascade or retained as Independent Supply) commencing on the Member's Cascade Supply Date. When a supply contract is negotiated with Seattle, any Member that is a Seattle Contract Purveyor shall relinquish its rights under its Seattle Water Purveyor Contract to Cascade and execute such documents as may be necessary to transfer those rights to Cascade. Cascade shall accept those rights and a corresponding obligation to provide a Fully Supply Commitment (net of Independent Supply). The approval of a contract with the City of Seattle providing for the initial acquisition of rights to substantial Water Supply Assets, and any material amendment to that contract, shall be effective upon a 65% Dual Majority Vote. Any Full Supply Commitment shall be subject to water shortages, to Cascade's ability to implement the Water Supply Plan, and to the portion of the Member's needs that can be served by the audited capacity of its Independent Supply. If the needed supply is not available, the shortage shall be shared by all the Members in accordance with Cascade's shortage management plan, except as otherwise provided in Section 5.5. Cascade is not obligated to provide water supply to service area expansions in or outside the urban growth boundary, unless Cascade agrees to such expanded service area. However, Cascade shall be obligated to provide water supply to the entire service area of each Member (as that service area is defined in terms under which the Member was admitted), whether or not some of that service area is within the Member's current jurisdictional boundaries and/or within the current urban growth boundary. Cascade is not obligated to provide increased water supply to any Cascade Interlocal Contract -17- Amended and Restated October 26, 2011 Member if it is determined that the Member's planning process or plans are materially out of compliance with the requirements of the Growth Management Act. A Member that joins with Water Supply Assets insufficient to provide for its needs for fifteen (15) years receives the Fully Supply it desires only if, when, and to the extent it is available within reliability standards determined by Cascade's system reliability methodology. If sufficient Full Supply is not available within reliability standards determined by Cascade's system reliability methodology, the Member receives partial Full or Interruptible Supply, and Full Supply must be provided within fifteen (15) years. Cascade shall then undertake to include in Cascade's Water Supply Plan, and to acquire the facilities or other assets necessary in the Board's determination to provide for that deficit. If Cascade fails to develop sufficient assets to timely provide the increased Full Supply, the commitment becomes a Full Supply Commitment at the end of that fifteen -(15) year period, and any shortage shall be shared by all Members in accordance with Cascade's shortage management plan. If multiple Members request new Full Supply, requests must be honored in the order received (i.e., in the order in which application is made accompanied by the application fee). With respect to new Members, requests for Full Supply "vest" no earlier than the date that membership is effective. In cases of conflict or ambiguity, the Board may determine the order of requests. Section 5.2.2 Additional Rules for Members Retaining Independent Supply. Whenever Cascade has a Supply Commitment to a Member that retains Independent Supply, Cascade shall provide Full Supply for all of that Member's water supply needs minus Cascade Interlocal Contract 18- Amended and Restated October 26, 2011 the amount of water that an audit determines may be provided by that Member's Independent Supply. Members are not required to share shortages resulting from the loss or all or part of Independent Supply, although Cascade may make Interruptible Supply available to a Member that loses Independent Supply at prices that are consistent with the price of Interruptible Supply being made available to others at that time. Cascade may at any time and at its cost and expense carry out audits of a Member's Independent Supply. A Member requesting an additional Full Supply Commitment due to loss of Independent Supply shall make that request by Resolution of the requesting Member's legislative authority. When and as determined by the Board, the Member shall pay an amount equal to the RCFCs allocable to the number of CERUs that can be served by the replacement supply provided or to be provided by Cascade. Cascade shall then include the supply in its Water Supply Plan, and provide the supply when it becomes available, but in any event within fifteen (15) years. If, within fifteen (15) years the supply is not available, Cascade's commitment becomes a Full Supply Commitment and any shortage with respect to that supply must be shared by all the Members in accordance with the Shortage Management Plan, except as otherwise provided in Section 7.3. Section 5.2.3 Additional Rules for Source Exchange. The Board may, at its sole discretion, authorize a Cascade Source Exchange Program Agreement with a Member or Non Member. The terms and conditions of a Cascade Source Exchange Program Agreement shall be developed from a source exchange proposal submitted to the Board. The agreement shall identify: (a) the water right (instantaneous and annual) to be augmented or replaced; (b) the Water Supply Assets to be utilized; (c) mechanisms and arrangements for delivery of Cascade Interlocal Contract _19- Amended and Restated October 26, 2011 regional water; (d) characteristics of supply obligation (for example, peak and average quantities, seasonal or annual delivery duration, interruptibility and shortage management); (e) reporting requirements; (f) changes in operation needed to benefit stream flow and fish; (g) rates and charges; and (h) such other conditions as the Board and the Member or public water supplier agree upon. The agreement may or may not provide for adjustments to a Member's RCFC payments or credits and whether or not the source exchange is a loss of a Member's Independent Supply that would be subject to the provisions of Section 5.2.2. Section 5.3 Financing of Assets. The acquisition of new capital facilities and other Water Supply Assets may be financing using RCFCs, transfers or Water Supply Assets, Rates and Charges, the issuance of revenue Bonds and such other sources as the Board may deem appropriate. Section 5.3.1 Issuance of Bonds. An Authorized Issuer may issue Bonds payable from and secured solely by all or a portion of Net Cascade Revenue, evidencing indebtedness up to an amount approved by Resolution for the Board in order to provide financing or refinancing to acquire, construct, receive, own, manage, lease or sell real property, personal property, intangible property and other Water Supply Assets, to establish debt service reserves, to provide for capitalized interest and to pay the costs of issuance of, and other costs related to the issuance of the Bonds. Such Bonds shall be payable solely from all or a portion of the Net Cascade Revenue or (if the Authorized Issuer is other than Cascade) from payments to be made by Cascade out of all or a portion of Net Cascade Revenue, and such Bonds shall not pledge the full faith and credit or taxing power or, except as expressly provided by contract, the revenue, assets or funds of any Member. Cascade Interlocal Contract -20- Amended and Restated October 26, 2011 Members serving as Authorized Issuers may conduct the financing through "separate systems" permitted by their applicable bond resolutions, or in some other appropriate manner, and Cascade may compensate those Members for all costs associated with the financing. Bond related documents of Authorized Issuers other than Cascade must expressly permit the Bonds to be refunded or prepaid without penalty prior to their stated maturity, on and after such dates as are approved by the Authorized Issuer and the Board, to allow for a transfer of the obligation to Cascade or to Cascade's successor entity, including without limitation a joint operating agency or similar entity, as may be permitted by law. Section 5.3.2 Pledge of Revenues. For as long as any Bonds payable from Net Cascade Revenue (or any portion thereof) are outstanding, Cascade irrevocably pledges to establish, maintain and collect all Member Charges in amounts sufficient to pay when due the principal of and interest on the Bonds (and, if the Authorized Issuer is other than Cascade, in addition to the foregoing pledge, to pledge to make timely payments to that Authorized Issuer for the payment of principal of and interest on the Bonds), together with amounts sufficient to satisfy all debt service reserve requirements, debt service coverage requirements, and other covenants with respect to the Bonds. Each Member hereby irrevocably covenants that it shall establish, maintain and collect rates, fees or other charges for water and other services, facilities and commodities related to the water supply it receives from Cascade and /or its water utility at levels adequate to provide revenues sufficient to enable the Member to: (a) make the payment required to be made under this Contract; and (b) pay or provide for payment of all other charges and obligations payable from or constituting a charge or lien upon such revenues. Each Member hereby Cascade Interlocal Contract -21 Amended and Restated October 26, 2011 acknowledges that this covenant and its covenant in Section 7.9 of this Contract may be relied upon by Bond owners, consistent with this Contract. Each Member shall pay the Member Charges imposed on its whether or not the Water Supply Assets to be financed through the issuance of Bonds are completed, operable or operating, and notwithstanding the suspension, interruption interference, reduction or curtailment in the operation of any Water Supply Assets for any reason whatsoever, in whole or in part. Member Charges shall not be subject to any reduction, whether by offset or otherwise, and shall not be conditioned upon the performance or nonperformance of any Member, or of any entity under this or any other agreement or instrument. However, credits against future RCFCs and Rates and Charges described in Sections 5.5 and 7.5, respectively, for development or addition of excess capacity that is either transferred to Cascade or retained as Independent Supply, shall not be considered "offsets" or "reductions" for the purposes of this Section. If, in connection with the issuance of obligations, any Member establishes a new lien position on revenues relating to its water utility, that Member shall covenant in the relevant documents that the amounts to be paid to Cascade as Member Charges shall be treated either: (a) as part of that Member's internal operation and maintenance costs payable prior to debt service on those obligations; and /or (b) for any portion of those Member Charges that is allocable to capital costs, as a contract resource obligation payable prior to debt service on those obligations. If any Member has existing outstanding revenue obligations relating to its water utility, it shall include substantially similar "springing covenants" in the documents relating to any new parity obligations. Cascade Interlocal Contract -22- Amended and Restated October 26, 2011 Section 5.3.3 Continuing Disclosure. To meet the requirements of United States Securities and Exchange Commission "SEC Rule 15c2- 12(b)(5) (the "Rule as applicable to a participating underwriter for any Bonds and any obligation of each Member as an "Obligated Person" under the Rule, Cascade and each Member agree to make an appropriate written undertaking, respectively, for the benefit of holders of the Bonds consistent with the requirements of the Rule. Section 5.3.4 Preservation of Tax Exemption for Interest on the Bonds. Each Member covenants that it will take all actions necessary to prevent interest on tax exempt Bonds from being included in gross income for federal income tax purposes, and it will neither take any action nor make or permit any use of proceeds of tax exempt Bonds or other funds treated as proceeds of those Bonds at any time during the term of those Bonds that will cause interest on those Bonds to be included in gross income for federal income tax purposes. Section 5.3.5 Additional Certificates. Each Member further agrees to provide such certificates or verifications as are reasonably requested by an Authorized Issuer in connection with the issuance of Bonds under this Section. Section 5.4 Supply Expansions and System Extensions. Cascade must provide for Supply System expansions and extensions to meet the needs of additional water customers of Members, subject to consistency with applicable growth management plans and comprehensive plans, Cascade's water supply plan, orderly asset development, reasonable cost and financing capacity. The Board shall establish a water supply development process, including criteria governing the evaluation of new projects, and that process must promote Cascade Interlocal Contract -23- Amended and Restated October 26, 2011 equality of costs and services (other than direct local services), regardless of geographic location. The results of the water supply planning process must be reflected in Cascade's Water Supply Plan. The Board shall have the authority to undertake new projects identified in Cascade's Water Supply Plan for the expansion of Water Supply Assets and regional transmission system extensions to meet Members' projected needs. To reduce costs, Cascade may, to the extent that the Board deems advisable, enter into agreements with Members to wheel water through their existing systems. When facilities are constructed that are used partially by Cascade for wheeling water and partially by Members or other entities for their purposes, the Board may determine an appropriate Cascade contribution to the cost of those facilities. Existing arrangements among Members (and between Members and Non- Members), in place when a Member joins Cascade, remain unaffected except as otherwise agreed between Cascade and the other entities concerned. Section 5.5 Regional Capital Facilities Charges. To allocate growth costs to those Members that require capacity increases, each Member shall pay to Cascade an RCFC for each new CERU connected to its water distribution system. Growth in water usage by existing CERUs is not subject to RCFCs unless that growth constitutes as CERU increase as provided in the RCFC Methodology. Members with a supply deficit must pay an RCFC commensurate with that deficit. To the extent that a Member transfers to Cascade or retains as Independent Supply water supply in excess of its needs, it receives a corresponding credit against future RCRCs. Cascade Interlocal Contract -24- Amended and Restated October 26, 2011 Subject to the provisions of Section 5.2.2, a Founding Member pays no RCFCs with respect to the number of CERUs served as of January 31, 2003, or other such later date as determined by Resolution of the Board. A new Member with adequate supply shall commence paying RCFCs fifteen (15) years prior to the date that its Water Supply Assets are projected to be insufficient to provide for its needs as determined by the Board (taking into consideration the results of the Water Supply Audit). A Member that joins with Water Supply Assets that are projected to be insufficient to provide for its needs for fifteen (15) years shall immediately pay RCFCs for the number of CERUs representing the deficit as determined by the Board. RCFCs shall be calculated according to the RCFC Methodology, which shall define the analytical steps required to calculate the RCFCs according to the greater o£ (a) the incremental difference between the average unit cost of expanding the system (i.e., the marginal cost of new capacity) and the average unit cost of the existing system; or (b) the average unit cost of past construction of the existing system plus then planned Supply System improvements. The methodology shall provide for an annual escalator, recalculation and update not less frequently than every fifth year, and a methodology for determining CERUs. The RCFCs shall be imposed on the Member for each new CERU of that Member in accordance with the terms of this Contract. Amendments to the RCFC Methodology shall require a 65% Dual Majority Vote. If a Founding Member owns Water Supply Assets or transfers Water Supply Assets to Cascade under Section 5. 1, to the extent the audited capacity of those assets (including Seattle Cascade Interlocal Contract -25 Amended and Restated October 26, 2011 Contract Purveyor rights) exceeds the Member's needs, that Member shall receive a credit against future RCFCs. If a Member seeks to transfer assets substantially in excess of its foreseeable needs, Cascade may negotiate appropriate compensation arrangements for the transfer. Members that develop new Independent Supply that is approved by the Board in accordance with Article 6, similarly receive a credit effective when the Independent Supply is placed in service as determined by the Board. A Member that accepts ownership of a Satellite System that Cascade agrees to serve shall pay an RCFC for the amount of supply needed to serve that system in excess of its rated capacity. Members that experience a net reduction in the number of CERUs served shall receive a CERU- for -CERU credit against future RCFCs. RCFC credits may not be transferred among Members without Board approval. Members shall not be required to pass RCFCs to their customers as capital facilities charges, but may provide for the payment of RCFCs in whatever manner they deem appropriate. For Members joining with an unmet net supply need, Cascade may, under circumstances determined by the Board, require the prepayment of RCFCs allocable to the full amount of the requested supply, i.e., when funds are needed to begin the construction of facilities immediately. Section 5.6 Transfer Upon Mergers, Consolidations and Assumptions. If. (a) two or more Members merge or consolidate; (b) a Member or a Non Member assumes Cascade Interlocal Contract -26- Amended and Restated October 26, 2011 jurisdiction of part or all of a Member; or (c) a Member assumes jurisdiction of part or all of a Non Member, the jurisdictions' water supply rights from and obligations to Cascade must be transferred or assumed under applicable law and consistent with the requirements of this Contract and the obligations of Cascade. ARTICLE 6. New Independent Supply Members may not bring new Water Supply Assets on -line as Independent Supply without Board approval. That approval may be granted or denied following an evaluation process, based on whether the Board determines that development of the proposed Independent Supply will benefit or be adverse to the interests of the Members as a whole. Recognizing that in certain circumstances the acquisition of additional Independent Supply might benefit (or cause no material harm to) the Members, new supplies under one (1) MGD may be approved by the Board regardless of the provisions of the Water Supply Plan and without a formal evaluation process. New supplies in amounts greater than one (1) MGD must be described in and be consistent with the Water Supply Plan. Members that have invested in the development of new Independent Supply assets may offer to sell their interest in such assets to Cascade. Cascade may, in its sole discretion and subject to mutually agreeable terms and conditions, purchase the Member's interest in such Independent Supply asset by reimbursing or otherwise compensating the Member for its investment in the project to the extent that investment has been capitalized. Once Cascade has purchased a Member's interest in a project, the project will be considered a Water Supply Asset of Cascade and be incorporated into the Water Supply Plan. ARTICLE 7. Asset Management Cascade Interlocal Contract -27- Amended and Restated October 26, 2011 Section 7.1 Supply System Management. Cascade is responsible for managing, on behalf of all Members, the Supply System. Cascade is not responsible for managing Independent Supply unless it has expressly agreed to do so. Supply System management responsibilities shall be governed by Cascade's system management plan adopted by the Board. Cascade's system management plan concerns, without limitation, matters such as daily system operations and maintenance, interface with other supply providers, contractual obligations, water quality, billing, management and administration. Cascade may delegate and /or contract out its Supply System responsibilities. Cascade must manage the Supply System in compliance with applicable laws, regulations and Cascade's minimum service standards. Adoption and amendments to the minimum service standards shall require a 65% Dual Majority Vote. Section 7.2 Conservation. Cascade shall develop and carry out, and Members must participate in, water conservation programs that are uniform among Members. The Board shall develop and implement a Cascade conservation management plan that provides a mandatory base conservation program that functions to reduce both average and peak demands and may establish a charge or assessment to fund development and implementation of the program. Members may implement additional conservation programs. The Board may adopt wholesale charges in addition to normal Demand Share charges to encourage resource conservation. The Board may also provide or contribute to additional local conservation programs that are not offered to all Members, and these local programs may be locally funded or funded by Cascade. Members that fail to comply with base programs as set forth in Cascade Interlocal Contract -28- Amended and Restated October 26, 2011 Cascade's conservation management plan may be required to assume a disproportionate reduction in water supply or to pay penalty charges, or both. Section 7.3 Shortages and Emergency. Section 7.3.1 Shortages. Members must respond to water shortages in a collective, shared fashion under a Cascade shortage management plan adopted by the Board. Resources must be shared in a manner that reduces the risk of severe shortages to each Member. Cascade's shortage management plan may include without limitation, a definition and classification of shortages, a shortage contingency plan including mandatory programmatic actions among all Members in the event of shortages, allocation of authority for determining and responding to shortages, and a communications and outreach program for the public. Members shall not be required to implement Cascade's shortage management plan in areas not served by the Supply System. In the event of shortages, Cascade shall reduce or halt Interruptible Supply before invoking the Shortage Management Plan with respect to all Members with a Full Supply Commitment. However, the Board may, by 65% Dual Majority Vote, continue service in the amounts it deems appropriate to one or more Members receiving Interruptible Supply. The Board may require that Members failing to comply with mandatory shortage management programs implemented under Cascade's shortage management plan assume a disproportionate reduction in supply or pay penalty charges, or both. In the event of a Cascade -wide water shortage, Members with Independent Supply may, without penalty, decline to participate in the shortage management program for that shortage by foregoing all supply from Cascade for the duration of the emergency or shortage. Cascade Interlocal Contract -29- Amended and Restated October 26, 2011 To avoid shortages resulting from emergencies or the inability to develop sufficient supplies, the Board may, by 65% Dual Majority Vote, establish moratoria on connections or additional commitments for future water services by the Members. A moratorium may be discontinued by a Dual Majority Vote of the Board. Section 7.3.2. Emergency. The Board shall include in Cascade's shortage management plan policies and procedures for addressing short-term disruptions of water supply, transmission or water quality, and it may delegate to the General Manager authority to address such disruptions according to such policies and procedures. Section 7.4 Water Quality. Cascade shall be responsible for water quality that meets or exceeds all federal or state requirements at the point of delivery from Cascade to the Member, consistent with applicable laws and regulations. Cascade assumes source water quality responsibility and liability with respect to Water Supply Assets under its ownership or control (including water wheeled to a Member through another Member's facilities). Cascade is also responsible for preparing and carrying out water quality activities compatible with the water quality requirements of regional water suppliers integrated with Cascade's system (e.g., Tacoma, Everett and Seattle). Cascade may, in its sole discretion, determine and adjust the appropriate method and level of treatment of water that it supplies, so long as that water meets applicable state and federal requirements. If water that it supplies meets those requirements, Cascade shall not be obligated to adjust the method or level of treatment so that the water can be more readily blended with a Member's Independent Supply or more readily transmitted through a Member's internal system. Each Member shall remain responsible for water quality within its Cascade Interlocal Contract -30- Amended and Restated October 26, 2011 respective distribution system, assuming that adequate water supply quality is provided by Cascade at the point of delivery from Cascade. Each Member shall be responsible for all costs related to making water supplied by Cascade compatible with that Member's internal system, including but not limited to, costs of additional treatment. Section 7.5 Water Supply Rates and Charges. The Board shall set Rates and Charges according to a Rate Calculation Methodology adopted from time to time by the Board. The Rate Calculation Methodology for Members' Supply Commitment shall provide for the definition and calculation of Demand Shares and for a uniform pricing structure with a commodity charge and fixed charges allocated by Demand Share. Cascade may sell water to a Non Member under terms and conditions established by the Board. The terms and conditions shall not be more favorable than the terms and conditions under which water is sold to Members. Revenue received from the sale of water to Non Members shall be used to offset or reduce Rates and Charges to Members to the extent practicable, except that such revenue need not be treated as reducing or offsetting those amounts that are necessary for the payment of debt service on Bonds and for the provision of reserve and coverage requirements for the Bonds. A Member shall be assigned a Demand Share based on the Board's best estimate of capacity to be used by that Member. Initially, the Board may base its estimate on a Seattle Contract Purveyor's use of water from Seattle. For a Member that joins without a supply history as a Seattle Contract Purveyor, or for a Member that has received only part of its water from Seattle, the Demand Share shall be established based on an audit of that Member's past Cascade Interlocal Contract -31 Amended and Restated October 26, 2011 three (3) years of water use. After three (3) years as a Member, the baseline demand and capacity obligation for that Member shall be fixed based on actual experience as a Member. Specific Demand Shares may be set by the Board to account for circumstances, such as (by way of example and not by limitation) costs of extending the Supply System to a Member, or when Independent Supplies affect regional demand patterns. When water supply from Cascade is wheeled through a Member to another Member, Cascade may presume that the first Member receiving the water is the "User" for calculation of Demand Shares unless the Members concerned instruct Cascade to use a different allocation. Rate credits for Water Supply Asset transfers are not deducted in the calculation of Demand Shares but are applied to reduce what a Member would otherwise pay. The Board must set Member Charges at levels it determines to be sufficient, together with other available revenue sources, to provide adequately for Operation and Maintenance Costs, Bond debt service, coverage and other covenants, replacement and renewal of facilities, reserves and other costs that the Board deems appropriate. The Board may provide that a Member's failure to participate in the planning process may result in penalty charges. A Member that has transferred Water Supply Assets shall receive a credit, determined when those assets are audited and transferred, based on the useful life of those facilities and on the Member's use of the water produced by those assets or an amount of water equivalent to the amount of supply from them. The Board may implement wholesale charges (additional to Demand Share -based charges and variable commodity charges) to reduce extreme peak use (e.g., "peaking -off of the pipe Cascade Interlocal Contract -32- Amended and Restated October 26, 2011 Water Rates and Charges must be the same for all Members receiving the same class of service (subject to credits, surcharges and penalty charges). Section 7.6 New Water Surcharge. A new water surcharge of $0.75 per 100 cubic feet (ccf) shall be imposed, effective on the Cascade Supply Date, and continue through December 31, 2011. It shall be applicable to all water purchased by Members over and above each Member's Old Water Allowance in the Seattle Purveyor Contract, if applicable, or to all water purchased by non Seattle Purveyor Members. New water surcharge revenues shall be used to offset or reduce Rates and Charges to Members to the extent practicable, except that such revenue need not be treated as reducing or offsetting those amounts that are necessary for payment of debt service on Bonds and for the provision of reserve and coverage requirements for the Bonds. Section 7.7 Franchises and Easements. Except to the extent otherwise required by state law, each Member shall provide franchises and rights of way on, under or across that Member's streets or other property, to Cascade and to other Members for Water Supply Assets, without charging any fees, rent or charges other than the customary and usual right -of- way permit and inspection fees. Section 7.8 Sales of Water to Non Members. Unless approved by the Board, a Member shall not sell water, including source exchange water, supplied by Cascade, nor shall a Member sell Independent Supply offset by water supplied by Cascade to a Non Member. Notwithstanding the foregoing, any Member may sell water supplied by Cascade to a Non Member to the extent required by a contract in effect as of the date the Member joins Cascade. Cascade lnterlocal Contract -33- Amended and Restated October 26, 2011 Section 7.9 Payment Procedures; Default; Step -Up Provisions. Section 7.9.1 Invoice and Payment. (a) Cascade shall provide each Member with periodic invoices showing the Member Charges payable by that Member for the billing period and the due date. Invoices shall be provided monthly or on other such periodic schedule as determined by the Board, but no more frequently than monthly nor less frequently than once every six months. The Board will determine a due date for all invoices. (b) Payment of any and all invoices shall be due and payable on or before the due date, and shall be made by wire transfer or such other means as are agreed to by Cascade and the Member. If a treasurer, trustee, fiscal agent or escrow agent is appointed in connection with the issuance of Bonds, Cascade may require, and specify on the invoice, that certain amounts be provided directly to that person or entity, and the Member shall pay those amounts in the manner and to the person so specified. (c) If full payment of any invoice is not received on or before the due date, such payment shall be considered past due and a late payment charge shall accrue for each day that the invoice remains unpaid. The late payment charge shall equal the product of the unpaid amount and an interest rate established by the Board. Late payment charges shall continue to accumulate until the unpaid amount of the invoice and all late payment charges are paid in full. Further, if an invoice or any portion thereof remains unpaid for more than sixty (60) days after the due date, Cascade may pursue any legally available remedy at law or equity for the unpaid amount, including without limitation, specific performance and collection of the late payment charge. Cascade's right to enforce payments in this regard may be assigned to a Cascade Interlocal Contract -34- Amended and Restated October 26, 2011 treasurer, trustee, credit enhancement provider or other entity. Furthermore, upon written notice, Cascade may reduce or suspend delivery of water until the invoice and late payment charges are paid. (d) If any Member disputes all or any portion of an invoice, it shall notify Cascade immediately upon receipt. If Cascade does not concur, the Member shall remit payment of the invoice in full, accompanied by written notice to Cascade indicating the portions of the invoice that the Member disputes and the reasons for the dispute. The Member and Cascade shall make a good faith effort to resolve such dispute. If the Member fails to remit payment of the invoice in full pending resolution of the dispute, the prevailing party in an action relating to the collection of that invoice shall be entitled to reasonable attorney fees and costs. Section 7.9.2 Default and Step -Up. (a) If any Member fails to make any payment in full for more than fifty (50) days past the due date, Cascade shall make written demand upon that Member to make payment in full within ten (10) days of the date that the written demand is sent by Cascade. If the failure to pay is not cured within the ten (10) day period, the Member shall be deemed to be in default. (b) Upon an event of default as described in subsection 7.9.2(a), the other Members shall pay Cascade (in addition to Member Charges otherwise due) the defaulting Member's Member Charges in proportion to each remaining Members' Demand Share in accordance with a schedule established by Resolution of the Board. (c) The payment of a proportionate share of the existing defaulted Member's Member Charges by Members shall not relieve the defaulting Member of its liability for those Cascade Interlocal Contract -35- Amended and Restated October 26, 2011 payments. Cascade shall have a right of recovery from the defaulting Member on behalf of each Member. Cascade may commence such suits, actions or proceedings at law or in equity, including but not limited to suits for specific performance, as may be necessary or appropriate to enforce the obligations of this Contract against any defaulting Member. Cascade's right to enforce payments in this regard may be assigned to a treasurer, trustee, credit enhancement provider or other entity. Amounts recovered by Cascade as payment of amounts due shall be passed through to each Member in proportion to the share that each assumed, in cash or in credit against future Member Charges as the Board shall determine. (d) The prevailing party in any such suit, action or proceeding, shall be entitled to recover its reasonable attorney fees and costs against the defaulting Member. ARTICLE 8. Planning Section 8.1 Water Supply Plan. Cascade must plan for its Members' water supply needs. That planning shall be to be compatible with the equivalent planning responsibilities of other wholesale water providers and with state, county and city planning responsibilities under the Growth Management Act. The Board must adopt, and may from time to time amend, a Water Supply Plan that must be based on no less than a twenty- (20) year planning horizon. Cascade shall coordinate its planning effort with local and regional utilities and other appropriate agencies and work to encourage cooperative region -wide planning and coordination. Each Member shall actively participate in Cascade's water supply planning and shall provide to Cascade accurate data regarding its facilities and operations together with good- faith estimates of future needs and a description of any involvement in the development of Cascade Interlocal Contract -36- Amended and Restated October 26, 2011 new Independent Supplies. Each Member's water comprehensive or system plan shall be consistent with any plans adopted by Cascade, and shall be consistent with applicable requirements of the Growth Management Act and comprehensive plans. Section 8.2 Watershed Management Plan. Cascade may adopt Watershed Management Plans, as appropriate, for the watersheds within its service area provided that a Watershed Management Plan may take the place of, or may be incorporated into a Cascade Water Supply Plan. In fulfilling its responsibilities for watershed management, Cascade may enter into interlocal agreements with Non Member municipalities to engage in watershed management, including development of Watershed Management Plans and the implementation and financing of such plans. Section 8.3 System Reliability Methodology. Cascade shall develop and adopt a system reliability methodology for planning, operation and management purposes. Adoption and amendments to the system reliability methodology shall require a 65% Dual Majority Vote. ARTICLE 9. Filings This Contract must be filed with the King County Office of Records and Elections or with any other applicable county auditor, in accordance with RCW 39.34.040, and must be submitted for review by the Washington State Department of Health and the Washington State Department of Ecology, in accordance with RCW 39.34.050. ARTICLE 10. Duration and Dissolution; Withdrawal Cascade Interlocal Contract -37- Amended and Restated October 26, 2011 Section 10.1 Duration. Except as provided in Section 10.3, Cascade shall remain in existence for the longer of the following: (a) the period it holds any assets; (b) the period during which Bonds are outstanding; or (c) the period it continues to include Members. Section 10.2 Withdrawals. A Member may notify Cascade of its intent to withdraw by delivery to Cascade of a Resolution of its legislative authority expressing such intent. Upon receipt of such Resolution, the Member shall lose its right to vote and the Board shall determine (a) the withdrawing Member's allocable share of the cost of the then existing obligations of Cascade; and (b) the withdrawing Member's obligations to Cascade. "Then existing obligations of Cascade" means obligations or costs incurred by Cascade as of the date the Member's withdrawal notice is received, including but not limited to Bond obligations, contract obligations and cash financed capital projects; provided that a withdrawing Member's allocable share shall in no event include an obligation for future expenses for which Cascade has not incurred a legal obligation; and provided further, that to the extent the Member's obligation (with respect to such costs) is re -paid over time, the Member shall be entitled to a credit for supply abandoned by the Member and is otherwise used by Cascade. A "withdrawing Member's obligation to Cascade" includes but is not limited to, the Member's share of fixed operating costs, any other expenses contained in Cascade's adopted budget for that year, and any assessments or other similar charges lawfully imposed by Cascade. For purposes of the preceding sentence, "fixed operating costs" shall be determined in the year of withdrawal, and the Member's obligation with respect to such costs shall be limited only to that amount required to pay for supply abandoned by the Member and not otherwise used by Cascade. Cascade Interlocal Contract -38- Amended and Restated October 26, 2011 The allocable share of cost or obligations shall be determined by the Board, taking into consideration as deemed applicable by the Board: (a) the ratio of the Member's Demand Share to total Member demand; (b) the ratio of the Member's contribution to Cascade revenue to total Cascade revenue including RCRCs; (c) the cost or a portion of the cost of capital projects or facilities specially benefiting the Member; and (d) and any other factor the Board deems appropriate to consider. The Member's withdrawal shall be effective on payment of such allocable share or provision for arrangements to pay such allocable share that are satisfactory to the Board. Until the effective date of withdrawal, the Member shall continue to comply with all applicable provisions of this Interlocal Contract. Upon withdrawal, except as provided in an Asset Transfer Agreement, the withdrawing Member shall have no right to, or interest in any Water Supply Assets owned by Cascade. The withdrawing Member shall be deemed to have abandoned any and all rights to service, to the use of Cascade Water Supply Assets or other rights with respect to Cascade (except as otherwise expressly provided in this Contract). Notwithstanding the provisions of this Section 10.2, Cascade will, upon the withdrawal of a Member that has transferred operational control and management of (but not title to) an Independent Supply Asset to Cascade under Section 5.1, return operational control of such asset to the withdrawing Member. Return of operational control and management will be subject to: (a) continued use by Cascade, to the extent and for such time as the Board deems such use necessary for Cascade to continue providing service to its Members; and (b) payment or provision for payment of any Cascade costs, including but not limited, to those associated with the withdrawing Member's Independent Supply Asset. Cascade Interlocal Contract -39- Amended and Restated October 26, 2011 The Board may establish additional generally applicable conditions and requirements for withdrawal. Section 10.3 Dissolution. Cascade may be dissolved by a 65% Dual Majority Vote. Upon dissolution, except as provided in an Asset Transfer Agreement, Cascade's assets initially shall be held by its then current Members as tenants in common. Each Member's ownership interest must be based on that Member's Demand Share as of the time of the dissolution. Cascade's liabilities (including Bonds and other contractual obligations) initially shall be distributed based on Members Demand Shares as of the time of the dissolution. Assets and liabilities must be distributed in accordance with agreement or contract, under a voluntary mediation process, or by a court of law. A court may appoint an arbitrator or special master. Distribution shall be based on the best interests of efficient and economic water supply in the entire area served by the Members, subject to a rebuttable presumption that Water Supply Assets will be returned to the Member that originally transferred them to Cascade. That presumption may be overcome by a showing that another asset distribution is in the best interests of efficient and economic water supply. The proceeds of any sale of assets must be distributed among the then current Members based on the Demand Shares at the time of dissolution. Section 10.4 Successor Entity. Notwithstanding the provisions of Section 10.3, upon a 65% Dual Majority Vote (ratified within one hundred and twenty (120) days by 65 as measured by Dual Majority Vote of the Members' legislative authorities, all assets, liabilities, and obligations of Cascade may be transferred to any successor entity (including without limitation, a joint operating agency or other municipal corporation, as permitted under Cascade Interlocal Contract -40- Amended and Restated October 26, 2011 state law), and all obligations of Members and parties contracting with Cascade become obligations to the successor entity. ARTICLE 11. Amendments. Amendments to this Contract shall be effective upon approval by 65% Dual Majority Vote (ratified within one hundred and twenty (120) days by 65 as measured by Dual Majority Vote of the Members' legislative authorities. ARTICLE 12. Applicable Law and Venue. This Contract is governed by the laws of the state of Washington. The venue for any legal action arising from a dispute under this Contract is the Superior Court for King County. ARTICLE 13. No Third Party Beneficiaries. There are no third -party beneficiaries to this Contract except for the rights of Bond owners as provided in Section 5.3.2, no person or entity other than an agency signatory to this Contract shall have any rights hereunder or any authority to enforce its provisions, and any such rights or enforcement must be consistent with and subject to the terms of this Contract. ARTICLE 14. Severability. If any provision of this Contract or its application is held by a court of competent jurisdiction to be illegal, invalid, or void, the validity of the remaining provisions of this Contract or its application to other entities or circumstances shall not be affected. The remaining provisions continue in full force and effect, and the parties' rights and obligations must be construed and enforced as if the Contract did not contain the particular invalid provision. But if the invalid provision or its application is found by a court of competent jurisdiction to be substantive and to render performance of the remaining provisions Cascade Interlocal Contract -41 Amended and Restated October 26, 2011 unworkable and infeasible, is found to seriously affect the consideration, and is inseparably connected to the remainder of the contract, the entire Contract is deemed void. ARTICLE 15. Entire Agreement. This Contract constitutes the entire and exclusive agreement between the parties relating to the specific matters covered in this Contract. All prior or contemporaneous verbal or written agreements, understandings, representations or practices relative to the foregoing are superseded, revoked and rendered ineffective for any purpose. This Contract may be altered, amended or revoked only as set forth in Article 11. No verbal agreement or implied covenant may be held to vary the terms of this Contract, any statute, law, or custom to the contrary notwithstanding. Cascade Interlocal Contract -42- Amended and Restated October 26, 2011 Cascade Water Alliance Y Title: Chair Date: l4 5/ l' Attest: Title: Chief Executive Order Date: L( I f Authorized by: Resolution No. 2011 -17 Date: October 26. 2011 Cascade Water Alliance Cascade Interlocal Contract -43- Amended and Restated October 26, 2011 ARTICLE 16. Execution. This Contract may be executed in one or more counterparts. Signatory A2encv By: Title: Attest: Title: Authorized by (Resolution or Ordinance): Date: City of Bellevue Date: Date: Cascade Interlocal Contract -44- Amended and Restated October 26, 2011 ARTICLE 16. Execution. This Contract may be executed in one or more counterparts. Sienatory A2encv Title: Date: Attest: Title: Date: Authorized by (Resolution or Ordinance): Date: Covington Water District Cascade Interlocal Contract -46- Amended and Restated October 26, 2011 ARTICLE 16. Execution. This Contract may be executed in one or more counterparts. Signatory A2encv By: Title: Attest: Title: Authorized by (Resolution or Ordinance): Date: City of Issaquah Date: Date: Cascade Interlocal Contract -46- Amended and Restated October 26, 2011 ARTICLE 16. Execution. This Contract may be executed in one or more counterparts. Sienatory AEencv Title: Date: Attest: Title: Date: Authorized by (Resolution or Ordinance): Date: City of Kirkland Cascade Interlocal Contract -46- Amended and Restated October 26, 2011 ARTICLE 16. Execution. This Contract may be executed in one or more counterparts. Sisnatory A2encv B y Title: Attest: Title: Authorized by (Resolution or Ordinance): Date: City of Redmond Date: Date: Cascade lnterlocal Contract -46- Amended and Restated October 26, 2011 ARTICLE 16. Execution. This Contract may be executed in one or more counterparts. Signatory Agencv M. Title: Date: Attest: Title: Date: Authorized by (Resolution or Ordinance): Date: Sammamish Plateau Water Sewer District Cascade Interlocal Contract -46- Amended and Restated October 26, 2011 ARTICLE 16. Execution. This Contract may be executed in one or more counterparts. Lignatory Agency By Title: Attest: Title: Authorized by (Resolution or ordinance): Date: Skyway W &S District Date: Date: Cascade Interlocal Contract -46- Amended and Restated October 26, 2011 ARTICLE 16. Execution. This Contract may be executed in one or more counterparts. Si�nat r A aencv By:., Title: Attest: l h '4" Date: l).t_c c,w4.i. l a i x011 Title: UL-11v Date: 2fl J Authorized by Resolution or Ordinance): /rA/1W�/� U'G l_-1 I JI Date: h City of Tukwila Cascade Interlocal Contract -46- Amended and Restated October 26, 2011 CASCADE WATER ALLIANCE CASCAD E RESOLUTION No. 2011-17 WATER ALLIANCE A RESOLUTION OF THE BOARD OF DIRECTORS OF THE CASCADE WATER ALLIANCE, A WASHINGTON NONPROFIT CORPORATION, ADOPTING AN AMENDED AND RESTATED INTERLOCAL AGREEMENT, ADOPTING MINIMUM DEMAND SHARES FOR SAMMAMISH PLATEAU WATER AND SEWER DISTRICT AND THE CITY OF ISSAQUAH, ESTABLISHING THE TERMS AND CONDITIONS FOR THE RCFC CREDIT PURCHASE PROGRAM, AND AMENDING CASCADE WATER ALLIANCE CODE SECTION 5.25.070 (A PORTION OF THE REGIONAL CAPITAL FACILITIES CHARGE METHODOLOGY) WHEREAS, The Cascade Water Alliance (Cascade), is a Washington Nonprofit Corporation composed of municipal corporations and special purpose Municipal Corporations that are parties to an Interlocal Contract entered into under authority of the Interlocal Cooperation Act (Chapter 39.34 RCW) for the purpose of providing water supply to meet the growing demands of its Members; and WHEREAS, Cascade was formed in April 1999, according to the terms of an Interlocal Contract; the Board of Directors of Cascade (Board) approved amendments to the Interlocal Contract in September 1999, November 2002, and December 2004; the Board now desires to amend the December 2004 Amended and Restated Interlocal Contract to raise the maximum administrative dues that may be collected from the Members to 9% of Cascade's annual revenue requirement and to allow the 9% limit to be amended in the budget by a 65% Dual Majority Vote of the Board; and such amendment to the Interlocal Contract requires a 65% Dual Majority Vote (ratified within 120 days by 65 as measured by Dual Majority Vote, of the Members' legislative authorities); and WHEREAS, the Interlocal Contract, Section 7.5 provides that specific Demand Shares may be set by the Board to account for circumstances; the Rate Calculation Methodology, adopted by the Board and codified at Cascade Water Alliance Code (CWAC) 5.20.020, provides for the right to recover costs through additional charges or surcharges to address unique circumstances; and the Board now desires to set specific minimum Demand Shares effective January 1, 2012, to account for unique circumstances for Members Sammamish Plateau Water and Sewer District and the City of Issaquah; and WHEREAS, Section 5.5 of the Interlocal Contract provides that the Regional Capital Facilities Charge (RCFC) be calculated according to an RCFC Methodology, which defines the analytical steps required to calculate the RCFC; the RCFC Methodology was adopted by the Board in Resolution 2006 -02 and, by Resolution 2010 -02 codified at CWAC 5.25.010 through 5.25.070; the Board has determined it is reasonable, appropriate, consistent with applicable law, and in the best interest of Cascade to amend CWAC 5.25.070 of the RCFC Methodology to authorize a program whereby Cascade may purchase RCFC credits from one or more Members; and such amendment of the RCFC Methodology requires a 65% Dual Majority Vote of the Board; and WHEREAS, in accordance with the RCFC Methodology and CWAC 5.25.070 as amended by this Resolution, the Board now desires to establish the terms and conditions for an RCFC Credit Purchase Program whereby Cascade may purchase RCFC credits from one or more Members. NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE CASCADE WATER ALLIANCE as follows: Section 1. Amendment to Interlocal Contract. The Board approves and adopts the 2011 Amended and Restated Interlocal Contract, with Section 4.7 amended in the form below; and directs the Chair and the Chief Executive Officer to distribute the 2011 Amended and Restated Interlocal Contract for ratification by Members' legislative authorities. Section 4.7 Budget; Dues; Financial Management. The Board must approve an annual budget, determining Cascade's revenues and expenditures no later than sixty (60) days before the beginning of the fiscal year in which that budget will be in effect. The budget will be developed and approved according to a schedule established by the Bylaws. The budget must identify the levels of member charges on which revenue projections are based. The Board may amend the budget. Each Member must pay annual dues to defray part or all of Cascade's administrative costs based on the number of CERUs served by its water system, regardless of water usage or capacity, and regardless of whether those units are served by the Supply System or by Independent Supply. Total administrative dues collected from all Members may not exceed the gFea O f 9% of Cascade's annual revenue requirement less debt se This limit may be amended in the budget by a 65% Dual Maioritv Vote of the Board. The Board may establish minimum annual dues per Member and may provide that less than all of a Member's CERUs be taken into account in establishing dues. All Cascade books and records shall be open to inspection by the Washington State. Section 2. Demand Shares. Beginning January 1, 2012, the minimum Demand Shares for Sammamish Plateau Water and Sewer District and the City of Issaquah are set as follows: Minimum Demand Share Sammamish Plateau Water and Sewer District 1.0 City of Issaquah 0.75 Cascade Resolution No. 2011 -17 October 26, 2011 Page 2 of 5 As long as these minimum Demand Shares are in effect, in accordance with section 6.2.2. of each Member Audit Acceptance Agreement, the Production Requirements for Sammamish Plateau Water and Sewer District and City of Issaquah are waived and no penalties may be assessed to these Members for not meeting the initial or modified (by RCFC credit redemption) Production Requirement, provided that the Members maintain the capacity and availability of audited quantities of Independent Supply, subject to audit and potential imposition of RCFCs in the event of loss of supply. Section 3. Amendment of the RCFC Methodologv. The Board approves an amendment to Resolutions 2006 -2 and CWAC 5.25.070 (a portion of the Regional Capital Facilities Charge Methodology) and as follows: 5.25.070 RCFC credits. In recognition of existing or future independent supplies, or as compensation for transfer of such resources, Cascade may issue credits redeemable in lieu of RCFC payments. The number and use of those credits would be defined by the Board and include the following general provisions: l� The terms and conditions for Fate f redemption of RCFC credits shall be set by the Board to allow redemption under a structure that it determines appropriate to protect Cascade's financial performance and eauitable cost recoverv. is B. Cascade may develop a moaram wherebv it offers to purchase RCFC Credits of one or more Members, at a price and with other terms and conditions as established by the Board. These provisions are intended to protect and stabilize the cash flow derived from RCFCs. Section 4. RCFC Credit Purchase Program. Pursuant to the RCFC Methodology, as amended by this Resolution, the Board establishes the terms and conditions for the RCFC Credit Purchase Program whereby Cascade may purchase RCFC credits from one or more Members as follows: Regional Capital Facilities Charge Credit Purchase Program Annual Redemption. Effective with the fiscal year beginning January 1, 2012, and each fiscal year thereafter, RCFC credits held by any Member shall be redeemable Cascade Resolution No. 2011 -17 October 26, 2011 Page 3 of 5 via an annual reimbursement mechanism in accordance with the following redemption rules: a. Credits may only be redeemed if Cascade receives reported growth and RCFC payment for at least 1,250 CERUs in a given fiscal year as calculated as a total from all Members. b. All Members shall report and pay for all applicable CERU growth as it occurs in accordance with Cascade reporting requirements and procedures. c. Cascade shall monitor overall growth and revenue to establish whether or when the threshold is reached or exceeded. d. After the end of the fiscal year, Cascade shall determine the degree to which the threshold is exceeded, allocate any and all such excess among Members holding valid credits in proportion to their share of that year's growth, and allow the use of credits for any amount thus allocated to and among Members holding valid credits. e. Cascade will notify each Member with potential reimbursement through credit redemption no later than January 31 of the subsequent fiscal year. The Member will be responsible to confirm whether or to what degree they wish to exercise the resulting use of credits. A failure to respond by the Member within 14 days will be considered notice to redeem the maximum applicable credits and Cascade will by default take this as an affirmative redemption for all applicable credits and issue the corresponding refund. f. As so directed by the Member or by default if the Member has failed to timely respond, Cascade will refund RCFC revenues corresponding to redeemed credits, reducing the remaining quantity of available credits for that Member. The refund will be based on the full RCFC applicable during the fiscal year for which credits are redeemed. g. Credits remain non transferable among Members except as specifically authorized by the Board. 2. One -Time Redemption Option. In the alternative to the annual reimbursement mechanism set forth in Section 1 above, as a one -time offering, each Member with credits may choose to redeem any or all of its outstanding credits, as expressed as a percentage, by notifying Cascade no later than December 31, 2011 of its selection under this Section 2. Absent such notification, this offer expires and the member will by default retain all applicable credits and redeem themunder the annual reimbursement mechanism rules set forth in Section 1 above. No later than December 31, 2011, a Member may offer up to 100% of its outstanding credits for purchase by Cascade at a price of $2,500 per CERU. Cascade will make full payment no later than December 31, 2012. Any Member selecting this alternative may not redeem any of its remaining credits until after December 31, 2025, and would be subject to redemption rules as applicable at that time. Cascade Resolution No. 2011 -17 October 26, 2011 Page 4 of 5 Section 5. This Resolution shall be in full force and effect on the date of its adoption; provided that Sections 2, 3 and 4 of this Resolution shall remain in full force and effect after 120 days only if the 2011 Amended and Restated Interlocal Contract has been ratified by Members' legislative authorities. ADOPTED AND APPROVED by the Board of Directors of the Cascade Water Alliance at a regular meeting thereof, held on the 26th day of October 2011. Attest Chuck Clarke, Chief Executive Officer Members g Yes No Demand Share Yes 10 0 No CASCAD WATER ALLIANCE &o'yd arren, Chair John a hione, Vice Chair Jim ggerton, ary/Treasurer Include in CWAC? Yes No Cascade Resolution No. 2011 -17 October 26, 2011 Page 5 of 5 CERTIFICATE OF CITY OF TUKWILA The City of Tukwila (the "City a code city and a member of the Cascade Water Alliance "Cascade hereby certifies to Cascade and to Lehman Brothers Inc. (the "Underwriter as set forth below Capitalized terms used below but not defined have the meanings assigned thereto in the Bond Purchase Agreement (the "Purchase Agreement') between the Underwriter and Cascade. 1 The City is a code city duly organized under the laws of the State of Washington (the "State and duly authorized to own and to operate its water system (which is identified in the Preliminary Official Statement) and to provide this Certificate (the "Certificate to Cascade and to the Underwriter 2 The City has full legal right, power and authority- (a) to execute and deliver this Certificate and to perform its obligations contained herein, (b) to execute and deliver the Closing Certificate of the City (the "Member Closing Certificate (c) to enter into the Amended and Restated Interlocal Contract, dated as of December 15, 2004 (the "Interlocal Contract' and together with this Certificate, the "Member Documents among Cascade and the members named therein (collectively, the "Members and (d) to confirm the accuracy of the Member Information defined below 3 Attached to this Certificate are true and correct copies of the following documents Resolution No 1604, dated April 17, 2006, evidencing a motion authorizing the Mayor to sign the Member Documents; Resolution No 1417, dated May 3, 1999 authorizing the Mayor to sign the original version of the Interlocal Contract; and Regular Meeting Minutes dated December 16, 2002, evidencing a motion authorizing the Mayor to sign the Amended and Restated Interlocal Contract. Such resolutions and motion were adopted at meetings duly convened and held in all respects according to law To the extent required by law, due and proper notice of such meetings was given, a quorum was present throughout such meetings, a legally sufficient number of votes were cast in the proper manner for the adoption of such resolutions and motion. The resolutions and motion are in full force and effect as of the date hereof and have not been amended, superseded or repealed. 4 The City has duly authorized the execution and delivery by the City of each of the Member Documents, and each of the Member Documents has been fully authorized, executed and delivered by the City 5 As of the date of the Preliminary Official Statement and as of the date of this Certificate, the information concerning the City contained in Appendix A (except the amount of the budgeted 2006 payments to Cascade, which are obtained from Cascade) and under the heading "THE MEMBERS City of Tukwila" in Cascade's Preliminary Official Statement (collectively, the "Member Information is true and correct. 6. Each of the representations and warranties of the City contained in the Member Documents is true and correct as of `the date of this Certificate as if made on the date of this Certificate. 7 If, between the date of the Purchase Agreement and the date 25 days following the date of the Closing (a) any event shall occur or any pre- existing fact or condition shall become known to the City that might or that would cause the Member Information, as then supplemented or amended, to contain any untrue statement of a material fact, the City shall promptly notify Cascade thereof; and (b) if, in the reasonable opinion of the Underwriter, such event, fact or condition requires the preparation and publication of a supplement or amendment to the Official Statement, the City will provide to Cascade a supplement or amendment to the Official Statement in a form and in a manner approved by the Underwriter 8 The execution and delivery by the City of this Certificate and of the Interlocal Contract do not conflict with, result in a breach of or constitute a default under any of the terms or conditions of any resolution, ordinance, mortgage, deed of trust, lease or other agreement or instrument to which the City is a party or by which it or any of its property is bound, or any laws, judgments, decrees, rules or regulations applicable to the City of any court or other governmental body or any other applicable requirement of law; and no consent, approval, authorization, order, permit, registration or qualification of or with any such court or governmental agency or body was or is required for the execution and delivery of either of the Member Documents. 9 The City agrees to furnish such information, to execute such instruments and to take such other action in cooperation with the Underwriter and not inconsistent with law, as may be requested by the Underwriter to (a) qualify the Bonds for offer and sale under the blue sky or other securities laws and regulations of such states and other jurisdictions of the United States of America as may be designated by the Underwriter and -2- 50661840.2 (b) determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions and shall cooperate with the Underwriter to continue such qualifications in effect so longer as required for the distribution of the Bonds; provided, however, that in each case the City shall not be required to execute a general consent to service of process or to qualify to do business in connection with any such qualification or determination in any jurisdiction. 10 The City is not in material breach of or in default under the Interlocal Contract or in material breach of or in material default under any material agreement of the City's water utility, and no event has occurred and is continuing that constitutes or that with the passage of time or the giving of notice, or both, would constitute a material breach of or material default or event of default under any such material agreement. 11 In each year in which the Member Charges the City is required to pay is 10 percent or more of the sum of the Member Charges paid by all of the Members in such year, the City will provide to Cascade, not later than the last day of the eighth month of each fiscal year of the City (but if either the City's or Cascade's fiscal year changes so that it ends on other than December 31, then not later than 30 days before Cascade's continuing disclosure is due), (a) audited financial statements for the City for the prior fiscal year, prepared in accordance with generally accepted accounting principles applicable to Washington cities, and if audited financial statements are not available at that time, the City may provide unaudited financial statements with audited financial statements to be provided to Cascade when they become available; and (b) updated Member Information consisting of historical financial information and operating data for the City of the type included under the heading "THE MEMBERS City of Tukwila," in the table under the caption "THE MEMBERS Member and Regional Water Rates," and in Appendix A of Cascade's Official Statement. 12 The City confirms that it has not been in default on any of its debt obligations and further confirms that during the previous five years it has not failed to comply, in all material respects, with any previous undertakings in a written contract or agreement specified in paragraph (b)(5)(i) of the Rule 13 The City agrees that any certificate signed by any officer of the City and delivered to the Underwriter shall be deemed to be a representation and warranty by the City to the Underwriter as to the statements made therein. 14 The officer of the City signing this Certificate is duly authorized to sign this Certificate on behalf of the City -3- 50661800.2 CLOSING CERTIFICATE OF THE CITY OF TUKWILA The City of Tukwila (the "City a code city and a Member of the Cascade Water Alliance "Cascade hereby certifies to Cascade and to Lehman Brothers Inc (the "Underwriter as follows (capitalized terms used below but not defined have the meanings assigned thereto in the Bond Purchase Agreement (the "Purchase Agreement between the Underwriter and Cascade) 1 Each of the representations and warranties of the City contained in its Member Certificate is true and correct as of the date of this Closing Certificate as if made on the date of this Closing Certificate, and as of the date of this Closing Certificate, each of the representations and warranties contained in its Member Certificate is true and correct assuming that (i) where the phrase "the Preliminary Official Statement" appears in the Member Certificate, that term is now read as "the Preliminary Official Statement and the Official Statement" and (n) the term "Member's Documents" includes this Closing Certificate as well as the Member Certificate and the Interlocal Contract. 2 The City confirms its agreements contained in its Member Certificate, including in particular, the City's agreements contained in Paragraphs 7, 9 and 11 of the Member Certificate 3 The officer of the City signing this Closing Certificate is duly authorized to sign this Closing Certificate on behalf of the City Dated this 10th day of May, 2006 CITY OF TUKWILA By .4 Title Mayor 50667116 1 15 At the Closing, the City shall cause to be delivered to the Underwriter and to Cascade the opinion of counsel to the City and the Member Closing Certificate and the other documents and certificates required of the Member pursuant to Paragraph 7(e) of the Purchase Agreement. Dated this 2O day of April, 2006 CITY OF TUKWILA By- Title -4- 50661300.2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TI, KWILA, WASHINGTON, AUTHORIZING AND DIRECTING THE MAYOR OR HIS DESIGNEE TO EXECUTE CERTIFICATIONS, ENTER INTO A CONTINUING DISCLOSURE UNDERTAKING, AND DO ALL THINGS NECESSARY TO ENABLE CASCADE WATER ALLIANCE TO ISSUE AND SELL ITS INITIAL BONDS. WHEREAS, the City of"Tukwila (the "City") entered into an Interlocal Agreement effective J une 1, 1999, as amended and restated as of February 28, 2005 (the "Interlocal Agreement"), relating to the creation of the Cascade Water Alliance ("Cascade"); anti WHEREAS, pursuant to the Interlocal Agreeirient, Cascade is authorized to issue bonds for its purposes upon approval of the Cascade Board; and WHEREAS, the Cascade Board has determined to issue its initial bonds in a principal amount of approximately $58 million, to pay the costs of carrying out a portion of the capital program described in its Watershed Management Plan; and WHEREAS, pursuant to the Interlocal Agreement debt service on the bonds will be paid directly frorn net revenue of Cascade and, indirectly, from member charges to Fie paid by the City and other members of Cascade; and WHEREAS, the Interlocal Agreement includes a "step up" provision, which provides that if any mernber fails to pay its share of member charges, the other niembers shall pay to Cascade (in addition to its own rnember charges otherwise due) the defaulting rnernber's charges in proportion to each remaining member's share; and WHEREAS, the City now desires to recognize the issuance of bonds by Cascade and the City's responsibilities with respect thereto under the Interlocal Agreement, anti to authorize and direct the Mayor or his designee to sign closing certificates and a continuing disclosure undertaking in connection with the bonds; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, DO RESOLVE AS FOLLOWS- Section 1. The City hereby acknowledges the issuance of approximately $58 million principal amount of bonds by Cascade, and acknowledges the City's responsibilities with respect thereto set forth in the Interlocal Agreement, 'The City authorizes and directs the Mayor or his designee to execute one or more certificates with respect to: A. Information regarding the City included in Appendix A to the preliminary and Final Official Staten for the bonds; B. The absence of litigation with respect to the bonds and the City's obligations under the Interlocal Agreement; and C. The due authorization by the City of, and the vilidity of, the Interlocal Agreement. C `T)muincms and semingsAH 1-rnsqksk1opK61y\1%1NDA I Warci Alliancc,doc P131sn VIY2006 Page I of 2 In addition, the City hereby authorizes and directs The Mayor or his designee to enter into an ongoing disclosure undertaking with respect to financial and operating data regarding the City included in the Official Statement. Section 2. "The Mayor or his designee is authorized to take any actions and to execute doctunents as in his Judgment may be necessary or desirable in order to carry out the terms of, and complete the Cascade bond issuance contemplated by, this Resolution. All acts taken pursuant to the authority of this Resolution, but prior to its effective date are hereby ratified, PASSED BY THE CITY COUNCIL TFIE CITY OFF WASHINGTON, at Regular Meeting thereof this 17 day of, -Z I 2006. ATTEST/ AUTHENTICA Dennis Robertson, Coun cil President J, jano'�. Cantu, 64C, City Clerk APPROVED AS TO FORM BY: Off ice of the City Attorney A Filed with the City Clerk- Passed by the City Cou 7-6 Resolution Number: 1��49� C"Docurnents Hnd "wRinWAA11 War Alliance,doc PB;ksn 4114/2f)06 Page 2 of 2 6 �5 (,,4 INTERLOCAL CONTRACT Amended and Restated December 15, 2004 67. 01 G111M� TABLE OF CONTENTS ARTICLE I Agreement 1 ARTICLE 2 Definitions ARTICLE 3 Formation of Entity Purpose and Powers 7 Section 3 1 Formation 7 Section 3 2 Membership 7 Section 3 3 Conversion to Municipal Corporation Status 8 Section 3 4 Purposes 9 Section 3 5 Powers 10 ARTICLE 4 Organization Structure, Board 11 Section 4 1 Composition, Bylaws, and Meetings I I Section 4 2 Powers of the Board I I Section 4 3 Voting I 1 Section 4 4 Officers and Committees 12 Section 4 5 Executive Committee 13 Section 4 6 Staff Consultants and Contractors 13 Section 4 7 Budget; Dues, Financial Management. 14 ARTICLE 5 Asset Development and Supple Commitment 14 Section S I Property Acquisition, Ownership and Disposition 14 Section 5 2 Supply Commitment 15 Section 5 2 1 Conmiltment to Members 16 Section 5 2 2 Additional Rules for Members Retaining Independent Supply 17 Section 5 2 3 Additional Rules for Source Exchange 18 Section 5 3 Financing of Assets. 19 Section _5 4 Supply Expansions and System Extensions 22 Section 5 5 Regional Capital Facilities Charges 2 3 Section 5 6 Transfer Upon Mergers, Consolidations and Assumptions 2.5 ARTICLE 6 New Independent Supply 2S ARTICLE 7 Asset Management 26 Section 7 1 Supply System Management 26 Section 7 2 Conservation 2 Section 7 3 Shortages Emergency 27 Section 7 3 1 Shortages 27 Section 7 3 2 Emergency 28 Section 7 4 Water Quality 28 Section 7 5 Water Supply Rates and Charges 29 Section 7 6 New Water Surcharge 31 Cascade Interlocal Contract Amended and Restated December 15 2004 Section 7 7 Franchises and Easements 31 Section 7 8 Sales of Water to Non Members 32 ARTICLE 8 Planning. 34 Section 8 1 Water Supply Plan 34 Section 8 2 System Reliability Methodology 35 ARTICLE 9 Filings 3.5 ARTICLE 10 Duration and Dissolution, Withdrawal 36 Section 10 1 Duration 36 Section 10 2 Withdrawals 36 Section 10 3 Dissolution 38 Section 10 4 Successor Entitv 38 ARTICLE 1 1 Amendments 39 ARTICLE 12 Applicable Law and Venue 39 ARTICLE 13 No Third Party Beneficiaries. 39 ARTICLE 14 Severability 39 ARTICLE 15 Entire Agreement 40 ARTICLE 16 Execution 41 Cascade interlocal Coninict �i- Amended and Restated December 15 2004 CASCADE WATER ALLIANCE INTERLOCAL CONTRACT Recitals WI IEREAS the Cascade Water Alliance, an intergovernmental organization created by Interlocal Contract effective April 1, 1999 (as amended July 2000 and November 2002) to further the Interests of Its Members with respect to water supply and to work cooperatively with other water supply entitles in the region, and WHEREAS Members of the Cascade Water Alliance have determined to amend the Cascade Water Alliance s Interlocal Contract to better facilitate the purposes of the Cascade Water Alliance NOW THEREFORF it is agreed as follows ARTICLE I Agreement The Cascade Interlocal Contract, effective April 1 1999 and entered Into under authority of the Interlocal Cooperation Act, Chapter 39 34 RCNN is amended and re- stated as provided herein ARTICLE 2. Definitions "Asset Transfer Agreement" means an agreement between Cascade and a Member by which the Member transfers title to Water Supply Assets to Cascade, with or without monetary consideration, to be operated and maintained as part of the Cascade Water System. "Authorized Issuer" means either (a) Cascade (or a successor entity) or (b) a Member or other entity authorized to issue Bonds for the benefit of Cascade and approved by Resolution of the Board "Board" means the Board of Directors of Cascade Cascade Interlocal Contract Amended and Restated December 15 2004 "Bonds" means short-term or long -term bonds, notes, warrants, certificates of indebtedness, or other obligations issued by or on behalf of Cascade ByLaws" means the Bylaws of Cascade as adopted and amended by the Board. "Cascade" means the Cascade Water Alliance "Cascade ERUs" "CERUs means equivalent residential units, calculated according to the Regional Capital Facilities Charge Methodology "Cascade Source Exchange Program" means a program adopted by Resolution of the Board for the replacement of all or a portion of a public water systems existing water supply to benefit stream flow and fish without serving growth or increasing that system s water supply A program utilizing Lake Ta.pps Water Supply shall include the terms and conditions for source exchange contained in the Lake Tapps Water Right Report of Examination "Cascade Source Exchange Program Agreement" means an agreement between Cascade and a Member or another public water supplier to implement the Cascade Source Exchange Program "Cascade Supply Date" means the date for the Founding Members and each new Member established by Resolution of the Board, upon which Cascade undertakes a Supply Commitment "Contract" means this Cascade Water Alliance interlocal Contract "Demand Share" means either a Member s current share of water provided through the Supply System, or estimated share of water to be provided through the Supply System, whether Full Supply or interruptible Supply expressed in millions of gallons per day Demand Share is calculated according to the Rate Calculation Methodology Cascade inierlocal C oniract Amended and Restated I keemhcr 15 2004 Dual Majority Vote" means Board approval of proposal on the basis of a simple majority of all Members, allowing one vote per Member together with a simple majority of all Members on the basis of each Member's Weighted Vote A "simple majority" means a majorit) of all Members of Cascade, not just the Members present and voting "65% Dual Majority Vote" means Board approval of a proposal on the basis of a 65% supermajority of all Members, allowing one vote per Member together with 65% supermajority of all Members on the basis of each Member s Weighted Vote A "supermajority means 65% of all Members of Cascade, not just the Members present and voting. "Founding Member" means the City of Bellevue, Covington Water District, the City of Issaquah, the City of Kirkland, the City of Redmond, Sammamish Plateau Water and Sewer District, Skyway Water and Sewer District, and the City of Tukwila. "Gross Cascade Revenue" means all of the earnings and revenues received by Cascade from any source whatsoever including but not limited to (a) Member Charges, (b) revenues from the sale, lease or furnishing of other commodities, services, properties or facilities, (c) the receipt of earnings from the investment of money inn any maintenance fund or similar fund, (d) and withdrawals from any rate reserve or rate stabilization fund or account. However Gross Cascade Revenue shall not include (a) principal proceeds of Bonds or any other borrowings, or earnings or proceeds from any investments in a trust, defeasance or escrow fund created to defease or refund obligations relating to the Water Supply System (until commingled with other earnings and revenues included in Gross Cascade Revenue) or held in a special account for the purpose of paying a. rebate to the United States Government under the Code (b) taxes and other income and revenue which may not legally be pledged for revenue bond Cascade lntedocal Contract 3- Amended and Restated December 15 2004 debt service (c) improvement district assessments, (d) federal or state grants allocated to capital projects (e) payments under Bond Insurance or other credit enhancement policy or device (t) Insurance or condemnation proceeds used for the replacement of capital projects or equipment, (g) earnings In any construction fund or bond redemption fund, (h) deposits to any rate reserve or rate stabilization fiord or account, or (1) any revenues generated by any Independent Supply except those amounts that are payable to Cascade pursuant to this Contract or another Interlocal agreement "Independent Supply" or "Independent Supplies" means a Member s Water Supple Assets that are not part of the Supply System "Member" or "Members" means one or more member agencies of Cascade "Member Charges" means all payments that Cascade Members are required by this Contract to make to Cascade Including but not hunted to all Rates and ('barges, RCFCs, dues, assessments and other payments from Members "Net Cascade Revenue" means Gross Cascade Revenue less Operations and Maintenance Costs "Non- Member" means any person or agency that Is not a. party to this Contract "Operations and Maintenance Costs" or "O &M Costs" means all expenses Incurred by Cascade to operate and maintain the Supply System in good repair working order and condition, Including without limitation, payments made to any other public or private entity for water or other utility service Except as approved by the Board Operations and Maintenance Costs shall not Include anv depreciation, capital additions or capital replacements to the Supply System. Cascade Interlocal C onlrael 4 Amended and Restated I )ecembcr 1-5 2004 Rates and Charges" means the rates and charges (not including RCFCs) chargeable to each Member using the Rate Calculation Methodology plus any late payment or other charge that may be due "Rate Calculation Methodology" means the method of setting Rates and Charges adopted by the Board in accordance with Section 7 5 "Regional Capital Facilities Charges" ("RCFCs means the charges to each Member for new CERUs connected to that Member s water distribution system. "Regional Capital Facilities Charge Methodology" "RCFC Methodology means the method of determining the RCFCs adopted by the Board in accordance with Section 5 5 "Satellite Systems" means water supply facilities identified as such by the Board, including but not limited to facilities that serve a portion of a Member s customers but that are not part of the Member's main water system "Seattle Contract Purveyor" or "Seattle Contract Purveyors" means a Member that is or was a party to The Citv of Seattle Water Purveyor Contracts, Version A or Version B dated November 1981 (as amended) executed prior to July l 1998 "Supply Commitment" means the obligation undertaken by Cascade, established by Resolution of the Board to supply water to a Member With respect to Members, that obligation shall be characterized as "Full Supply Commitment," or an "Interruptible Supply Commitment" defined as follows "Full Supply Commitment for any or all of a Member's water needs means that those needs, as projected in the Member s lawf illy adopted water supply plan, shall be met from the Supply System, net of independent supply and subject to the other limitations established in this Cascade Interlocal Contract 5- Amended and Restated December 15 2004 agreement, on an equal parity with all other Full Supply Commitments, and with a guaranteed priority no lower than for any other Supply Commitment made by Cascade provided that no Member is guaranteed any given amount of supply or capacity "Interruptible Supply Commitment" means a supply of all or part of a Member's water needs from the Supply System on an as- available bans on a. lower priority than any Full Supply Commitment The Supply Commitment for a Member shall be defined by this lnterlocal Contact, the terms and conditions of membership and the Supply Commitment resolution "Supply System" means the Water Supply Assets owned or controlled by Cascade "Water Supply Assets" means tangible and intangible assets usable in connection with the provision of water supply including without limitation, real property physical facilities (e g dams, wells, treatment plants, pump stations, reservoirs, and transmission lines) water rights capacity and /or contractual rights in facilities or resources owned by other entities, and investments in conservation programs and facilities "Watershed Management Plan" means a plan adopted by Cascade for purposes of regional water supply water transmission, water quality or protection, or any other water related purpose, including but not limited to the plans identified in RCW 39 34 190 (3) "Water Supply Plan" means the Cascade Regional Water Supply Plan (which may include the Cascade Watershed Management Plan) adopted by the Board as provided in Section 8 l and 82 "Weighted Vote" means a vote in which each Member s vote is counted according to the Member s Demand Share, but no Member shall have a Weighted Vote of less than one Cascade hderlocal Contract 4 /Amended and Restated December 15 2004 ARTICLE 3. Formation of Entity, Purpose and Powers Section 3 I Formation. The Cascade Water Alliance was created on April 1 1999 as a public body and an instrumentalrtN of Its Members, which exercises essential governmental functions on its Members' behalf as authorized by the Interlocal Cooperation Act (RCW 39 34) Cascade is incorporated under RCW 39 34 040(3) as a public nonprofit corporation in the manner set forth in RCW 24 03 or 24 06 and it may, with Board approval, be incorporated as a partnership in the manner set forth in RCW 25 04 or the Board may organize the form of Cascade in any other manner permitted by law In addition to its status under any other applicable law Cascade shall constitute a watershed management partnership as provided in Chapter 39 34 RCW The Board may approve the filing of Articles of Incorporation or similar documents in connection with incorporating Cascade or organizing it in some other manner Section 3.2 Membership. Subject to restrictions on future Cascade water rights, or to limitations upon water's place of use imposed by contract or permit, any municipal water utility serving within the Central Puget Sound Re=gion may be admitted to Cascade The decision to admit new Members rests with the sole discretion of the Board, which shall determine whether to extend a membership offer taking into consideration the audit findings, Cascade water resources, and any other factors the Board deems advisable When a municipality applies for membership Cascade shall conduct a water supply audit according to the methodology and within the period determined by the Board. Audit results shall be provided to the Board and to the applicant If a membership offer is extended, it shall address the nature of the Water Supply Assets being transferred or retailed and the "value" of those assets in terms of the calculation of an C arcade Interlocal Contract Amended and Restated December 15 20011 applicant s Demand Share, RCFCs and other matters relating to the rights and obligations of the applicant and Cascade which must be recorded In the form that the Board determines and which will constitute along with this Contract, the conditions under which an applicant becomes a Member of Cascade An applicant for membership shall be admitted by adoption of a Resolution of the Board accepting the application for membership and incorporating the terms and conditions of membership Each membership application must be accompanied by a nonrefundable application fee based on the cost of the audit and other costs related to the admission of a new Member or a request for new supply The Board shall set the application fee for each applicant based on the estimated cost of processing the application, Including the cost of the audit As a condition of membership each new Member admitted to Cascade shall, in addition to any other applicable fees, rates, charges or assessments, pay to Cascade the membership fee, as established by the Board If an applicant s planning process or plans are materially out of compliance with the requirements of the Growth Management Act, the Board may condition an offer of membership upon the applicant s compliance with that act Section 3.3 Conversion to Municipal Corporation Status. In accordance with section i o 4 Cascade may be converted into a separate municipal corporation if and as permitted by law Upon the creation of such a separate municipal corporation, all Cascade rights and hl,gations and all Member rights and obligations under this Contract shall transfer to that new munictpai corporation Cascade Intcrlocal Contract 4- Amcnded and Resiatc' Dece>> bcr Section 3.4 Purposes. Cascade s purposes include only those related to water resources, and do not include the provision of other general services to the public, and are to a. provide a safe, reliable and high quality drinking water supply to meet the current and projected demands of Cascade Members serving the Central Puget Sound Region, and for Non Members as determined by Cascade, and to carry out this task in a coordinated, cost effective, and environmentally sensitive manner b develop contract for manage acquire, own, maintain and operate Water Supply Assets, including without limitation, surface water supplies, groundwater supplies, i eclaimed water supplies, and other water supply resources as determined by the Board, contract with Seattle to transfer to Cascade and to modify Seattle's rights and duties with respect to Seattle Contract Purveyors, d contract for or assume certain contractual rights and duties related to the Tacoma Second Supply Pipeline project; purchase and provide water supply transmission services, treatment facilities and other related services, provide conservation programs to promote the wise and efficient use of resources, g carry out emergency water supply and shortage management programs for its Members when demands exceed available supply h. coordinate and plan cooperatively with other regional or local water utilities and other entities to maximize supply availability and to minimize system costs, develop a Water Supply Plan addressing the needs of its Members and develop a Watershed Management Plan serving the needs of its Members and Cascade itself and-develop a regional water supply plan with other water providers as Cascade may find convenient or necessary to meet regional, state and federal planning requirements, and to take a leadership role in developing and coordinating those supply plans, share costs and risks among Members commensurate with benefits received, and k carry out, or to further other water supply purposes that the Members determine, consistent with the provisions of this Contract Cascade Interlocal Contract 4- Amended and Restated December 15 2004 Section 3.5 Powers. To further Its purposes, Cascade has the full power and authority to exercise all powers authorized or permitted under RCW 39 34 and any other laws that are now or In the future may be, applicable or available to Cascade and to engage in all activities inctdentai or conducive to the attainment of the purposes set forth in Section 3 4 of this Contract, including but not limited to the authority to a. acquire, construct, receive, own, manage, lease and sell real property personal property intangible property and other Water Supply Assets, b operate and maintain facilities c enter into contracts, d hire and fire personnel, e sue and be sued, f exercise the power of eminent domain (through its Members at their individual discretion, unless and until Cascade has that power under applicable law) g. impose, alter regulate, control and collect rates, charges, and assessments, h purchase and sell water and services within and outside the geographical boundaries of Its Members, borrow money (through Its Members or other entities at their Individual discretion or as authorized by Chapter 39 34 RCW now or In the future) or enter into other financing arrangements, lend money or provide services or facilities to any Member other governmental water utilities, or governmental service providers, k invest its funds, establish policies, guidelines, or regulations to carry out its powers and responsibilities, in purchase insurance, Including participation In pooled insurance and self insurance programs, and Indemnify its Members, officers and employees In accordance with law n exercise all other powers within the authority of and that may be exercised Cascade Interloeal Contract 10- Amended and Restated December 15 2004 individually by all of its Members with respect to water supply, conservation, reuse treatment and transmission, or any of the other purposes set forth in Section 34 o exercise all other powers within the authority of, and that may be exercised individually by all its Members with respect to watershed planning and management and_ p exercise all other corporate powers that Cascade may exercise under the law relating to its formation and that are not inconsistent with this Interlocal Contract or with Chapter 39 34 RC'W or other applicable law ARTICLE 4 Organization Structure; Board Section 4 1 Composition, Bylaws and Meetings. Cascade is governed by a Board of Directors consisting of one individual representative appointed by Resolution of the Member s legislative authority Members may similarly appoint Alternate Board Members. Each Board Member and each Alternate Board Member must be an elected official of the Member The Board shall adopt B} La-vk;s consistent with this Interlocal Contract that specify, among other matters, the month of Cascade s Annual Meeting, Board powers and duties and those of the Executive Committee, Standing Committees, Officers and employees The Board shall meet as required by the Bylaws, but no less than quarterly Section 4.2 Powers of the Board. The Board has the power to take all actions on Cascade's behalf in accordance with voting provisions set forth in Section 4 3 The Board may delegate to the Executive Committee or to specific Cascade Officers or employees any action that does not require Board approval under this Contract Section 4.3 Voting. All Board actions must be approved by Dual Majority Vote of all Members, except where this Contract requires either a 65% Dual Majority Vote, as provided in Sections 5 2 5 5 7 1 7 3 8 3 10 3 10 4 and Article 11 or ratification by the Members Cascade Interlocal Contract 1 i Amended and Restated December 15 2004 legislative authority as provided in Section 10 4 and Article I l The Board may act by voice votes, as set forth in the Bylaws Any Member may require a recorded tabulation of votes either before or immediately after a voice vote is taken. Although voting is, in part, based on Weighted Vote, the Members expressly agree that there is only one class of voting membership and voting occurs within that single class Any Member that has been declared to be in default of its obligations under this Interlocal Contract by the Board shall lose its right to vote until the Board has declared the default to be cured Section 4 4 Officers and (:ommittees. Cascade Officers shall include a Chair a Vice Chair a Secretary and a Treasurer The Chair serves as the chair of the Board (and may be known as the "President" if the Bylaws so designate) and performs those duties set forth in the Bylaws The Vice Chair shall perform the duties of the Chair in the Chair' s absence and shall perform other duties as set forth in the Bylaws The Secretary shall be responsible for Cascade records and performs other duties as set forth in the Bylsaws The Treasurer shall be responsible for Cascade accounts and financial records and performs other duties as set forth in the ByLaws Consistent with the provisions of this Contract, the Board may in the ByLaws, establish additional Officers and set forth their duties The Board may create and appoint Members to Standing Committees and special committees as it deems appropriate Committee Members need not be elected officials or employees of Members, but Standing Committee Chairs must be Board Members or Alternate Board Members Cascade lnterlocal Contract 12 Amended and Restated December 15 2004 Section 4.5 Executive Committee. The Chair Vice Chair Secretary Treasurer and chairpersons of Standing Committees together constitute Cascade's Executive Committee The Chair (or acting Chair) shall vote on matters before the Executive Committee only if necessary to break a tie The Executive Committee s duties and responsibilities are set forth in the ByLaws The Executive Committee shall not have the power to a. approve any contract for a term longer than three years b approve any contract involving expenditure by or revenue to Cascade in excess of such amounts and under such circumstances as set forth in the ByLaws c retain or dismiss the chief executive officer or determine the chief executive officer's compensation, or d take any actions expressly reserved to the Board by this Contract or the ByLaws The Executive Committee shall have the authority if necessary to avoid default on any Bond, to withdraw from any capital reserve fund or rate stabilization fund, an amount equal to the amount necessary to avoid a default and to authorize payment of that amount to avoid default Section 4.6 Staff, Consultants and Contractors. Cascade staff shall consist of a chief executive officer and other positions established by the Board The Board shall appoint, designate the title of, and establish the compensation range of the chief executive officer The Board shall hire or retain legal counsel and independent accountants and auditors for Cascade The authority to hire other consultants may be delegated to the Executive Committee The chief executive officer appoints persons to fill other staff positions, and those appointments may be subject to ratification by the Board or the Executive Committee if the ByLaws so provide The Board may also provide that administrative professional or technical services be performed by contract Cascade Interlocal Contract I Amended and Restated December 15 2004 Section 4 7 Budget; Dues, Financial Management. The Board must approve an annual budget determining Cascade s revenues and expenditures no later that sixty (60) days before the beginning of the fiscal year In which that budget will be In effect The budget will be developed and approved according to a schedule established by the Bylaws The budget must Identify the levels of Member Charges on which revenue projections are based The Board may amend the budget Each Member must pay annual dues to defray part of Cascade s administrative costs based on the number of CERUs served by Its water system, regardless of water usage or capacity and regardless of whether those units are served by the Supply System or by Independent Supply Total dues collected from all Members may not exceed the greater of $1 000 000 00 or 5% of Cascade s annual revenue requirement, less debt service The Board may establish minimum annual dues per Member and may provide that less than a.11 of Member's CERUs be taken into account In establishing dues All Cascade books and records shall be open to Inspection by the Washington State Auditor ARTICLE 5. Asset Development and Supply Commitment Section 5.1 Property Acquisition, Ownership and Disposition. Cascade may construct purchase rent, lease, manage, contract for or otherwise acquire and dispose of Water Supply Assets and other assets Cascade may control and manage both the assets It owns and the assets that are owned by Members that. have transferred control and management of those assets to Cascade This Contract does not vest in Cascade any authority with respect to Members' other facilities or assets, such as Water Supply Assets retained by Members as Independent Supply C arcade Interlocal Contract 14- Amended and Restated December 15 2004 Sul�lect to Cascade s agreement, a Member may transfer to Cascade its title to or operational control and management of kkater Supply Assets. Water Supply Assets may also be fully retained by Members as Independent Supply subject to the provisions of Article 6 At the discretion of the Board, Cascade may accept title to or operational control and management of Water Supply Assets offered by Members or accept supply assets that constitute all or part of a Member's Satellite System(s) The Board may accept supply assets subject to the terms and conditions arranged between Cascade and the Member based on the result of the audit process and mutual needs Cascade may enter into Asset Transfer Agreements which shall provide for the terms and conditions of (a) Cascade s operation of the transferred Water Supply Asset with respect to the Member transferring the asset, (b) Cascade s operation, maintenance and replacement of the Water Supply Asset as part of the Supply System, (c) return or disposition of the Water Supply Asset if Cascade terminates its existence or the Member withdraws, (d) continuation of service (if appropriate) to Members or former Members by the Member receiving the Water Supply Asset at reasonable rates and charges or payment to Cascade of the cost of replacing the Water Supply Asset and (e) such other conditions as the Board and the Member agree upon. Members shall not be deemed to hold legal ownership rights in any Water Supply Assets owned by Cascade, whether those Water Supply Assets have been developed by, purchased by or transferred to Cascade, and regardless of the accounting treatment of RCFC payments and other payments made to Cascade Section 5.2 Supply Commitment Cascade Interloca! Contract 15- \mended and Restated December 15 2004 Section 5.2.1 Commitment to Members. Beginning on the Cascade Supply Date Cascade shall provide a. Full Supply Commitment to each Founding Member Thereafter Cascade shall provide a Full Supply Commitment to meet all current and future water supply needs of a Member that joins with Water Supply Assets sufficient to provide for its needs during the following fifteen (15) years (whether or not those Water Supply Assets are transferred to Cascade or retained as independent Supply) commencing on the Member's Cascade Supply Date When a supply contract is negotiated with Seattle, any Member that is a Seattle Contract Purveyor shall relinquish its rights under its Seattle Water Purveyor Contract to Cascade and execute such documents as may be necessary to transfer those rights to Cascade Cascade shall accept. those rights and a corresponding obligation to provide a Full Supply Commitment (net of Independent Supply) The approval of a contract with the City of Seattle providing for the initial acquisition of rights to substantial Water Supply Assets, and any material amendment to that contract, shall be effective upon a 65% Dual Majority Vote Any Full Supply Commitment shall be subject to water shortages, to Cascade s ability to implement the Water Supply Plan, and to the portion of the Member's needs that can be served by the audited capacity of its Independent Supply If the needed supply is not available, the shortage shall be shared by all the Members in accordance with Cascade s shortage management plan, except as otherwise provided in Section 5 5 Cascade is not obligated to provide water supply to service area expansions in or outside the urban growth boundary unless Cascade agrees to such expanded service area. However Cascade shall be obligated to provide water supply to the entire service area of each Member (as that service area is defined in terms under which the Member was admitted) whether or not some of that service area is within the Member s current C aseade interkwal C oniract 16- Amended and Restated December 15 2004 jurisdictional boundaries and /or within the current urban growth boundary Cascade is not obligated to provide increased water supply to any Member if it is determined that the Member's planning process or plans are materially out of compliance with the requirements of the Growth Management Act A Member that joins with Water Supply Assets insufficient to provide for its needs for fifteen (15) years receives the Full Supply it desires only if, when, and to the extent it is available within reliability standards determined by Cascade s system reliability methodology If sufficient Full Supply is not available within reliability standards determined by Cascade s system reliability methodology the Member receives partial Full or Interruptible Supply and Full Supply must be provided within fifteen (15) years Cascade shall then undertake to include in Cascade's Water Supply Plan, and to acquire the facilities or other assets necessary in the Board's determination to provide for that deficit. If Cascade fails to develop sufficient assets to timely provide the increased Full Supply the commitment becomes a Full Supply Commitment at the end of that fifteen- (15) year period, and any shortage shall be shared by all Members in accordance with Cascade's shortage management plan. If multiple Members request new Full Supply requests must be honored in the order received (i e in the order in which application is made accompanied by the application fee) With respect to new Members, requests for Full Supply "vest" no earlier than the date that membership is effective In cases of conflict or ambiguity the Board may determine the order of requests Section 5.2.2 Additional Rules for Members Retaining Independent Supply Whenever Cascade has a Supply Commitment to a Member that retains Independent Supply Cascade shall provide Full Supply for all of that Member s water supply needs minus the amount Cascade him Contract 17 Amended and Restated December 15 2004 of water that an audit determines may be provided by that Member s Independent Supply Members are not required to share shortages resulting from the loss of all or part of independent Supply although Cascade may make Interruptible Supply available to a Member that loses Independent Supply at prices that are consistent with the price of Interruptible Supply being made available to others at that time Cascade may at any time and at Its cost and expense carry out audits of a Member s Independent Supply A Member requesting an additional Full Supply Commitment due to loss of Independent Supply shall make that request by Resolution of the requesting Member s legislative authority When and as determined by the Board, the Member shall pay an amount equal to the RCFCs allocable to the number of CERUs that can be served by the replacement supply provided or to be provided by Cascade Cascade shall then Include the supply in Its Water Supply Plan, and provide the supply when it becomes available, but in any event within fifteen (15) years If, within fifteen (15) years the supply is not available, Cascade's commitment becomes a Full Supply Commitment and any shortage with respect to that supply must be shared by all the Members in accordance with the Shortage Management Plan, except as otherwise provided in Section 7 3 Section 5.2.3 Additional Rules for Source Exchange. The Board may at its sole discretion, authorize a Cascade Source Exchange Program Agreement with a Member or Non- Member The terms and conditions of a Cascade Source Exchange Program Agreement shall be developed from a source exchange proposal submitted to the Board. The agreement shall identify (a.) the water right (instantaneous and annual) to be augmented or replaced, (b) the Water Supply Assets to be utilized, (c) mechanisms and arrangements for delivery of regional water (d) characteristics of supply obligation (for example, peak and average quantities, seasonal or annual C aseade Interincal Contract is- Amended and Restated December IS 2004 delivery duration, interruptibility and shortage management) (e) reporting requirements, (f) changes in operation needed to benefit stream flow and fish, (g) rates and charges, and (h) such other conditions as the Board and the Member or public water supplier agree upon. The agreement may or may not provide for adjustments to a Member's RCFC payments or credits and whether or not the source exchange is a loss of a Member's Independent Supply that would be subject to the provisions of Section 5 12 Section 5.3 Financing of Assets. The acquisition of new capital facilities and other Water Supply Assets may be financed using RCFCs, transfers of Water Supply Assets, Rates and Charges, the issuance of revenue Bonds and such other sources as the Board may deem appropriate Section 5.3 1 Issuance of Bonds An Authorized Issuer may issue Bonds payable from and secured solely by all or a portion of Net Cascade Revenue, evidencing indebtedness up to an amount approved by Resolution of the Board in order to provide financing or refinancing to acquire, construct, receive own, manage, lease or sell real property personal property intangible property and other Water Supply Assets, to establish debt service reserves, to provide for capitalized interest and to pay the costs of issuance of and other costs related to the issuance of the Bonds Such Bonds shall be payable solely from all or a portion of the Net Cascade Revenue or (if the Authorized Issuer is other than Cascade) from payments to be made by Cascade out of all or a portion of Net Cascade Revenue and such Bonds shall not pledge the full faith and credit or taxing power or except as expressly provided by contract, the revenue, assets or funds of any Member Members serving as Authorized Issuers may conduct the financing through "separate Cascade Interlocal Contract 1 Amended and Restated December 15 2004 systems" permitted by their applicable bond resolutions, or in some other appropriate manner and Cascade may compensate those Members for all costs associated with the financing. Bond- related documents of Authorized Issuers other than Cascade must expressly permit the Bonds to be refunded or prepaid without penalty prior to their stated maturity on and after such dates as are approved by the Authorized Issuer and the Board, to allow for a transfer of the obligation to Cascade or to Cascade's successor entity including without limitation a point operating agency or similar entity as may be permitted by law Section 5.3.2 Pledge of Revenues. For as long as any Bonds payable from Net Cascade Revenue (or any portion thereof) are outstanding, Cascade irrevocably pledges to establish, maintain and collect all Member Charges in amounts sufficient to pay when due the principal of and interest on the Bonds (and if the Authorized Issuer is other than Cascade in addition to the foregoing pledge to pledge to make timely payments to that Authorized Issuer for the payment of principal of and interest on the Bonds) together with amounts sufficient to satisfy all debt service reserve requirements, debt service coverage requirements, and other covenants with respect to the Bonds Each Member hereby irrevocably covenants that it shall establish, maintain and collect rates, fees or other charges for water and other services, facilities and commodities related to the water supply it receives from Cascade and /or its water utility at levels adequate to provide revenues sufficient to enable the Member to (a) make the payments required to be made under this Contract, and (b) pay or provide for payment of all other charges and obligations payable from or constituting a charge or lien upon such revenues Each Member hereby acknowledges that this covenant and its covenant in Section 7 9 of this Contract may be relied upon by Bond Cascade ]nterlocal Conlract ?t)- Amended and Restated December 15 2004 owners. consistent with this Contract Each Member shall pay the Member Charges imposed on it whether or not the Water Supply Assets to be financed through the issuance of Bonds are completed, operable or operating, and notwithstanding the suspension, interruption, interference, reduction or curtailment in the operation of any Water Supply Assets for any reason whatsoever in whole or in part Member Charges shall not be subject to any reduction, whether by offset or otherwise, and shall not be conditioned upon the performance or nonperformance of any Member or of any entity under this or any other agreement or instrument However credits against future RCFCs and Rates and Charges described in Sections 5 5 and 7 5 respectively for development or addition of excess capacity that is either transferred to Cascade or retained as Independent Supply shall not be considered offsets" or "reductions for the purposes of this Section. If in connection with the issuance of obligations, any Member establishes a new lien position on revenues relating to its water utility that Member shall covenant in the relevant documents that the amounts to be paid to Cascade as Member Charges shall be treated either (a) as part of that Member s internal operation and maintenance costs payable prior to debt service on those obligations and /or (b) for any portion of those Member Charges that is allocable to capital costs, as a contract resource obligation payable prior to debt service on those obligations If any Member has existing outstanding revenue obligations relating to its water utility it shall include substantially similar "springing covenants in the documents relating to any new parity obligations Section 5.3.3 Continuing Disclosure. 'To meet the requirements of United States Securities and Exchange Commission "SEC Rule I5c2- 12(b)(5) (the "Rule as applicable to a Cascade lnterlocal Contract 23 Amended and Restated December 15 2004 participating underwriter for any Bonds and any obligation of each Member as an "Obligated Person under the Rule, Cascade and each Member agree to make an appropriate written undertaking, respectively for the benefit of holders of the Bonds consistent with the requirements of the Rule Section 5.3 4 Preservation of Tax Exemption for Interest on the Bonds. Each Member covenants that it will take all actions necessary to prevent Interest on tax exempt Bonds from bean- included in gross Income for federal income tax purposes, and It will neither take any action nor make or permit any use of proceeds of tax- exempt Bonds or other funds treated as proceeds of those Bonds at any time during the term of those Bonds that will cause interest on those Bonds to be included in gross income for federal income tax purposes Section 5.3.5 Additional Certificates. Each Member further agrees to provide such certificates or verifications as are reasonably requested by an Authorized Issuer in connection with the issuance of Bonds under this Section Section 5.4 Supply Expansions and System Extensions. Cascade must provide for Supply System expansions and extensions to meet the needs of additional water customers of Members, subject to consistency with applicable growth management plans and comprehensive plans, Cascade s water supply plan, orderly asset development reasonable cost and financing capacity The Board shall establish a water supply development process, including criteria governing the evaluation of new projects, and that process must promote equality of costs and services (other than direct local services) regardless of geographic location The results of the water supply planning process must be retlected in Cascade s Water Supply Plan The Board shall have the authority to undertake new projects identified in Cascade s Water Supply Plan for the Cascade Interlocal C ontracl 22 /Amended and Restated December 15 2004 expansion of Water Supply Assets and regional transmission system extensions to meet Members' projected needs. To reduce costs, Cascade may to the extent that the Board deems advisable, enter into agreements with Members to wheel water through their existing systems. When facilities are constructed that are used partially by Cascade for wheeling water and partially by Members or other entities for their purposes, the Board may determine an appropriate Cascade contribution to the cost of those facilities Existing arrangements among Members (and between Members and Non Members) in place when a Member_joins Cascade, remain unaffected except as otherwise agreed between Cascade and the other entities concerned. Section 5.5 Regional Capital Facilities Charges. To allocate growth costs to those Members that require capacity increases, each Member shall pay to Cascade an RCFC for each new CERU connected to its water distribution system. Growth in water usage by existing CERUs is not subject to RCFCs sinless that growth constitutes a CERU increase as provided in the RCFC Methodology Members with a supply deficit must pay an RCFC commensurate with that deficit To the extent that a Member transfers to Cascade or retains as Independent Supply water supply in excess of its needs, it receives a corresponding credit against future RCFCs Subject to the provisions of Section 5.2 2, a Founding Member pays no RCFCs with respect to the number of CERUs served as of January 31 2003 or other such later date as determined by Resolution of the Board. A new Member with adequate supply shall commence paying RCFCs fifteen (15) years prior to the date that its Water Supply Assets are projected to be insufficient to provide for its needs as determined by the Board (taking into consideration the results of the Water Supply Audit) Cascade lnlerlocal C ontract 23- Anicndcd and Restated December 15 2004 A Member that loins with Water Supply Assets that are projected to be insufficient to provide for its needs for fifteen (1.5) years shall immediately pay RCFCs for the number of CERUs representing the deficit as determined by the Board. RCFCs shall be calculated according to the RCFC Methodology which shall define the analytical steps required to calculate the RCFCs according to the greater of (a) the incremental difference between the average unit cost of expanding the system (i.e the marginal cost of new capacity) and the average unit cost of the existing system, or (b) the average unit cost of past construction of the existing system plus then planned Supply System improvements. The methodology shall provide for an annual escalator recalculation and update not less frequently than every fifth year and a methodology for determining CERUs The RCFCs shall be imposed on the Member for each new CERU of that Member in accordance with the terms of this Contract Amendments to the RCFC Methodology shall require a 65% Dual Majority Vote If a Founding Member owns Water Supply Assets or transfers Water Supply Assets to Cascade under Section 5 1 to the extent the audited capacity of those assets (including Seattle Contract Purveyor rights) exceeds the Member's needs, that Member shall receive a credit against future RCFCs If a. Member seeks to transfer assets substantially in excess of its foreseeable needs, Cascade may negotiate appropriate compensation arrangements for the transfer Members that develop new Independent Supply that is approved by the Board in accordance with Article 6 similarly receive a credit effective when the Independent Supply is placed in service as determined by the Board A Member that accepts ownership of a Satellite System that Cascade agrees to serve shall pay an RCFC for the amount of supply needed to serve that system in excess of its rated capacity C arcade )nterlocal C ontracl 2 1- Amended and Restated December 15 2004 Members that experience a net reduction in the number of CERUs served shall receive a CERU- far -CERU credit against future RCFCs. RCFC credits may not be transferred among Members without Board approval Members shall not be required to pass RCFCs to their customers as capital facilities charges, but may provide for the payment of RCFCs in whatever manner they deem appropriate For Members joining with an unmet net supply need. Cascade may under circumstances determined by the Board, require the prepayment of RCFCs allocable to the full amount of the requested supply i.e when funds are needed to begin the construction of facilities immediately Section 5.6 Transfer upon Mergers, Consolidations and Assumptions. If (a) two or more Members merge or consolidate, (b) a Member or a Non Member assumes jurisdiction of part or all of a Member or (c) a Member assumes jurisdiction of part or all of a Non Member the jurisdictions' water supply rights fi and obligations to Cascade must be transferred or assumed under applicable law and consistent with the requirements of this Contract and the obligations of Cascade ARTICLE G. New Independent Supply Members may not bring new Water Supply Assets on -line as Independent Supply without Board approval. That approval may be granted or denied following an evaluation process, based on whether the Board determines that development of the proposed Independent Supply will benefit or be adverse to the interests of the Members as a whole Recognizing that in certain circumstances the acquisition of additional Independent Supply might benefit (or cause no material harm to) the Members new supplies under one (1) MGD may be approved by the Board regardless of the provisions of the Water Supply Plan and without a formal evaluation process Cascade lnterlocal Contract 25- Amended and Restated December 15 2004 New supplies in amounts greater than one (1) MGD must be described in and be consistent with the Water Supply Plan Members that have invested in the development of new Independent Supply assets may offer to sell their interest in such assets to Cascade Cascade may in its sole discretion and subject to mutually agreeable terms and conditions, purchase the Member s interest in such Independent Supply asset by reimbursing or otherwise compensating the Member for its investment in the project to the extent that investment has been capitalized. Once Cascade has purchased a Member s interest in a project, the project will be considered a. Water Supply Asset of Cascade and be incorporated into the Water Supply Plan. ARTICLE 7 Asset Management Section 7 1 Supply System Management. Cascade is responsible for managing, on behalf of all Members, the Supply System Cascade is not responsible for managing Independent Supply unless it has expressly agreed to do so Supply System management responsibilities shall be governed by Cascade s system management plan adopted by the Board Cascade s system management plan concerns, without limitation, matters such as daily system operations and maintenance, interface with other supply providers, contractual obligations, water quality billing, management and administration Cascade may delegate and /or contract out its Supply System responsibilities Cascade must manage the Supply System in compliance with applicable laws, regulations and Cascade s minimum service standards Adoption and amendments to the minimum service standards shall require a 65% Dual Majority Vote C aseade inicriocal Conlract It Amended and }gestated December 1 Section 7.2 Conservation. Cascade shall develop and carry out, and Members must participate in, water conservation programs that are uniforin among Members The Board shall develop and implement a Cascade conservation management plan that provides a mandatory base conservation program that functions to reduce both average and peak demands and may establish a charge or assessment to fund development and implementation of the program. Members may implement additional conservation programs The Board may adopt wholesale charges in addition to normal Demand Share charges to encourage resource conservation. The Board may also provide or contribute to additional local conservation programs that are not offered to all Members, and these local programs may be locally funded or funded by Cascade Members that fail to comply with base programs as set forth in Cascade s conservation management plan may be required to assume a disproportionate reduction to water supply or to pay penalty charges, or both. Section 7 3 Shortages and Emergency Section 7 3 1 Shortages. Members must respond to water shortages in a collective shared fashion under a Cascade shortage management plan adopted by the Board Resources must be shared in a manner that reduces the risk of severe shortages to each Member Cascade's shortage management plan may include without limitation, a definition and classification of shortages, a shortage contingency plan including mandatory programmatic actions among all Members in the event of shortages, allocation of authority for determimng and responding to shortages, and a communications and outreach program for the public Members shall not be required to implement Cascade s shortage management plan in areas not served by the Supply System. Cascade Interlocal Contract 27 Amended and Restated December 1 S 2004 In the event of shortages, Cascade shall reduce or halt Interruptible Supply before invoking the Shortage Management Plan with respect to all Members with a Full Supply Commitment However the Board may by 65% Dual Majorlty Vote, continue service in the amounts it deems appropriate to one or more Members receiving Interruptible Supply The Board may require that Members failing to comply with mandatory shortage management programs implemented under Cascade s shortage management plan assume a disproportionate reduction to supply or pay penalty charges, or both In the event of a Cascade -wade water shortage Members with Independent Supply may without penalty decline to participate in the shortage management program for that shortage by foregoing all supply from Cascade for the duration of the emergency or shortage To avoid shortages resulting from emergencies or the inability to develop sufficient supplies, the Board may by 6.5% Dual Majority Vote, establish moratoria on connections or additional commitments for future water services by the Members A moratorium may be discontinued by a Dual Majority Vote of the Board Section 7 3.2. Emergency The Board shall include in Cascade s shortage management plan policies and procedures for addressing short-term disruptions of water supply transmission or water quality and it may delegate to the General Manager authority to address such disruptions according to such policies and procedures. Section 7 4 Water Quality Cascade shall be responsible for water quality that meets or exceeds all federal or state requirements at the point of delivery from Cascade to the Member consistent with applicable laws and regulations Cascade assumes source water quality responsibility and liability with respect to Water Supply Assets under its ownership or control Cascade Jnierlocal Contract 'R- Amended and Restaled December 15 2004 (including water wheeled to a Member through another Member s facilities) Cascade is also responsible for preparing and carrying out water quality activities compatible with the water quality requirements of regional water suppliers integrated with Cascade's system (e g. Tacoma, Everett and Seattle) Cascade may in its sole discretion, determine and adjust the appropriate method and level of treatment of water that it supplies, so long as that water meets applicable state and federal requirements If water that it supplies meets those requirements, Cascade shall not be obligated to adjust the method or level of treatment so that the water can be more readily blended with a Member's Independent Supply or more readily transmitted through a Member's internal system Each Member shall remain responsible for water quality within its respective distribution system, assuming that adequate water supply quality is provided by Cascade at the point of delivery from Cascade Each Member shall be responsible for all costs related to making water supplied by Cascade compatible with that Member's internal system, including but not limited to costs of additional treatment Section 7.5 Water Supply Rates and Charges. The Board shall set Rates and Charges according to a Rate Calculation Methodology adopted from time to time by the Board. The Rate Calculation Methodology for Members' Supply Commitment shall provide for the definition and calculation of Demand Shares and for a uniform pricing structure with a commodity charge and fixed charges allocated by Demand Share Cascade may sell water to a Non- Member under terms and conditions established by the Board. The terms and conditions shall not be more favorable than the terms and conditions under Cascade Interlocal Contract )9- Amended and Restated December 15 2004 which water is sold to Members Revenue received from the sale of water to Non- Members shall be used to offset or reduce Rates and Charges to Members to the extent practicable except that such revenue need not be treated as reducing or offsetting those amounts that are necessary for the payment of debt service on Bonds and for the provision of reserve and coverage requirements for the Bonds A Member shall be assigned a Demand Share based on the Board s best estimate of capacity to be used by that Member Initially the Board may base Its estimate on a Seattle Contract Purveyor's use of water from Seattle For a Member that loins without a supply history as a Seattle Contract Purveyor or for a Member that has received only part of its water from Seattle, the Demand Share shall be established based on an audit of that Member s past three (3) years of water use After three (3) years as a Member the baseline demand and capacity obligation for that Member shall be fixed based on actual experience as a Member Specific Demand Shares may be set by the Board to account for circumstances, such as (by way of example and not by limitation) costs of extending the Supply System to a Member or when Independent Supplies affect regional demand patterns. When water supply from Cascade is wheeled through a Member to another Member Cascade may presume that the first Member receiving the water is the "User" for calculation of Demand Shares unless the Members concerned instruct Cascade to use a different allocation. Rate credits for Water Supply Asset transfers are not deducted in the calculation of Demand Shares but are applied to reduce what a Member would otherwise pay The Board must set Member Charges at levels it determines to be sufficient, together with other available revenue sources, to provide adequately for Operation and Maintenance Costs, Cascade Interlocal Contract ,0- Amended and Restated December 15 2004 Bond debt service, coverage and other covenants, replacement and renewal of facilities, reserves and other costs that the Board deems appropriate The Board may provide that a Member's failure to participate in the planning process may result in penalty charges A Member that has transferred Water Supply Assets shall receive a credit, determined when those assets are audited and transferred, based on the useful life of those facilities and on the Member's use of the water produced by those assets or an amount of water equivalent to the amount of supply from them. The Board may implement wholesale charges (additional to Demand Share -based charges and variable commodity charges) to reduce extreme peak use (e g. "peaking -off of the pipe Water Rates and Charges must be the same for all Members receiving the same class of service (subject to credits, surcharges and penalty charges) Section 7 6 New Water Surcharge, A new water surcharge of $0 75 per 100 cubic feet (cct) shall be imposed, effective on the Cascade Supply Date and continue through December i 1 2011 It shall be applicable to all water purchased by Members over and above each Member's Old Water Allowance in the Seattle Purveyor Contract, if applicable, or to all water purchased by non Seattle Purveyor Members New water surcharge revenues shall be used to offset or reduce Rates and Charges to Members to the extent practicable, except that such revenue need not be treated as reducing or offsetting those amounts that are necessary for payment of debt service on Bonds and for the provision of reserve and coverage requirements for the Bonds Section 7 7 Franchises and Easements. Except to the extent otherwise required by state law each Member shall provide franchises and rights of way on, under or across that Cascade Literlocal Contract 31 Amended and Restated December 15 2004 Member s streets or other property to Cascade and to other Members for Water Supply Assets, without charging any fees, rent or charges other than the customary and usual right -of -way permit and inspection fees Section 7.8 Sales of Water to Non Members. Unless approved by the Board, a Member shall not sell water including source exchange water supplied by Cascade, nor shall a Member sell Independent Supply offset by water supplied by Cascade to a Non Member Notwithstanding the foregoing, any Member may sell water supplied by Cascade to a Non- Member to the extent required by a contract in effect as of the date the Member loins Cascade Section 7 9 Payment Procedures, Default; Step -Up Provisions. Section 7 9 1 Invoice and Payment. (a) Cascade shall provide each Member with periodic invoices• showing the Member Charges payable by that Member for the billing period and the due date Invoices shall be provided monthly or on other such periodic schedule as determined by the Board, but no more frequently than monthly nor less frequently than once every six months The Board will determine a due date for all invoices (b) Payment of any and all invoices shall be due and payable on or before the due date and shall be made by wire transfer or such other means as are agreed to by Cascade and the Member If a treasurer trustee, fiscal agent or escrow agent is appointed in connection with the issuance of Bonds, Cascade may require, and specify on the invoice, that certain amounts be provided directly to that person or entity and the Member shall pay those amounts in the manner and to the person so specified. Cascade Interlocal Contract �2 Amended and Restated December 15 2004 (c) If full payment of any invoice is not received on or before the due date, such payment shall be considered past due and a late payment charge shall accrue for each day that the invoice remains unpaid. The late payment charge shall equal the product of the unpaid amount and an interest rate established by the Board Late payment charges shall continue to accumulate until the unpaid amount of the invoice and all late payment charges are paid in full. Further if an invoice or any portion thereof remains unpaid for more than sixty (60) days after the due date, Cascade may pursue any legally available remedy at law or equity for the unpaid amount, including without limitation, specific performance and collection of the late payment charge Cascade's right to enforce payments in this regard. may be assigned to a treasurer trustee, credit enhancement provider or other entity Furthermore, upon written notice, Cascade may reduce or suspend delivery of water until the invoice and late payment charges are paid. (d) If any Member disputes all or any portion of an invoice, it shall notify Cascade immediately upon receipt If Cascade does not concur the Member shall remit payment of the invoice in full, accompanied by written notice to Cascade indicating the portions of the invoice that the Member disputes and the reasons for the dispute The Member and Cascade shall make a good faith effort to resolve such dispute If the Member fails to remit payment of the invoice in full pending resolution of the dispute, the prevailing party in an action relating to the collection of that invoice shall be entitled to reasonable attorney fees and costs. Section 7.9.2 Default and Step -Up. (a) If any Member fails to make any payment in full for more than fifty (50) days past the due date, Cascade shall make written demand upon that Member to make payment in full within ten (10) days of the date that the written demand is sent by Cascade If the failure to pay is not Cascade Interloeal Contract 33- Amended and Restated December 15 2004 cured within the ten (10) day period, the Member shall be deemed to be in default (b) Upon an event of default as described in subsection 7 9 2(a), the other Members shall pay Cascade (in addition to Member Charges otherwise due) the defaulting Member's Member Charges in proportion to each remaining Members' Demand Share in accordance with a schedule established by Resolution of the Board (c) The payment of a proportionate share of the existing defaulted Member's Member Charges by Members shall not relieve the defaulting Member of its liability for those payments Cascade shall have a right of recovery from the defaulting Member on behalf of each Member Cascade may commence such suits, actions or proceedings at law or in equity including but not limited to suits for specific performance, as may be necessary or appropriate to enforce the obligations of this Contract against any defaulting Member Cascade s right to enforce payments in this regard may be assigned to a treasurer, trustee credit enhancement provider or other entity Amounts recovered by Cascade as payment of amounts due shall be passed through to each Member in proportion to the share that each assumed, in cash or in credit against future Member Charges as the Board shall determine (d) The prevailing party in any such suit, action or proceeding, shall be entitled to recover its reasonable attorney fees and costs against the defaulting Member ARTICLE 8. Planning Section 8.1 Water Supply Plan. Cascade must plan for its Members water supply needs That planning shall be to be compatible with the equivalent planning responsibilities of other wholesale water providers and with state, county and city planning responsibilities under the Growth Management Act The Board must adopt, and may from time to time amend, a Water C aseadc Inicrlocal Conlr ct 4- Amended and Restated December 1 -5 2004 Supply Plan that must be based on no less than a twenty- (20) year planning horizon. Cascade shall coordinate its planning effort with local and regional utilities and other appropriate agencies and work to encourage cooperative region -wide planning and coordination. Each Member shall actively participate in Cascade's water supply planning and shall provide to Cascade accurate data regarding its facilities and operations together with good -faith estimates of future needs and a description of any involvement in the development of new Independent Supplies Each Member's water comprehensive or system plan shall be consistent with any plans adopted by Cascade, and shall be consistent with applicable requirements of the Growth Management Act and comprehensive plans Section 8.2 Watershed Management Plan. Cascade may adopt Watershed Management Plans, as appropriate, for the watersheds witlun its service area provided that a Watershed Management Plan may take the place of or may be incorporated into a Cascade Water Supply Plan In fulfilling its responsibilities for watershed management, Cascade may enter into interlocal agreements with Non- .Member municipalities to engage in watershed management, including development of Watershed Management Plans and the implementation and financing of such plans Section 8.3 System Reliability Methodology Cascade shall develop and adopt a system reliability methodology for planning, operation and management purposes. Adoption and amendments to the system reliability methodology shall require a 65% Dual Majority Vote ARTICLE 9 Filings This Contract must be filed with the King County Office of Records and Elections or with any other applicable county auditor in accordance with RCW 39 34 040 and must be submitted Cascade Interlocal Contract 35- Amended and Restated December 1 S 2004 for review by the Washington State Department of Health and the Washington State Department of Ecology in accordance with RCW 39 34 050 ARTICLE 10. Duration and Dissolution, Withdrawal Section 10 1 Duration. Except as provided in Section 10 3 Cascade shall remain in existence for the longer of the following. (a) the period it holds any assets (b) the period during which Bonds are outstanding; or (c) the period it continues to include Members. Section 10.2 Withdrawals. A Member may notify Cascade of its intent to withdraw by delivery to Cascade of a Resolution of its legislative authority expressing such intent Upon receipt of such Resolution, the Member shall lose its right to vote and the Board shall determine (a) the withdrawing Member's allocable share of the cost of the then existing obligations of Cascade, and (b) the withdrawing Member's obligations to Cascade "Then- existing obligations of Cascade" means obligations or costs incurred by Cascade as of the date the Member's withdrawal notice is received, including but not limited to Bond obligations, contract obligations and cash financed capital projects, provided that a withdrawing Member's allocable share shall in no event include an obligation for future expenses for which Cascade has not incurred a legal obligation, and provided further that to the extent the Member s obligation (with respect to such costs) is re -paid over time, the Member shall be entitled to a credit for supply abandoned by the Member and is otherwise used by Cascade A withdrawing Member's obligation to Cascade" includes but is not limited to the Member's share of fixed operating costs, any other expenses contained in Cascade's adopted budget for that year and any assessments or other similar charges lawfully imposed by Cascade For purposes of the preceding sentence, fixed operating costs shall be determined in the year of withdrawal, and the Member s obligation with respect to such Cascade interiocal Contract Amended and Restated December 15 2004 costs shall be limited only to that amount required to pay for supply abandoned by the Member and not otherwise used by Cascade The allocable share of cost or obligations shall be determined by the Board, taking into consideration as deemed applicable by the Board. (a) the ratio of the Member's Demand Share to total Member demand, (b) the ratio of the Member's contribution to Cascade revenue to total Cascade revenue including RCFCs, (c) the cost or a portion of the cost of capital projects or facilities specially benefiting the Member and (d) and any other factor the Board deems appropriate to consider The Member's withdrawal shall be effective on payment of such allocable share or provision for arrangements to pay such allocable share that are satisfactory to the Board Until the effective date of withdrawal, the Member shall continue to comply with all applicable provisions of this Interlocal Contract. Upon withdrawal, except as provided in an Asset Transfer Agreement, the withdrawing Member shall have no right to or interest in any Water Supply Assets owned by Cascade The withdrawing Member shall be deemed to have abandoned any and all rights to service, to the use of Cascade Water Supply Assets or other rights with respect to Cascade (except as otherwise expressly provided in this Contract) Notwithstanding the provisions of this Section 10 2, Cascade will, upon the withdrawal of a Member that has transferred operational control and management of (but not title to) an Independent Supply Asset to Cascade under Section 5 1 return operational control of such asset to the withdrawing Member Return of operational control and management will be subject to (a) continued use by Cascade to the extent and for such time as the Board deems such use necessary for Cascade to continue providing service to its Members and (b) payment or provision for Cascade Interlocal Contract 37 Amended and Restated December 15 2004 payment of any Cascade costs, Including but not limited, to those associated with the withdrawing Member s Independent Supply Asset The Board may establish additional generally applicable conditions and requirements for withdrawal Section 10.3 Dissolution. Cascade may be dissolved by a 65% Dual Majority Vote Upon dissolution, except as provided in an Asset Transfer Agreement, Cascade s assets initially shall be held by Its then current Members as tenants in common. Each Member's ownership interest must be based on that Member s Demand Share as of the time of the dissolution Cascade s liabilities (including Bonds and other contractual obligations) initially shall be distributed based on Members Demand Shares as of the time of the dissolution. Assets and liabilities must be distributed in accordance with agreement or contract, under a voluntary mediation process, or by a court of law A court may appoint an arbitrator or special master Distribution shall be based on the best interests of efficient and economic water supply in the entire area served by the Members, subject to a rebuttable presumption that Water Supply Assets will be returned to the Member that originally transferred them to Cascade That presumption may be overcome by a showing that another asset distribution is in the best interests of efficient and economic water supply The proceeds of any sale of assets must be distributed among the then current Members based on the Demand Shares at the tune of dissolution Section 10 4 Successor Entity Notwithstanding the provisions of Section 10 3 upon a 65% Dual Majority Vote (ratified within one hundred and twenty (120) days by 65 as measured by Dual Majority Vote of the Members legislative authorities, all assets, liabilities, and obligations of Cascade may be transferred to any successor entity (including without limitation, a Cascade Interlocal Contract 1R- Amended and Restated December 15 2004 joint operating agency or other municipal corporation, as permitted under state law), and all obligations of Members and parties contracting with Cascade become obligations to the successor entity ARTICLE Il Amendments. Amendments to this Contract shall be effective upon approval by 65% Dual Majority Vote (ratified within one hundred and twenty (120) days by 65 as measured by Dual Majority Vote of the Members' legislative authorities ARTICLE 12. Applicable Law and Venue. This Contract is governed by the laws of the state of Washington. The venue for any legal action arising from a dispute under this Contract is the Superior Court for King County ARTICLE 13 No Third Party Beneficiaries. There are no third -party beneficiaries to this Contract except for the rights of Bond owners as provided in Section 5 3 2, no person or entity other than an agency signatory to this Contract shall have any rights hereunder or any authority to enforce its provisions, and any such rights or enforcement must be consistent with and subject to the terms of this Contract ARTICLE 14 Severability If any provision of this C ontract or its application is held by a court of competent jurisdiction to be illegal, invalid, or void, the validity of the remaining provisions of this Contract or its application to other entities or circumstances shall not be affected. The remaining provisions continue in full force and effect, and the parties rights and obligations must be construed and enforced as if the Contract did not contain the particular invalid provision. But if the invalid provision or its application is found by a court of competent jurisdiction to be substantive and to Cascade Intcrlocal Contract 39- Amended and Restated December 15 2004 render performance of the remaining provisions unworkable and infeasible, is found to seriously affect the consideration, and is inseparably connected to the remainder of the contract, the entire Contract is deemed void ARTICLE 15, Entire Agreement. This Contract constitutes the entire and exclusive agreement between the parties relating to the specific matters covered in this Contract. All prior or contemporaneous verbal or written agreements, understandings, representations or practices relative to the foregoing are superseded, revoked and rendered ineffective for any purpose This Contract may be altered, amended or revoked only as set forth in Article I I No verbal agreement or implied covenant may be held to vary the terms of this Contract, any statute, law or custom to the contrary notwithstanding. Cascade ]ntcrlocal Conlract -40- Amended and Restated December 15 2004 ARTICLE 16. Execution. This Contract may be executed in one or more counterparts Sip-natory Aeenev Bv'r� iv-) c c Title. ��L��L �.0 Date. AttestQ2 w <n ��✓1�.zlC Title. ��-F� -f§ Date. Authorized bv.j� {Resole ion or ordmance& Date. Cascade Interlocal Contract -41 'mended and Restated December 15 2004 Cascade Water Alliait A l l� t I Title. Chair t Date. Attest. `X l 0_ )IQ-C Title. General Manaizer Date. �4KQM�Y 1rJ Authorized bv: Resolution No. Date. DOtWs tr C arcade Interlocal Contract -41 emended and Restated December 15 2004 CASCADE WATER ALLIANCE RESOLUTION NO 2004 -18 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE CASCADE WATER ALLIANCE, A WASHINGTON NONPROFIT CORPORA'T'ION, FOR THE PURPOSE OF ADOPTING AN AMENDED AND RESTA'T'ED TNTERLOCAL CONTRACT WHEREAS, the Cascade Water Alliance (Cascade) is a Washington Nonprofit Corporation composed of municipal corporations and special purpose Municipal Corporations which is organized under authority of the Interlocal Cooperation Act (Chapter 39 34 RCW) for the purpose of providing water supply to meet the growing demands of its Members and the region, and WHEREAS, Cascade was formed in April 1999, according to the terms of an Interlocal Contract which established the basis for Membership and for developing the Cascade Water System, and WHEREAS, The Board of Directors of Cascade approved Amendments to the Interlocal Contract in September 1999 and November 2002 and WHEREAS the Amended and Restated Interlocal Contract establishes 1) Cascade as a Watershed Management Partnership as provided in the Interlocal Cooperation Act (Chapter 39 34 RCW), and 2) overall structure and principles for financing projects, borrowing funds, issuing and securing debt; NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE CASCADE WATER ALLIANCE, as follows_ Section 1. The Board of Directors of Cascade approves and adopts the Amended and Restated Interlocal Contract, in the form attached to this Resolution, and Section 2. The Board directs the Chair and General Manager to distribute the Amended and Restated Interlocal Contract for ratification by Members' legislative authorities Cascade Resolution No. 2004-18 Page 1 of 2 Decenibar 15 2004 kDOPTED AND APPROVED by the Board of Directors of the Cascade Water Alliance at a regular meeting thereof, held on this day of 2004 CASCADE WATER ALLIANCE f' Grant Deggm r 4. 1 Attu M1cl1ael GjCi do, General Manager Stanley St6ne, Vice Chair Jim Haggerton, Secretary /Treasurer i Members Z es 7 N o C� Demand Share es 0/o No n Cascade Resolution No. 2004-18 Page 2 of 2 December 15 2004