F4. Evergreen Sewer District AgreementcrTYOF # -�. City of Kalispell
Post Office Box 1997 - Kalispell, Montana. 59903
WITelephone: (406) 758-7701 Fax: (406) 758-7758
MONTANA
MEMORANDUM
To: Mayor Johnson and City Council
From: Doug Russell, City Manager
Re: Proposed Evergreen Sanitary Sewer Treatment Agreement
Meeting Date: July 20, 2015
BACKGROUND: In 1990, The City of Kalispell entered into an agreement with the Evergreen
Sewer District to convey sewage to the Kalispell Wastewater Treatment Plant. This agreement
expires in July of 2015. Staff has been working with representatives from the Evergreen district
to develop a new agreement based on the impacts to the WWTP and the comparison to the
residential rates for treatment for households in Kalispell.
At the work session this past Monday, the agreement was reviewed and discussed. It was
requested that a limit be placed on the amount of conveyance allocated to Evergreen, similar to
the previous agreement. The attached agreement has this modification to the language, placing
the capacity at 0.782 million gallons a day. The previous agreement identified a limit of 0.682
gallons. The increase accounts for new service boundaries, a portion of which includes areas
that received council approval for service outside of the previous district boundaries.
As the current agreement expires on July 25, an extension is also provided, in case the proposed
agreement is tabled or rejected.
ALTERNATIVE RECOMMENDATION: Should council table or reject the proposed
agreement, it is recommended that council approve the attached extension to the current
agreement.
FINANCIAL IMPACTS: The new agreement provides for a formula where a residence in
Evergreen will be paying the same amount for sewer treatment as would a resident in Kalispell.
In total, it is estimated that the City of Kalispell would receive $530,000 in annual revenue under
this agreement.
RECOMMENDED ACTION: It is recommended that the City Council approve the
attached agreement between the City of Kalispell and the Flathead County Water and
Sewer District No. 1- Evergreen.
ATTACHMENTS: Sanitary Sewer Treatment Agreement
Extension of Term of Interlocal Agreement
SANITARY SEWER
TREATMENT AGREEMENT
between
CITY OF KALISPELL
and
FLATHEAD COUNTY WATER AND SEWER DISTRICT NO. 1
EVERGREEN
This Agreement entered into this 1st day of July, 2015, by and between the City of Kalispell
[hereinafter "Kalispell"] and Flathead County Water and Sewer District No. 1 — Evergreen
[hereinafter "Evergreen"], as evidenced by their signatures hereon agree as follows:
Section l: Recitals
WHEREAS, Kalispell is a municipality of the State of Montana located within Flathead County
and organized pursuant to Title 7 Chapter 3 Part 43. Kalispell owns, maintains and
provides certain utility services, including wastewater treatment, to its city residents
with oversight from the Montana State Department of Environmental Quality.
Kalispell may legally provide its utilities to serve areas outside of Kalispell for
consideration and if it is deemed to be in the best interests of Kalispell and its
residents; and
WHEREAS, Evergreen is a duly formed County Water and Sewer District created under the
authority of the Montana state law. Evergreen currently possesses the statutory
authority to provide water supply and distribution, wastewater collection, treatment
and conveyance to properties in the proximity of its facilities with oversight from the
Montana State Department of Environmental Quality; and
WHEREAS, Evergreen entered into an Interlocal Agreement with Kalispell dated the 25th day of
July, 1990, hereinafter referred to as the "1990 Interlocal Agreement", in which
Evergreen conveys the sewage it collects to Kalispell WWTP. The 1990 Interlocal
Agreement expires July 25, 2015; and
WHEREAS, Evergreen entered into an Interlocal Agreement with Kalispell dated the 30th day of
November, 2007, hereinafter referred to as the "2007 Interlocal Agreement", which
delineated the provision of services and responsibilities of Kalispell and Evergreen
with respect to municipal wastewater services that may be provided to properties
located outside of RSID 132 but within such proximity to Evergreen's collection and
conveyance system. The 2007 Interlocal Agreement remains in effect until modified
or repealed by all necessary parties; and
WHEREAS, Kalispell is required to implement and enforce a pretreatment program to control
discharges from all industrial users of its wastewater treatment system pursuant to
requirements set forth in 40 CFR Part 403. Evergreen is required to authorize
Kalispell to implement and enforce Kalispell's sewer use ordinance and 40 CFR 403
within Evergreen's service area.
Page 1 of 7
WHEREAS, it is in the best interests of all of the citizens of Flathead County that water quality
continue to be protected by providing municipal sewage treatment services to all
properties presently served by Evergreen, together with other properties located
within such proximity to the Evergreen sewage collection and conveyance facilities
that they may be served by Evergreen for collection and conveyance of sewage to
the Kalispell WWTP.
NOW THEREFORE, IT IS AGREED by and between Kalispell and Evergreen that it is to their
mutual advantage to adopt this Agreement as follows:
Section 2: Purpose
It is the purpose of this Agreement to delineate the provision of services and responsibilities of
Kalispell and Evergreen with respect to municipal waste water services that may be provided to
properties connecting to Evergreen's collection and conveyance facilities that such property may
be served by Evergreen.
Section 3: Administration of Municipal Sewer Services
3.01 No separate legal entity is established by this Agreement.
3.02 Agreement: Evergreen agrees that it shall abide by all current Code, Rules, Regulations,
Resolutions, and Ordinances, including but not limited to prohibited wastes, discharge
limits, surcharges above base strengths, treatment plant impact fee, and pretreatment rules
of the City of Kalispell, State Department of Environmental Quality, and the Environmental
Protection Agency relating to sewage treatment.
Evergreen agrees that it shall inform its users of the requirements they are subject to and
the penalties to which such users are subject, for violation of the discharge requirements
and prohibitions.
3.03 Service Area: It is understood between the parties hereto that this Agreement obligates
Kalispell to accept normal municipal sewage from Evergreen for that area comprising the
Service Area as show in Exhibit A. The volume rate will not exceed 0.782 million gallon
average daily flow for the area within the Evergreen boundary as shown in Exhibit A.
Volume rate outside of the Evergreen boundary is not applied against the 0.782 million
gallons per day. For the purpose of this volume rate, the number of days of flow
measurement will be 75 days. If the volume rate is fully utilized Evergreen may request an
approval of a volume rate increase from the Kalispell City Council.
3.04 Consent Required by Kalispell: In the event owners of property outside of that portion of
the Service Area as shown in Exhibit A attached hereto, operated by Evergreen, said
property owner(s) must, prior to connection, apply for and obtain a written consent by the
Kalispell City Council, or designee. Kalispell may decline the application for any reason.
If Kalispell accepts the application, the property owner(s) or users shall provide a written
execution of a waiver to protest annexation, consent to withdraw from the rural fire district,
Page 2 of 7
enter into a development and or pretreatment agreement with Kalispell, meet pretreatment
regulations, and pay the treatment plant impact fee.
Evergreen is authorized hereunder to connect any property to its collection and conveyance
system within that portion of the Evergreen District Boundary as shown in Exhibit A
attached hereto, unless and until, Evergreen is notified by Kalispell that there is not
sufficient treatment capacity at the Kalispell WWTP to treat any additional sewage from
Evergreen. Property located inside the Evergreen District Boundary, prior to allowing
connection by Evergreen, is required to obtain written consent of Kalispell's City Manager,
or designee, after satisfying the requirement of paying the treatment plant impact fee.
Annually Evergreen shall provide Kalispell an updated map highlighting properties that are
connected to the Evergreen Sewer System and shall provide average and maximum daily
flows from Evergreen to the Kalispell WWTP. This will assist Kalispell in making
informed decisions on plant capacity and future plant upgrades.
3.05 Ownership of Kalispell WWTP: Kalispell shall remain the sole owner of Kalispell
WWTP.
3.06 Ownership of Sewage Conveyance Lines and Facilities: Evergreen shall remain the sole
owner of its collection and conveyance system.
3.07 Quality of Sewage to be treated: It is understood between the parties it is Evergreen's
responsibility to manage the quality of sewage discharged to the Kalispell Treatment Plant.
The effluent sewage from Evergreen will meet the sewage quality limits as outlined in City
Code, Ordinance, Resolutions, and Regulations.
Evergreen shall not discharge to the Kalispell Wastewater Treatment Facility Prohibited
Wastes as outlined in City Code, Ordinance, Resolution and Regulations that will injure or
interfere with any sewage treatment process, cause Kalispell a permit discharge violation,
constitute a hazard to humans or animals, create a public nuisance, may contaminate sewage
sludge, create any hazard in, or have an adverse effect on the water receiving discharge
from the treatment facility. If Evergreen's discharge is not within the specified limits
required by City Code, Ordinance, Resolutions, and Regulation, Evergreen shall be notified
and thereafter shall immediately begin an investigation for sources of contamination of the
sewage and take action necessary to eliminate the contamination. Kalispell shall assess
Evergreen the cost of all sampling, treatment plant operation damages, and discharge permit
penalties Kalispell has been assessed from contamination from Evergreen's discharge to
the treatment facility.
When Evergreen's average daily flows increase greater than 20% in a 15-day period,
Evergreen shall begin an investigation for sources of excess ground and surface water flows
and keep Kalispell informed of the findings and actions being taken to alleviate the excess
flows.
3.08 Odor Abatement: In order to reduce the odors at the Treatment Plant where the effluent
arrives at the end of Evergreen's force main, Evergreen shall construct and maintain odor
Page 3 of 7
treatment facilities within two years of this signed agreement that will reduce the amount
of hydrogen sulfide gas and odor released at the end point of the force main at the Kalispell
Treatment Plant.
3.09 Sewage Treatment Rate: Evergreen agrees to pay to Kalispell the sewer treatment volume
rate, base rate and surcharge rate for the sewage received from Evergreen at the Kalispell
Wastewater Treatment Plant. The rate charged to Evergreen will not exceed the sewer
treatment rate charge for a property located within the Kalispell City Limits based solely upon
the service properties being located outside of the Kalispell City Limits. The rate excludes
the following:
I. any portion of the Kalispell Treatment Rate which is for the
cost/expense of collection/conveyance of sewage from properties within
Kalispell to the Kalispell Wastewater Treatment Plant,
2. treatment cost related to Kalispell's inflow and infiltration (I&I), and
finally
3. any billing expenses for the owner of the properties within the City of
Kalispell.
Each year's rate(s) calculation will be based on Evergreen's and Kalispell's actuals for flows
and the prior fiscal year ending June 30th. Included in the rate calculation will be a
contribution to the replacement fund for either $450,000 or 50% of depreciation whichever
is lower per fiscal year. Evergreen shall provide Kalispell the number of customers and flow
volume for each year. Likewise, Kalispell shall provide Evergreen with the number of
customers, volume billed and flow volume. The rate(s) formula is in Exhibit B attached
hereto and incorporated fully herein by this reference.
The entire volume of sewage from Evergreen will be measured by Evergreen's meter tied
into Kalispell's telemetry -monitoring system, tested, and calibrated yearly. The metering
system will be verified for compliance at least yearly through coordination between
Evergreen and Kalispell.
Kalispell shall bill Evergreen for sewage treatment on the tenth of each month. Payments are
due in full no later than ten (10) days after mailing of the Kalispell bill.
3.10 Rate Study: A treatment rate study, performed by a financial consultant, may be performed
during the term of this agreement. Any rate study conducted will establish individual
treatment rates (both volume and base) for both Kalispell and Evergreen and will supersede
the rate method established in 3.08. Evergreen agrees to pay Kalispell the sewer treatment
rates for the sewage received from Evergreen at the Kalispell Wastewater Treatment Plant as
established in the rate study. Kalispell shall work cooperatively with Evergreen in the rate
development process to ensure the rates established are not discriminatory or based on out -
of -city designation. Rather, the rate is to be based on the cost of service to treat Evergreen's
sewer discharge, the replacement fund contribution is maintained, and the rate takes into
account the exclusions of items I through 3 in Section 3.08.
Page 4 of 7
3.11 Pretreatment: Evergreen agrees to authorize Kalispell to implement and enforce Kalispell's
sewer use ordinance and 40 CFR 403 within Evergreen's service area. Kalispell shall: (1)
update the industrial waste survey; (2) issue permits to all industrial users required to obtain
a permit; (3) conduct inspections, sampling, and analysis; (4) take all appropriate enforcement
action as outlined in the Kalispell's sewer use ordinance; and (5) perform any other technical
or administrative duties the Parties deem appropriate. In addition, Kalispell may, as agent of
Evergreen, take emergency action to stop or prevent any discharge which presents or may
present an imminent danger to the health or welfare of humans, which appears to threaten the
environment, or which threatens to cause interference, pass through, or sludge contamination.
If the authority of Kalispell to act as agent for Evergreen under this Agreement is questioned
by an industrial user, court of law, or otherwise, Evergreen shall take whatever action is
necessary to ensure the implementation and enforcement of its sewer use ordinance against
its industrial users, including, but not limited to, implementing and enforcing its own sewer
use ordinance on its behalf and/or amending this Agreement to clarify the Control Authority's
authority.
Evergreen shall reimburse Kalispell for costs incurred in implementing and enforcing a
pretreatment program to control discharges from all industrial users of its wastewater
treatment system pursuant to requirements set forth in 40 CFR Part 403. Kalispell shall
provide Evergreen with a detailed accounting of all such costs.
The Parties shall review and revise this Agreement to ensure compliance with the Federal
Clean Water Act (42 U.S.C. 1251 et seq.) and rules and regulations (40 CFR Part 403) issued
thereunder, as necessary, but at least once every 5 years on a date to be determined by the
Parties.
3.12 Force Main: The parties agree that a flow of 200 gpm is reserved for Kalispell in
Evergreen's force main from the intersection of Willow Glen Drive and Concord Lane to
the Kalispell WWTP.
Section 4: Applicable Law
These parties agree that this Agreement will be governed in all respects by the laws of the State
of Montana and the parties expressly agree that venue will be in Flathead County, Montana and
no other venue.
Section 5: Binding Affect
This Agreement will be binding upon and will inure to the benefit of the legal representatives,
successors, and assigns of the parties.
Page 5 of 7
Section 6: No Third Party Beneficiary
This Agreement is for the exclusive benefit of the parties and will not constitute a third party
beneficiary agreement and will not be relied upon or enforced by a third party.
Section 7: Dispute Resolution
a. Any claim, controversy, or dispute between the parties, their agents,
employees, or representatives will be resolved first by negotiation between senior -level
personnel from each party duly authorized to execute settlement agreements. Upon mutual
agreement of the parties, the parties may invite an independent, disinterested mediator to
assist in the negotiated settlement discussions.
b. If the parties are unable to resolve the dispute within forty-five (45) days from
the date the dispute was first raised, then such dispute will be resolved in a court of competent
jurisdiction in compliance with the Applicable Law provisions of this Agreement. In that
event, the prevailing party shall be entitled to recover attorney fees and costs of the litigation.
Section 8: Severability
If any portion of this Agreement will be held to be void or unenforceable, the balance thereof will
continue to be effective.
Section 9: Ori ing al Agreements and Resolutions of Kalispell
All terms of the 1990, 1996, and 2007 Interlocal Agreements and Addendum between the parties
hereto and Resolution No. 5103 of Kalispell augmenting those agreements will remain in full force
and effect until the effective date of this Agreement, at which time they will be superseded by the
adoption of this Agreement.
Section 10: Effective Date
This Agreement will become effective with the fiscal year beginning July 1, 2015. The process
to transfer Trumble Creek Crossing customers from Kalispell to Evergreen will commence upon
execution of the agreement.
Section 11: Term of Agreement
The duration of this contract is 20 years. This agreement is negotiable at any time if both parties so
consent in writing. If no notice to terminate or renegotiate is received at least three months prior to
expiration of this Agreement, then this agreement will renew for an additional five-year term subject
to the preceding clause.
Page 6 of 7
IN WITNESS WHEREOF, the local governments have caused this instrument to be duly executed
by their proper officers as follows:
CITY OF KALISPELL
APPROVED BY THE CITY MANAGER OF THE CITY OF KALISPELL on the day of
201 , as authorized by the City Council to execute this Agreement.
ATTEST:
By: By:
Aimee Brunckhorst
City Clerk
(SEAL)
Doug Russell
City Manager
FLATHEAD COUNTY WATER AND SEWER DISTRICT NO. 1 EVERGREEN APPROVED
BY THE BOARD OF DIRECTORS OF THE FLATHEAD COUNTY WATER AND SEWER
DISTRICT NO. 1 EVERGREEN on the day of , 201
ATTEST:
Roberta Struck
Secretary
John T Fallon
Board President
Page 7 of 7
Exhibit B Evergreen Rate Calculation Worksheet
Kalispell Current Sewer Utility Rate
FY Actual Flows/1,000 gallons
Kalispell Evergreen Total
816,779 159,355 976,134
Monthly Base Rate
$/1,000 gallons
$8.44
$4.78
WWTP
Collection
Billing
Expense Sum
FY14/15
FY14/15
FY14/15
A
Total Personal Services (includes lab personal for WWTP)
$
673,603
$
347,624
$ 96,642
B
Total Maintenance & Operations (includes lab for WWTP)
$
890,625
$
398,054
$ 80,729
C
Capital Outlay from Operating Budget (rates)
$
119,000
$
545,826
D
Capital Outlay from Bond & Impact Fees
$
45,000
$
1,005,640
E
Capital Outlay/Maint from Replacement Funds
$
953,610
$
-
F
Debt Service from Rates
$
871,565
$
2,189
G
Replacement Funds
$
411,599
$
-
H
Depreciation Expense (non cash)
$
842,146
$
793,775
Expenditure Total
$
4,807,148
$
3,093,108
$ 177,371
Less
Capital Outlay/Maint from Replacement Funds (E) $ (953,610)
Capital Outlay from Bond & Impact Fees (D) $ (45,000) $ (1,005,640)
Depreciation Expense/Non Cash (H) $ (842,146) $ (793,775)
Total $ 2,966,392 $ 1,293,693 $ 177,371
Step 1: Calculate % split for cost per 1,000 gallon based on actual expenses
Calculated Rate Treatment $ 3.04 65.7% percent of total
Calculated Rate Collection $ 1.58 34.3% percent of total
Total $ 4.62 100.0%
Step 2: Actual per 1000 gal rate, minus % for I/I, minus billing cost, percent split from Step 1 calculation applied
Total actual charged pre 1,000 gal $ 4.78 Kalispell
Rate minus % of I/I $ 4.09 billed/1,000 gal % I/I
Billing cost per 1,000 gal $ 0.22 699,625 14.3%
Rate per/ gal minus billing cost $ 3.88
Treatment per 1,000 gallons $
Collection per 1,000 gallons $
Step 3: Base rate application with Step 1 calculated percent split
Treatment Monthly Base Rate $
Step 4: Evergreen's Yearly Volume and Base Rates
2.55
65.7%
of
$
3.88
1.33
34.3%
of
$
3.88
5.55
65.7%
of
$
8.44
Volume Rate $ 2.55 $/1,000 gallons
Monthly Base Rate $ 5.55 per month per account
Evergreen Accounts 1,884 Accounts provided by Evergreen
Estimated Annual Cost $ 531,596.64 per year
EXTENSION OF TERM OF INTERLOCAL AGREEMENT
BETWEEN THE CITY OF KALISPELL AND
FLATHEAD COUNTY WATER & SEWER DISTRICT NO. 1 EVERGREEN
The Parties, CITY OF KALISPELL, hereinafter "the City", and FLATHEAD COUNTY
WATER & SEWER DISTRICT NO. 1 EVERGREEN, hereinafter "the District", hereby enter
into this agreement to extend the term of the existing Interlocal Agreement between them as
described below.
WHEREAS, the District entered into an Interlocal Agreement with the City dated the 25th day
of June, 1990, hereinafter referred to as the "1990 Interlocal Agreement'', in
which it conveys the sewage it collects to the City's Wastewater Treatment Plant;
and
WHEREAS, the term of the 1990 Interlocal Agreement is for 25 years and is due to expire on
the 25th day of July, 2015; and
WHEREAS, the parties have been in earnest discussions regarding a new Interlocal agreement
that will succeed the 1990 Interlocal Agreement and desire to continue those
discussions in an effort to reach such agreement, which the parties agree will
require more time than remains in the current agreement.
NOW THEREFORE, the parties agree that it is in the best interests of their respective
constituencies to extend the 1990 Interlocal Agreement for a period of time that extends to the
I8th day of September, 2015.
All other terms of the 1990 Interlocal Agreement between the parties shall remain in full force
and effect.
IN WITNESS WHEREOF, the local governments have caused this instrument to be duly executed
by their proper officers as follows:
CITY OF KALISPELL
APPROVED BY THE CITYMANAGER OF THE CITY OF KALISPELL on the day of June,
2015, as authorized the City Council to execute the Interlocal Agreement.
ATTEST:
Aimee Brunckhorst, CMC
City Clerk
(SEAL)
Doug Russell
City Manager
FLATHEAD COUNTY WATER & SEWER DISTRICT NO. 1 EVERGREEN
APPROVED BY THE BOARD OF DIRECTORS OF THE FLATHEAD COUNTY WATER &
SEWER DISTRICT NO. 1 EVERGREEN on the day of June, 2015.
Jack Fallon
President
ATTEST:
Roberta Struck
Secretary