20150522Boise City to Staff 1-13.pdf

Robert B. Luce
Boise City Aftorney
Boise City Holl
150 N. Copibl Boulevord
Moiling Addrcrs
P O. Box 500
Boise, ldoho 83701 -0500
Phone
208/38A-3570
Fox
208/384-U54
TDD/TTY
^Nfin4s29
Web
ww.cityofuoise.org
Moyor
Dovid H. Bist€r
City Council
Prcridcnt
Moryonne Jordon
Gouncil Pro lcm
Eloine Clegg
Scot ludwig
liouren McLeon
Ben Quinlono
T.l Thomson
An Equol Opporlunity Employer
Printed on re<ycled poper
Boise City Attorn ey's Office
May 22,201,5
Wa Hand Delivery
Jean Jewell, Secretary
Idaho Public Utilities Commission
472W. Washington St.
Boise,Idaho 83720
Re: Case No. IIWI-W-15-02
Dear Ms. Jewell:
Enclosed for filing, please find three (3) copies of the City of Boise City's
Response to Commission StafPs First Production Requests No's I through 13.
Kindly return a file stamped copy to me.
Sincerely,
n/
Douglas K. Strickling )
Deputy Boise City Attorney
DKS/rcs
Enc.
Douglas K. Strickling (ISB No. 3230)
BOISE CITY ATTORNEY'S OFFICE
P.O. Box 500-83701
150 North Capitol Boulevard
Boise,Idaho 83702
Tel: [phone]
Fax: [phone]
dstrickline@ cityofboise. org
Attorney for City of Boise
Dean J. Miller (ISB No. 1968)
Chas.'F. McDevitt (ISB No. 835)
Celeste K. Miler (ISB No. 2590)
McDEVITT & MILLER LLP
420 West Bannock Sfreet
P.O. Box 2564-83701
Boise,ID 83702
Tel: [phone]
Fax: [phone]
i [e-mail]
chas @mcdevitt-miller. com
ck@mcdevitt-miller. com
Attorney for United Water Idaho Inc.
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BEFORE THE IDAHO PIIBLIC UTILITIES COMMISSION
IN THE MATTER OF THE JOINT )
APPLTCATION OF UNITED WATER IDAHO, ) CASE NO. UWI-W-15-02
INC., AI\D THE CITY OF BOISE, IDAHO FOR )
APPROVAL OF AN AGREEMENT FOR ) CITY OF BOISE RESPONSE TO
REPLACEMENT AIID OPERATION OF FIRE ) FIRST PRODUCTION
HYDRANTS AI\D RELATED RATE MAKING ) REQUEST OF THETREATMENT. ) COMMISSION STAFF TO THE
) CITY OF BOTSE, IDAHO
)
The City of Boise City, by and through its attorney of record, Douglas K. Strickling,
hereby provides the following documents and information in response to the First Production
Request of Idaho Public Utilities Commission Staff to the City of Boise, Idaho.
RESPONSE TO FIRST PRODUCTION REQUEST
TO THE CITY OF BOISE, IDAHO 1 M AY 22,2015
Preparer/Responding Witness :
Neal Olderneyer
Boise City Public Works Director
150 N. Capitol Boulevard
Boise,Idaho 83706
Phone #[phone]
in consultation with Douglas K. Strickling.
REQUEST NO. 1: Please provide a copy of the current Franchise Agreement between
United Water and Boise City.
RESPONSE NO. 1: A copy of the current Franchise Agreement between United Water
and Boise City is attached.
RESPONSE TO FIRST PRODUCTION REQUEST
TO THE CITY OF BOISE,IDAHO 2 MAY 22,2015
Preparer/Responding Witness :
Neal Olderneyer
Boise City Public Works Director
150 N. Capitol Boulevard
Boise, Idaho 83706
Phone #[phone]
in consultation with Douglas K. Strickling.
REQUEST NO. 2: Is a new franchise agreement currently being negotiated? If so,
when is the new franchise agreanent expected to become effective?
RESPONSE NO. 2: Detailed negotiations have not yet begun. The existing franchise
agreement expires November 1,2015. A new franchise agreement will need to be in place by
that date to allow United Water to operate within the City.
RESPONSE TO FIRST PRODUCTION REQUEST
TO THE CITY OF BOISE, IDAHO 3 MAY 22,2015
Preparer/Responding Witness :
Neal Oldemeyer
Boise City Public Works Director
150 N. Capitol Boulevard
Boise,Idaho 83706
Phone #[phone]
in consultation with Douglas K. Strickling.
REQUEST NO. 3: The direct testimony of Neil Oldemeyer states on page 3, lines 1-5:
"I have not been able to identify the original reason for the City owning the hydrants, but have
come across documentation that suggests that the City has maintained this operational model
because of control issues: maintenance and operation responsibilities, potential ownership issues,
and so forth. At this point, City leadership has decided the benefits of transferring ownership
outweigh any concerns that may currently exist or in the past been present."
a. Please provide a copy of the documentation referred to by Oldmeyer.
b. Please elaborate on the specific concerns of o'maintenance and operation
responsibilities, potential ownership issues, and so forth" as referred to by
Oldemeyer.
c. Please describe any past or current concerns of the city as referred to by Oldemeyer.
RESPONSE NO.3:
Requested documentation is attached.
The documentation referred to by Neal Oldemeyer is limited to the attached draft
memorandum from former City Engineer, Chuck Mickelson, to former Mayor Coles
dated December 27,1993. It appears to have never been sent, but the content was
discussed with Mayor Coles. Mr. Oldemeyer's knowledge and understanding of the
specific issues is largely limited to this draft document.
See answer to b. above.
RESPONSE TO FIRST PRODUCTION REQUEST
TO THE CITY OF BOISE, IDAHO 4
a.
b.
C.
MAY 22,2015
Preparer/Responding Witness :
Neal Oldemeyer
Boise City Public Works Director
150 N. Capitol Boulevard
Boise, Idaho 83706
Phone #[phone]
in consultation with Douglas K. Strickling.
REQUEST NO. 4: Please explain what operational and maintenance expertise Boise
City believes it lacks and that United Water possesses as referred to on page 4, lines 18-20 of
Neil Oldemeyer's testimony. Does Boise City believe that its lack of operational and
maintenance expertise has jeopardized fire protection for Boise residents in the past under City
ownership of fire hydrants?
RESPONSE NO.4: Boise City's operation and maintenance of its fire hydrants has not
jeopardized fire protection. Boise has maintained an ISO Class III fire rating for more than 24
years and would anticipate that rating to continue. While Boise operates sewer, geothermal and
irrigation systerns, which require expertise and resources similar to maintaining a municipal
water systern and its components, greater efficiencies can be obtained if UWI owns and
maintains the hydrants. Integrating the hydrants into the United Water system will allow United
Water to apply their expertise on common maintenance practices; location and maintenance
tracking systems; contract preparation and bid processes; and up-to-date knowledge of industry
practices and standards to ensure the system can be operated and maintained in a more efficient
manner.
RESPONSE TO FIRST PRODUCTION REQUEST
TO THE CIry OF BOISE, IDAHO 5 MAY 22,2015
Preparer/Responding Witness :
Neal Oldemeyer
Boise City Public Works Director
150 N. Capitol Boulevard
Boise,Idaho 83706
Phone #[phone]
in consultation with Douglas K. Strickling.
REQUEST NO. 5: What operational and maintenance standards does Boise City
currently follow for its fire hydrants? Please explain how the operational and maintenance
standards United Water proposes to follow differ from the operational and maintenance
standards currently employed by Boise City.
RESPONSE NO. 5: Boise's operational and maintenance requirements have been
limited to annual visual inspection of hydrants, clearing of brush from around the hydrants, brief
flowing of the hydrants, and occasional cleaning and maintenance of the hydrant threads. These
functions are performed by on-duty fire crews with the two-fold pu{pose of performing
maintenance and identifying hydrant locations. ln addition, hydrants at or near their 4O-year life
cycle are replaced by a contractor certified to work on UWI's system. The tracking of these
hydrant maintenance and replacement efforts are generally undertaken by an on-duty fireman
during his non-response time in the station or after shift on overtime. The City's, and more
specifically the Boise Fire Department's, capacity to accomplish this work is, at best, limited and
disjointed.
The Agreement for Replacernent and Operation of Fire Hydrants between UWI and Boise
outlines the expectations moving forward regarding operations, maintenance and replacement of
the hydrants. Never before has there been such a clear statement of expectations by both parties.
This is a good example of operational improvements that are being borne from this effort.
RESPONSE TO FIRST PRODUCTION REQUEST
TO THE CITY OF BOISE, IDAHO 6 MAY 22,201,5
Preparer/Responding Witness :
Neal Oldemeyer
Boise City Public Works Director
150 N. Capitol Boulevard
Boise, tdaho 83706
Phone #[phone]
in consultation with Douglas K. Strickling.
REQUEST NO. 6: On page 5, lines 7-11 of Neil Oldemeyer's testimony, he states,"The
hydrants are paid for by the general fund (largely taxes), which not everyone pays. This means
that governments, non-profits, and other tax exernpt entities are not required to fund this
important element of the water and fire protection systan even though they receive great benefit
from it." Can the same be said for police protection, parks, libraries and other city-provided
services? Please explain.
RESPONSE NO. 6: The referenced testimony was intended to distinguish between self-
supporting, fee-based funds (Enterprise Funds) which support the Airport and the City's sewer,
solid waste, geothermal, irrigation systems and the General Fund which is funded by property
taxes, sales tax, fine collections, franchise fees, development fees and other sources of revenue.
Enterprise Funds, which the water system would be were it owned by the City, are
allowed to collect user fees from everyone using the systern including federal, state, local and
other tax exanpt entities. All users pay into Enterprise Funds including police, park and library
facilities and tax-exempt entities. The City believes that hydrants, as an integral part of the water
system, should be paid for through user fees just as they are in virtually every city in Idaho.
However, because the City does not operate an enterprise fund system to which hydrant
maintenance can be charged to system users the maintenance is paid by the General Fund.
General Funds are primarily funded through property taxes which not everyone pays
including units of government and other tax exempt entities such as churches and hospitals.
General Fund expenditures include items such as fire hydrant purchases as well as costs
associated with Fire, Police, Parks, Libraries and other City Departments not supported by
Enterprise Funds. The City believes that hydrant replacement and maintenance should be
included in the charges for water service provided to govemmental and tax-exempt facilities and
RESPONSE TO FIRST PRODUCTION REQUEST
TO THE CITY OF BOISE, IDAHO 7 MAY 22,20T5
all entities should be paying for the great benefit they receive from having a complete water
system including hydrants available for fire protection.
RESPONSE TO FIRST PRODUCTION REQUEST
TO THE CITY OF BOISE, IDAHO MAY 22,2015
Preparer/Responding Witness :
Neal Oldemeyer
Boise City Public Works Director
150 N. Capitol Boulevard
Boise, Idaho 83706
Phone #[phone]
in consultation with Douglas K. Strickling.
REQUEST NO. 7: Please provide a list showing the amounts collected by Boise City
for franchise fees paid by United Water for each of the past 10 years and an explanation of how
the city uses that money.
RESPONSE NO. 7: The collection and expenditure of franchise fees are irrelevant to
this application and beyond the scope of the Commission's jurisdiction (see Idaho Code $ 6l-
104, ACHD v. IPUC, 151 ldaho I (2011) and Alpert v. Boise Water Corporation, 795 P.2d 298
(Idaho 1990).
However, in response to Request No. 7, a list indicating the amounts collected from
United Water for franchise fees is attached. The franchise fees collected from United Water are
combined with franchise fees collected from other franchised utilities and are placed into the
General Fund which also receives monies from property taxes and other revenue sources. The
United Water and other franchise fees are not allocated to any specific designated use or
expenditure. Attached are links for the FY 15 City budget which includes General Fund revenues
and expenditures:
http://dfa.cityofboise.ore/media/2573 5 1 /lv-20 1 5-update.pdt
http ://dfa.cityofboise.org/media/243 5 03/20 1 4budeetbookf,rnal.pdf
RESPONSE TO FIRST PRODUCTION REQUEST
TO THE CITY OF BOISE, IDAHO 9 MAY 22,2015
Preparer/Responding Witness :
Neal Olderneyer
Boise City Public Works Director
150 N. Capitol Boulevard
Boise, Idaho 83706
Phone #[phone]
in consultation with Douglas K. Strickling.
REQUEST NO. 8: Does Boise City propose to reduce its franchise fee since it will
longer be responsible for ownership and maintenance of fire hydrants that become owned
United Water? Please explain.
RESPONSE NO. 8: No. Franchise fees collected from United Water are a general
payrnent to the City for the right to do business within the City, to operate a water system in lieu
of the City's operating that systan and to utilize public property and rights of way without the
necessity of paying fees associated with the use of those properties. The City is statutorily
limited to collecting a maximum of 3% of United Water's gross revenues for the right to operate
within the City. Franchise fee revenues are connected to hydrant maintenance only in the
incidental sense that franchise fees are co-mingled with other General Fund revenues which are
used to pay all General Fund requirements, including replacement and maintenance of hydrants.
Please refer to Alpert for a detailed and relevant discussion regarding the authority and rationale
for the collection of franchise fees.
RESPONSE TO FIRST PRODUCTION REQUEST
no
by
TO THE CITY OF BOISE, IDAHO 10 MAY 22,2015
Preparer/Responding Witness :
Neal Oldemeyer
Boise City Public Works Director
150 N. Capitol Boulevard
Boise,Idaho 83706
Phone #[phone]
in consultation with Douglas K. Strickling.
REQUEST NO. 9: Does Boise City now or in the past use funds collected from United
Water through franchise fees to fund any costs associated with ownership and maintenance of
fire hydrants? Please explain.
RESPONSE NO. 9: No portion of the collected United Water franchise fees are ear-
marked or dedicated for fire hydrant maintenance and replacement. United Water franchise fees
go to the City's General Fund which is used to pay a wide variety of City expenses. However, as
referenced above, funds for hydrant maintenance and replacement are drawn from the General
Fund.
RESPONSE TO FIRST PRODUCTION REQUEST
TO THE CITY OF BOISE, IDAHO 11 MAY 22,2015
Preparer/Responding Witness :
Neal Oldemeyer
Boise City Public Works Director
150 N. Capitol Boulevard
Boise, Idaho 83706
Phone #[phone]
in consultation with Douglas K. Strickling.
REQUEST NO. 10: Will Boise City residents realize any tax reductions or other
savings if fire hydrant ownership is transferred to United Water? Please explain.
RESPONSE NO. 10: If the cost of hydrant replacement and maintenance is assumed by
United Water and its utility rate payers, which the City believes is fair, equitable and consistent
with practices throughout the State of Idaho, the General Fund will no longer provide for
expenditures for hydrant replacement and maintenance. It is in the discretion of the Boise City
Council, as guided by the extensive, detailed and statutorily controlled budget process, whether
these savings will result in a tax reduction, a deferred tax increase or a re-allocation of the
resources to fire protection or other general fund uses.
RESPONSE TO FIRST PRODUCTION REQUEST
TO THE CITY OF BOISE, IDAHO 12 MAY 22,2015
Preparer/Responding Witness :
Neal Oldemeyer
Boise City Public Works Director
150 N. Capitol Boulevard
Boise, tdaho 83706
Phone #[phone]
in consultation with Douglas K. Strickling.
REQUEST NO. 11: Please explain why Boise City believes United Water customers
should fund Boise's fire protection equipment, infrastructure, enhance or preserve the current
level of services for fire, police, libraries and parks, as stated by Oldemeyer in his testimony on
page 6,lines l2-16.
RESPONSE NO. 11: This request misinterprets the testimony of Neal Oldemeyer. The
City, through this joint application with United Water, simply believes United Water and/or its
customers should be responsible for the ownership, replacement and maintenance costs of
integrated hydrants within the City. Costs associated with ownership, replacement and
maintenance are utility related and should be allocated and collected from rate-payers as they are
in virtually every city in Idaho. The costs of funding Boise's fire protection equipment,
infrastructure, enhancement or preservation of the current level of services for fire, police,
libraries and parks will continue to be borne by the City's General Fund which includes all
taxpayers of the City.
It should be noted that approximately 85% of United Water customers are Boise citizens
and represented by the City's elected officials who approved the hydrant transfer agreement.
These 85o/o along with the other 15% of United Water customers already pay, as incorporated in
their rates, for the operation and maintenance of hydrants owned and operated by United Water
in unincorporated Ada County and areas of Eagle. Boise, through this agreement and application
is simply asking for equitable treatment across the United Water service area.
RESPONSE TO FIRST PRODUCTION REQUEST
TO THE CITY OF BOISE, IDAHO 13 MAY 22,20t5
Preparer/Responding Witness :
Neal Olderneyer
Boise City Public Works Director
150 N. Capitol Boulevard
Boise, Idaho 83706
Phone #[phone]
in consultation with Douglas K. Strickling.
REQUEST NO. 12: If this application is approved, will Boise City continue to maintain
responsibility to operate and maintain the hydrants it will still own over the projected 4O-year
transition period? Will Boise City be responsible for the operation and maintenance of any
hydrants within the city? If so, does Boise City expect to retain the expertise to maintain fire
hydrants over the next 40 years?
RESPONSE NO. L2: Yes to all 3 questions. It would be the City's preference to tum
over ownership and maintenance of all hydrants immediately but the City understands that is not
United Water's preference. (See United Water First Production Response No. 6) The City will
work closely with United Water to ensure consistent and ongoing operation and maintenance of
the hydrants, consistent with the expectations and standards outlined in the Agreement.
RESPONSE TO FIRST PRODUCTION REQUEST
TO THE CITY OF BOISE, IDAHO 14 MAY 22,2015
Preparer/Responding Witness :
Neal Olderneyer
Boise City Public Works Director
150 N. Capitol Boulevard
Boise, Idaho 83706
Phone #[phone]
in consultation with Douglas K. Strickling.
REQUEST NO. 13: Does Boise City believe that United Water ownership of fire
hydrants will provide a greater level of fire protection than is currently being provided under
Boise City ownership? Please explain.
RESPONSE NO. 13: Eventually, yes. In particular, Boise would expect beffer
coordinated maintenance and operation of the system and hydrants, work being completed by
industry specialists, and funding being readily available for timely replacement and installation
of the hydrants. All of these elements should create a better and more efficient level of fire
protection for Boise City.
RESPONSE TO FIRST PRODUCTION REQUEST
TO THE CITY OF BOISE, IDAHO 15 MAY 22,2015
DATED at Boise,Idaho, tn ThldayofMay 2015.
CC: Neal Oldemeyer
RESPONSE TO FIRST PRODUCTION REQUEST
TO THE CITY OF BOISE, IDAHO 16
Strickling
MAY 22,2015
I hereby certify that on *"fuauy of May, 2Ol5,I caused to be served, via the
method(s) indicated below, true anil correct copies of the foregoing document, upon:
Jean Jewell, Secretary
Idaho Public Utilities Commission
47 2 W est Washington Street
P.O. Box 83720
Boise, lD 83720-0074
ij ewell@Fuc. state.id.us
Brandon Karpen
Deputy Attorney General
Idaho Public Utilities Commission
P.O. Box 83720
Boise, Idatro 83720-0074
CERTIFICATE OF SERVICE
Hand Delivered
U.S. Mail
Fax
Fed. Express
Email
Hand Delivered
U.S. Mail
Fax
Fed. Express
Email
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RESPONSE TO FIRST PRODUCTION REQUEST
TO THE CITY OF BOISE, IDAHO t7 MAY 22,20t5
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AN ORDINAITCEGRAII,TING TO BOISE WATER CORPORATION, AN IDATTO CORPORATION,
ms succEssg_Rg-arrlD AsstGNs, THE FRANCHISE AND AUTITORITY TO OPEMTE AND
MAINTAIN A WATER UTTLTTY SYSTEM IN'ITIE CITY AI{D THE RIGTTT TO CONSTRUCT,
EXTEM, il,{AINTAN, REPATR AND OPEMTE SAIV{E IN, UNDER, OVER, ALONG, ACROSS
AND rrpoN TnE SB.EE:[S, ALLEyS, B-B[D_CE_S AND pUBLtg P_L_A,C"ES"N-,TIE OTy, AND
St BSEQUENT EXTENSIONS, ADDmONS AND A-wNEGTIONS THERETO FOR THE
COLLECTION, TRANSMSSION, DTSTRtsIMON A}.ID SALE OF POTABLE WATER FOR ALL
PURPOSES TO TIIE INHABTTANTS OF THE CITY; IMPOSING COMPLIANCE wml
APPLICABLE LAWS AND ORDINAI{CES; PRESCRIBING CONDIfiONS oF STREET
OCCUPANCY; PRESCRIBING INDEMNIRCATION AND MINIMUM LIIVTITS OF LIABILITYAI{D
PROPERTY DAMAGE; PRESCREING THE CONDffiONS OF OPERATION AND IvIAINTENAi.ICE
OF SYSTEM; PRESCRIBTNG AI\[D RESERVING CERTAIN RIGITTS OF CITY; PRESCRIBING
PAYMENT TO THE CITY FOR THE FRANCHISE AI{D AUTHORITY TO OPEMTE AND
r\IAINTAIN A WATER UTIUTY SYSTEM TN TITE CITY; PRESCRIBINO DURATION AND
ACCEPTANCE OF FRANCHISE; PROVIDTNG FOR THE PURCHASE OF TI{E WATER UTILITY
SYSTEM; PRESCRIBING COI{DffiONS FOR TRANSFER OF FRAI.ICHISE; PRESCRIBING
CONDffiONS FOR THE FORFEITT RE OF THE FRANCI{$E; PROVIDING SEPARABILITY; AND
PROVIDING AN EFFECTTVE DATE.
BE TI ORDAINED BY THE }yIAYOR AI.ID COUNCIL OF THE CITY OF BOISE CITY,
IDAIIO:
Section l. Grant of Nonexclusive Authority.
(a) There is hcreby grantcd by Boise Crty to ttre Boisc Water Corporation, an Idaho
corporation, its successors aud assigru, hereinafter called 'GRAMEE', thc ftanchhe, right and authoriry
to coustruct, extend, improve, mainain and operate a watcr urility systcm for thc collectioo, ransmision,
disriburion and sde of potable vatet, for all purposes for w!!ch watcrr may be used$ o CITY and tbe
inhabirants rhereof. The GRANTEE may con$rucq cxtend, improve, maiotain, opem[e, remove and
replace all nccessary plaots, works, Eains, scrices, couduis, pipes, tants and apparans ald cquipment
Becessary or cocvenicnt for such water utiliry system in, upon, over, acEoss, along and under cach and
all the strgeB, roads, allcyr, bridga, public ways and placcs at and wirhia C[TY as such tuay 8s any time
exist, subject to &e condidons and reguluions hereinafter set forth.
(b) The rigbr to so un€ and occupy said strccs, roads, alleys, bridgcs and other public ways
and places ar atrd wirtrin tho CITY for tie purposes hercin set forth shall not bc exclusive. Tbe CITY
rescrvcs tho right to grana non<ompcdng use of said srces, roads, dlcys, bridgcs and public wap and
0-17-95
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places, within Boise Warcr Corporation's area of service as certified by 0re Idaho Public Utilities
Commission,, b ily other person or fim at any dme during the period of thc Frurchise.
Secdon 2. Cornpliancc witlt Agolicable Lnws and Ordinances. Tho GRANTEE shall,
u dl times during &c life of this Francbise, bc rubjcct to dre lawful cxcrciso of ttre police powcr by thc
CITY and to such reasonable rcgularions as thc CITY s[all hcreafter provide.
Scction 3. Conditions qn StrectOccupanc.v.
(a) All stnrcures, mains, pipes, equipment and apparanrs constructcd, maintained and
- operated, for dre collection, transmissionand disributionof"watcr uader-this Fruchise by ttre 6n-lNTEE"
shall be so located so as not to inrcrfere with the proper use of sreets, roads, alleys, bridges and othcr
public ways and places as well as not o inarttre with existing public utility, sanitary sewcr, geortrcrmd
piping sysreurs and electrical street ligh rystems installuions. Unless otherwise approved in writing by
the City, new water facilities shdl be constuc@d in a locatiou consistcnt with the requircmenc of Ada
Counry Highway District Drawing HD 812 and as subsequently anended. In addition, nec, ratcr
facilities shatl be constructed in accordance wittr ldaho Deparmeut of Health and Wclfare Rules, Title
01, Crapter 08, 'Idaho Rules for Public Drinking Water Systcurs' urd as subscquently amendcd.
Existing asbestos-cemeat (Ag) watcr mains tbat are above proposed sanitary sewer mains shall be steeved
wirh stcel pipe by the GRANTEE. Labor will be provided by the GRANTEE at no cost o the Ciry. The
cost of the steel pipe will be reimbursed o the GRANTEE by the Ciry.
(b) GRANTEE shrll comply with tlre 'Digline' law (Idabo Code Chapter 22, Scction 5O urd
any firrure amendmenB thereo.
(c) The collccrion, transmission and distriburion sysem of GRANIEE shall be so
consmrcred, maintained, operarcd and locatcd so iu not to iajure or darnage unnecessarily any sanitrry
sewers, geothermal piping systems, electrical street light conduit" drains, storm sewers, catch basiru or
other like imFrovements or the subsurface or surface 0f strectsr -roads, dleys, sidewalks, bridges and
other public ways and places, but should uy of the aforesairi ba damaged or injured, whefier by act or
omission to act oa 6e pan of tho GRANTEE, its officcrs, eoployccs or ageuts, or pn xiElrtcly drmaged
or injured by ury properry or instnrmentaliry undcr the carc, ctstody or control of ttre GMNTEE, its
ofEcers, eoployees or agcosr, thc GRANTEE shall inmediatcly notiff thc aftcted sgeocy of 6e damage
ad shall fortbwith, at lts orln cxpemo, eithcr repair the damage and resore the aforcsaid to as good
condition as existod prior m thc timc of the said injury or dqmage or GRANTEE shdl mrke other
arrangemens that arc accepuble with thc atrectcd agency for accomplishing said repsir. GRAI.ITEE shall
kcep ttre affuctd agency informcd of all repairs bcing perfonmcd to allow the ryency to perform
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inspection of dre repair work. All of thc work done for the construcdon, maintenance, operation urd
location, and thc repair and rcstoration of any daurage or injury, shall bc done in accordance wirh ths
sandards of &e aftctcd agcncl as wcll as the provisioru of any and dl gcaeral ordinances or regulatlons
governing the ercavation in and repair of raid strc.ts, roads, dleys, bridges, sidowalks and othcr public
ways asd places. GRAI-ITEE shdl not use suritary sewers for grcundwater disposal duriog commrction.
(d) Thc GRAN1EE shall file one (l) copy in disital.format comparible with thc City's
computer mapping systcn in use at timc of execution of this sgreemcot, or a format mutuatly agrecd upou
Auiing dig"EffiTfEiis egrcemEnq"rilittrthE-ClTY Piiblic Woiks Dep'arbcot to"thc attcntlon of thc Clty
Eugiueer and fifteen (15) paper copies wi6 the City Firc Departrrcnt to the ancntion of the Firc Cbicf
in February of each year a curreot map and plan disclosing dre location urd character of stnrcores and
faciliries of irs collection, Eansmission and distribution systcm constructed add maintaiocd in, upon,
acro$ and under thc strecr, allcys utd public placcs or ways within the CITY. In thc cvcnt that
GRANTEE inaccurarcty maps any of is faciliries or lines insatled aftcr January l, ln6 and such
inaccuracy results in thc misplacement of sewer lincs, gcothermal lines, draiuage faciliries, or elcctrical
streer light conduir urd wiring by the CITY, it shdl be &e GRANTEE's responsibility lo move its
facilities or lines, or pay &e exra cost for any rerouting of CITY facilities neccrsary as a result of such
inaccurarc maps. In an cffon o coordinate the activities of the CITY and the GRA}.ITEE, the
GRANTEE shall provide thc office of the CITY Engineer urd the office of &e Firc Chief burteen (1:1)
days prior to constnrcdon, drawings of proposed and oew projecs. Thc OTY deparmeuts sbdl rcview
the constnrction drawings and provide 6e GRAN1EE with corrmcns rcgBrdiss thc GRANTEE's pmjccc
(e) GRANTEE shdl submit a legal advertiseracnt in the tdaho Daily Statesmao for a pcriod
of t'r,o €) consecutive Sundays cach ycar o notify construction ontractors of their $iltty o submit an
applicarion for GRANTEE's rcrriew to gain preapproval to submit bids on GRANTEE's coumercial
warerline cxrcnsions.
(0 For warerlinc projecs which involve frrnding from the CTIY, GRANTEE sball submit
cvidence to the CITY tlat each of &o prcapproved @ntractoni werc nodfied and askcd ro submit bids on I
the project- In addidon, ttrc CITY shall be allowed to review be bids prior m award of &c pmjcct bf
GRANTEE.
Section 4. Insurqcc for Iriabiliry and Propcrty Damrge and F.aithful Pcrformancc.
(a) Thc GRANTEE shdl indcmnify and save and hold harurlcss thc CITY from and for any
and alt losses, clairs, actioru or judgmens for damages or injury to persons or prcPerqf and losser and
cxpenset causcd or iocurrcd by thc GMNTEE, its officcrr, cmployccs utd ageue.
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O) GRANTEEshall maintain, and by its accepance of this Fraochise specifically agrccs that
it will maintain rhroughout the term of this Franchise, liability insurance in which ttre CITY shall bc
naned as a namcd insured in an amount equal to the ruinimirm coverage rcquired by thc Idaho Ton
Clairns Act. The limits of issurance shall not be deemed a limitation of thc GRANTEE'S covenanr ro
indemnify and save and hold harmlcss the OTY, and if the CITY becomcs liable for an amounr in cxcess
of the insurance limis hcrcin provided, thc GRANTEE covenans and agrees g9 i5ldgrnnify aud save and
hold harrrless the CITY from any and all such losses, claims, actions, judgments or expenses for damagcs
(c) The insurance pollcy obtained by the GRANTEE in compliance wittr this secrion must
be approved by the City Council and such insurance policy, along with writteu evidenco of paymens of
required premiums, shall be filed and mainuined with the Ciry Clork during the term of this Frurchise;
or in lieu of an insurance policy, tle GRANTEE may submit, and keep on file with the City Clerk,
during the term of this Franchise, a current cenificate of iosurance showing compliurce with this section,
but said certificate of insurance must disclose thar Boise Ciry'is a named insured, the policy period, and
that the premium has been paid for the policy period.
(d) The GRANTEE, whcre possible, will cooperate with ttre Ada City-Counry Emergancy
Management Office in implementation of the Local Emergency Operatiotu Plan.
Section 5. OpgIation and,Maintenance of System.
(a) Tbe GRANTEE shall harre the right to construst, extcnd, maiqrain, operate, remove asd
replace its water urility system for the collection, trarumission, distribution and salc of potable nater
ouridc corporare limis of the CITY, which, if the GMNTEE so desires, may be formed into one
inregrared water utiliry system; provided, that all the terms and conditioru of this Ordinance shall
automatically apply to such plans, works, maius, services, conduiu, pipes, tar*s and apparanrs and
equipment necessary or convenienc for such system so oonstructed, exteoded, rodntained and operated
ouBide the corporate limits of the CITY.
(b) The quatity of water disributcd by GRANTEE sball be of such standsrd as to cosform
to the warcr qualiry ard moaitoring standards 6xed by all Federal, sutp and local authorities haviug
jurisdictioo over communiry water systellu.
(c) Thc GRANTEE shall render efficient asd continuous service and make repairs promptly
and iutcmrpt service only for good causo and for the shortest time possible. Such internrptioas, iruofar
as possible, shall bc preceded by reasouable noticc aad be made during pcriods of minimum use of &e
systcu. GRANTEE shall not intemrpt service for any reason, other than Orose approved by I.P.U.C,
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Customer Service Rulcs urd Rcgularions, to mrke oecestary rcpdrl, maintsnatce or make i'nprovemens
wi&out notice to the CITY.
(d) Tho GMIITEE shall conttruct, maiuuin urd operarc its plans, works, Eails, sewices,
conduiu, pipes, tasks ad other apparuus and equipmout necessary ot convenicnr for such wucr utility
systsm in such rDanner ttrarsuch aPparanr, equipmenr and fimrres will not inrerferc with any inst4luioss
of fte CIIY. GRANTEE wilt maiaain 0re rcquired water fire flow, apparairs aad cquipmcnr for a Class
III fire rating as detcrmined by the ldrho Survey urd Roting Burcau, and if upon proper rating inspection,
the GRANTEE's'system'is found"to"be'deficlen( GRANTEE wilt Eakc*thCneddisarf iriiironciieriii 6
sadsry the rcquiremcnts of said Class Itr firc rating elassificuion.
(e) Atl occessary plants, works, mains, seryiccs, conduiu, pipes, tanks and apprranrs and
equipmcnt neccssary or conveniem for such water u:iliry systen, in, upon, over, across, along and under
each and all of the streets, roads, avenues, bridges, and o&cr public ways and places, whcrcver sinrarcd
or locatcd, and whaher now existing or mt, shall bc kept and mainained in a safe, suitable, substandal
condition and in good order urd repair. GRAI.ITEE vill make improvemens (u least 3200,000 annually)
to exisdng facilities fur purposes of making water available for fuc protcction. Such improvcmens shdl
be provided over the rcrm of this franchisc agreement urd be included in GRAI{TEE's anriual capital
improvcmenr program after rcview and approval by thc Fire Departmenl Thc Boise Fire Deparfircm
will provide a priority listing of requcsted capiml improvemens for improved fuc prorccdon to
GRANTEE prior m March I of each year.
(0 The GRANTEE shall include in the information required by Paragraph 3(e) of this
Franctriso ordinance, a copy of GRANTEE's currsst rnnual capitrl erpendinre budget aud a copy of
GRANTEE's current five (O yearcapital improvcments plan. Such informuionshall be provided at lcast
annuatly o &e officc of the City Enginccr u such tirue as such capital improvcment snrdics have been
complcted by GRANTEE.
G) The GRAIIITEE shdl maintain an office in the CITY, or sithin thc Boisc Ciry Arca of
lmpact, which shall be opeo duriog all uual busincss hourr, havo a listcd ulcphone, and be so operatcd
thar complaints and requess for rcpalrs or adjusueor may be rcceivcd at any time.
Scction 6. Rights of CITY in Frutchisc.
(a) The right ls hercby rcscrved by ttre CIIY to adopt, in addision to the provisions conaincd
hereio aod exisdng applicablc ordinutces, such additiond regulations as it shall fiad ncccssary; Providcd,
thu such rcgulations, by ordinancc or othersise, sball bc reasonable and not in conflict with thc righs
herein grurtd and not ia contlia with tlre laws, rules and raguluious of othcr goveramenul rcgulanry
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€eucies having jurisdictioo over GRANTEE's watcr udities opcruion.
(b) GRAIITEE shall couply wi& all applicable rules and reguladoru which, from dme rc
rime, may bc promulgated by the ldaho htblic Utilities C6mmissieq or any other govcrumental authoriry
properly prooulgadng such rules and regulations.
(c) The CITY shdl have the rigbt o inspect and cogy &e mags, plas, plans aud o&er
records of rhe locatioos and character of the stnrcures and facilities of the treauenr, collccrion,
transoissioo and distribution systcrtr nainrained and operared by the CnnMfgg at auy time during
uorual business hours,
(d) The GTY sball have the right o regulatc the locadon and insullation of all plants, works,
mairu, senrices, conduits, pipes, tanks, and apparaos aad equipment of the said water systerD as the
CITY shall find aecessary o iusure compliance wi6 the terms of &is Fraachise.
(e) Nothing hercia conrined in this Ordiaance shdl be coasmred as preventing, dimiuishing
or resricting GRANTEE ftom tsing for public utility purposcs any easeorent showu on any plat or plats
of any portion of dre CITY heretofore or hereafter plared or recorded or atry easement which has beeu
or tnay hereafter be creatcd, granted or dedicarcd for public utilry purposes by any penlon, firm or
corporuiou, provided that the subsurface ud surface thercof shall be resored o as good conditiou as
existcd prior to the said use for public utility purposes.
Scction 7. Peyment o Qity. The GRAIITEE shdt pay ro the CITY during each month
of this Franchise iu anouat equal to 6rec pcrcent Ql6) of 6e gross operuing revenues reccived duriag
the preceding month from the sale of warcr aad water seryices within the corporarc timia of be CITY.
The threc perceut franchisc ratB Eily bc changed to four percent (4!E) upon passage of a resolutiou by
the Boise City Council. The Boise City Council ruay pass a srcond resolutiou duriog the tcrm of this
Fraschise Agreement raising the ftanchise rue to five percent (5t) provided twenty-four @4) noo&s
bave passed since the passage of the prior resolutioo. Each payoeot shall be Badc monthly o the Boise
Ciry Accounting Deparment, wi& payueas due on Augru l, ald November 1, of each Franchise year
the 15th of each oon& following crch billing period. Such paymeoa will be based upou actrral revcuues
as recorded on GRANTEE Records. This payment shall be in ddition to any othu fee, ux or paymeut
owed to rhc CITY; aad shdl be in addition to aly other permit fec or cbarges which the GRATITEE is
obligated trt pay, pursuiult to the provisions of ordinances rnd sunrrci aow in exi$erce or hereinafter
euacted.
Tbe GRAIITEE will itssure that all uewly en'eled properties will be assessed fraschise fces for
the ncxt billing period after rcceipt of ootificarion by Boise City of 6e unexadoo.
The CITY shall have the right at reasonable times to examine and copy &a books and rccords
of ttre GRAIYTEE for thc purpose of verlfying thc stateurens of the gross opcrating rwcmrc! herelnbcbrc
mendoned, including tbe Cusromer Accouns ledgcr and other customer flow data which iodicucs floqr-
corsumption dara nece$ary for Boise City Scwer Billing purposes.
The GRANTEE shdl provide the inforuation nccasary from their water @nsumprioo records
for rhe purpose of updating the CITY's sewar billlngs. It shall be providcd otr a computer rape supplied
by CITY conpetible with GRANTEE's billing system. Thc information shall include such information
as-CddrffiSatltis"-Waidi-Aei:otinri Nulnt Ci;CusmrtrfNamml ;{AAi*s; WIffcr Consumfiidfr-R6itiii!
Dates, Consumption pcr Reading, Total Consumption for &e for tlre last two billing pcriods prior to
March 31 of the current yeu ud have the average of &at same period. The informarion providcd shall
be in Water Book ordcr and contain all book in which thc CITY would have a scwer account. The
CITY will reque$ this information by letter in March of the cumeut year, urd provide the Water Book
Numbers to GRANTEE which have CIIY sewer accouos in them. This inforrution shall be pmvidcd
annually during dre month of April of thc cunent year.
The GRANTEE shall provide CITY personnel accEss to dl GRANTEE's billing rccords for thc
purpose of updating currcnt sewer accounts. GRANTEE shall make opies of sork orders to set new
warcr meters for Public Work personnel revienr. This will be used for cross checking new sewer starur
in Boise Ciry sewer service area. Should thc need arise for this information o bc in printcd form,
GRANTEE shall provide a prinoutof tbe necessary informarion o CITY Utility Billing or Public Works
personnel to resolve a billing dispute.
Sccdon E. Duruion snd Acceptancc Qf Frarchisen This Fruchise and ttre rights,
privileges and aurhoriry hereby granted will be in full force ud effect as of November l, 1994 utd shall
conrinue in full force and effect for a renn of twenry onc (21) years, provided tbat within thiny (30) days
after tho date of ttre passage of this Ordinance the GRANIEE shall file with the City Clerk, its
unconditional accepmnce of &is Franchise and promise rc comply with and abide by its provisions, tcrErt
and cosditions. Such acceptancc and promirc shall be in writing aod duly executcd aod sworn to bc or
ou bchalf of the GRANTEE before a lrlotary Public or other officer authorized by law to administcr
oaths. GRANTEE shall pay all costs and expenses associated with t[e publication of &is Franchisc
Agrecment Ordinance as requircd.
Section 9. Acqlrisition of Warer System, Nothing contained in this Franchise Agrcemeor
shalt bc dcemed to negats the CITY's right or oprion to negotiue with GRANTEE during rhc term of the
Franchise for purchase by tbe OTY of the Company's property in wholc or in part. Nor is anything
contained herein inrcndcd o effect the right of the respective parties herao as confered by law in &e
event of the lawful condemnation of the Company's propcrry in whole or in pan- Further, it is
specifically undersood ud agrecd that in tbe event the CITY acquires the Company's properties by
condeonation no value shall be attributable to atry unexpircd term of this Franchise.
Section 10. Iransftr of Franchise. This Francbiseshallnor-be n.iigued, trursferred,
or sold without thc conscnt of the CITY; provided, howevcr, that consent of the CITY shall uor be
requircd in connection with the execution of mongag$ or trusr iudennrres or pledging rights under this
Franchise as may be neccssary for the procuring of capital.
Section 11. Forfeinrr,c of Franchise. This Franchise may be terminated and cancelled
at any time for failure of the GRANTEE to comply with the terms and conditions hercof. Prior to noticc
of intent to terurinare ud cancel, &e CITY shall give wriuen notice of the matrers and facts which
GRANTEE is claimed to be in det'ault or uoBcompliaoco, such notice to be given by peaonal service or
by registered mail. Should GRANTEE fail to oorect and remedy such default or noncompliance witbin
a reasonable time from the date of receipt of said notice, such reasonable timc to depend upon the
exigcncies surrounding the mattcrs and facts set forth in said notice, then urd in that event said CITY
may forthwith givo GRANTEE norice of its iorent to teminste and cancel this Franchise urd grant. Such
notice of intent to terminate and cancel shall be by ordinance duly adopted after ninery (90) days notice
to GRANTEE by certified mail or personal service of such intent to terminarc ud cancel and after a
public hearing in which the GRANTEE has been given an opporunity to be heard beforc the City
Council.
Section 12. Separnbilirf. Tbe provisions of this Ordinurcc are hereby declared separable
and if any secriou, clause or phrase hereof is hereafter declared invalid and unconsriutional, the same
shall noc a.ffect the validiry of thc remaining portions of &is Ordinaace.
Section 13. This Ordinaoce shall be in full force and effect after is passage, approval
and publication and retroactively to Novembcr l, 1994.
{"
PAssED by thc council of the city of Boise city, Idaho this l]-day of April, 1995.
AIPROVED by thc Mayor of ttre City of Boise City, tdaho, *is /l day of Aprit, 1995.
APPRO\TED:
Mayor
Ciry Clerk
CMY OF BOISE ooy't#
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CORRESPONDEI.ICE . f ti,7"e'4
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From:
lvlayor Brent Coles
Chuck Mickelson
City-Eggineer
PuUtic Works Pepi#eit
Subjec{: Franchise Agreement/[Iydrant Issues
During our discussion on ttre draft franchise agreement, you asked that I look at the issue
of donating 6re hydrants and/or selling $e hydrans to Boise Water Corpoution (BWC). I
met with Wayne Booe, discussed the issue in concept, and he prepared two workshees to
cover these issues. The worksheeB are anachcd.
Option No. 1 reflecg the City donating the hydrans to BWC. For purposes of this exercise,
we have assumed Ore value !o be $2,000,000. n/ayne indicated that there would be no
change in their rate base for earnings purposes except for annual maintenance expense. His
tarc asomey has indicated that BSIC would not have to pay uxes on the contribution of
S2,m0,000. llowever, in a conversation t had wifi our contract afiorney @ete Richardson)
and a PUC accouniant, they did not see why there would not be a ta:r implication to BWC
if a municipality were to contribute value to a private utility. If we elect to proceed forrvard
wittr this option, then I think ttris issue would need o be explored further.
Option No. 2 reflecs BWC buying the hydranrs from Oe City for $2,000,000. This would
increaso the BWC rate base by $2,000,000 and +heorctiea*l7BWC would be endtled to e:rn
i.l
about 20% on that $2,000,000 each year iN an operaring revenue (ttre operating revenue of
$400,000 phs an assumed annual maintenance cost of S50,000). fitis would represent an
increase to 50,000 warcr customers of about $9/year. This amount would decrease yearly as
the hydrants are depreciated and at the end of l0 years, the customer cost would be
approximately $8. l2lyear.
I am not cenain wtry the Ciry wans to give up the ownership of &e fire hydrans. If it
is an issue of operadon and maintenance cost, then the Ciry should e)@mine the cost issue
prior b urrning over Srese valuable assets to BWC. If we werc o scll the asseB to BVrlC,
obviously there would short+erm gain (cash to the City) for the 4greed upon value; howcver,
ttre 50,000 wuiler company customers will continue to pay for &ese assets, *ttich havc already
been paid for once, for the nex 45 years (the life of the asset). As BWC replaces ttrose
asses (i.e., pipe, hydrants, and valves) then they would earn on their investrnena just as they
are able to eam on other plant which is conributed by developers.
Philosophically, I raise the issue of losing control of the management of assets. Ovcr the
years, there have been many comments (opinioru) that the creation of ACHD has not been
in the best interest of Boise City bccause of the loss of control of the roads. Gening rid
of the hydrants is also contrary to our philosophy in the cay n€ are dealing with street
lights. Approximately 12 yars ago, the City decided tcl own new street lighs rather than
having Idaho Power capialize the poles and frmtres because their rarcs were approximately
50% to 100% higher than if Boise City owned &e fixnrres. As a result of that decision,
we have bccn requiring developers to put in strect lighs and leveraging ttre Ada County
Highway District, ffD, etc. Sre now own over half of the fixurres within the system,
whereas in 1980 we probably owned about 1576 of the fixtures wi*rin the sysrem.
Consequenrly, the overall sreer light budget is dramatically less than it would have been had
we not changed our philosophy.
There have also been comments from time to time that the Ciry of Boise should own rhe
water system. If that were ever considered a seriou option, &en giving away or selling the
irvdianG would maEe -ttr6 purchrse jllii iffi mucH-m6i6-iiiftieffi.--
It is my recommendation that this issue not be pursued in the franchise agreement
negotiations.
ljr
Auachmens
cc: Bilt Arcell
Rcon Ross
Stevc hrwis
CF/SF - Boisc Wrtcr CorP.
3WP/CRM/HYDRAT.IT.CRM
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