20150317Petition.pdf

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WATER AND SEWER SYSTEM AGREEMENT
THIS WATER AND SEWER SYSTEM AGREEMENT (his "Agreement") is made and
entered into this 2nd day of March, 2015 (the "E&IiE-Date"), by and between Taylor
Mountain Water and Sewer District, a water and sewer district organized pursuant to Chapter
32 of Title 42 of the Idaho Code, whose address is c/o Robert L. Harris, Holden, Kidwell, Hahn
& Crapo, P.L.L.C., 1000 Riverwalk Dr., Ste. 200, P.O. Box 50130, Idaho Falls, Idaho 83405
(hereinafter "District"), an6 Country Club Hills Utilities, Inc., an [daho corporation, whose
address is P.O. Box 50220, Idaho Falls, Idaho 83405 (hereinafter "CCHU"). District and CCHIJ
are individually a "Party" and together the "Parties".
RECITALS:
A. CCHU is an Idaho corporation formally organized in 1994 for the purpose of
owning and operating a "domestic water distribution system and a domestic sewer system."
CCHU Articles of Incorporation at Article V. The water and sewer systems are generally
associated with the Idaho Falls Country Club and its surrounding residential subdivisions
identified on Exhibit I attached hereto.
B. CCHU has entered into a certain Compliance Agreement Schedule ldaho Code $
39-116A dated January 17, 2012 (hereinafter, "Compliance Asreement") with the Idaho
Department of Environmental Quality ("[DEO") conceming needed infrastructure improvements
to CCHU'S sewer system. As explained in CCI{U's Environmental Information Document
submission to IDEQ:
[CCHU] has entered into a Compliance Agreement with IIDEQI to
improve its wastewater facilities by January 1,2016. Currently, CCHU treats
wastewater from its system in two total containment lagoons. The lagoons are
undersized and are leaking by more than what is allowed in the new wastewater
rules. The result of the leaking lagoons is raw wastewater percolates into the
Eastem Snake River Plain Sole Source Aquifer, thereby creating a significant
hazard to public health. The Eastern Snake River Plain Aquifer is the sole source
of drinking water for all of southeast ldaho, therefore it is essential work is
complete[d] to eliminate potential contaminates such as the CCHU lagoons.
Eastem Idaho Regional Wastewater Authority (EIRWA) has constructed a
new wastewater treatment plant in Shelley, Idaho with the capacity to treat
wastewater from Shelley, Ammon, Bingham County, and Bonneville County. In
addition to the treatment plant, there is also a large diameter sewer line in close
proximity to Country Club Hills with the capacity to handle the additional
wastewater flow from CCHU, therefore, the Recommended Alternative is to
WATER AND SEWER SYSTEM AGREEMENT - I
install two miles of l2-inch sewer line and associated appurtenances in an existing
paved county road to the existing Eastern Idaho Regional Wastewater Authority
infrastructure, and tum over the responsibility of treating the wastewater to the
Oxbow Wastewater Treatment Plant in Shelley, Idaho.
Environmentol Information Document at l-2.
C. In order to complete the Recommended Alternative described in the above
paragraph, CCHU has applied for and received a low-interest loan from IDEQ in the amount of
$1,641,000.00 (the "Loan"). CCHU is proceeding through the remaining steps of the IDEQ
process to receive the loan amounts and begin construction of the Recommended Altemative.
D. However, EIRWA has requested the formation of a sewer district before it will
allow connection into its system because a sewer district has taxing authority. Additionally,
CCHU desires to transfer ownership of the water and sewer system to another entity for
operation:
As a condition of accepting and treating the wastewater from CCHU, the
board of EIRWA is requiring CCHU to form a sewer district. CCHU
management is currently taking steps to form the district and have hired an
attorney to lead the effort. The name of the district will be the Taylor Mountain
Water and Sewer District (TMWSD) and once it is formed and a Board of
Directors named, the EIRWA Board will issue a "Will Serve" letter to TMWSD
for their existing connections.
Environmental Information Document at 2.
E. Therefore, District has recently been formed to (l) participate in the
Recommended Alternative as a condition of connecting to the EIRWA system and complying
with the Compliance Agreement, and (2) to receive the assets of CCHU and assume operation of
the water and sewer system. In order to accomplish these objections, the Parties hereby agree as
follows.
AGREEMENTS
NOW, THEREFORE, for good and valuable consideration, the receipt and legal
adequacy of which are hereby acknowledged, and upon the mutual covenants and agreements
hereinafter provided, the Parties agree as follows:
l. Compliance Asreement. District shall work with CCHU in good faith and
undertake any and all actions necessary to assist and ensure CCHU's compliance with the
provisions and deadlines contained in the Compliance Agreemenl to avoid any of the potential
penalties outlined in paragraph I I of the Compliance Agreemenf. Nevertheless, District was not
a party to the Compliance Agreement, and District assumes none of the obligations or potential
penalties agreed to by CCHU in the Compliance Agreement. District does reserve the right to
enter into another compliance agreement with IDEQ in its sole discretion.
WATER AND SEWER SYSTEM AGREEMENT - 2
2. Assienment of Loan and Transfer of Assets. The Parties shall undertake all
necessary actions and execute all necessary documents in order to assign the Loan to the District.
As part of that process, it is necessary that District own the water and sewer system (except for
the sewage lagoons) in order to provide collateral to IDEQ to secure the Loan. In that regard, the
Parties further agree as follows:
(a) Transfer of Water and Sewer System Assets. CCHU shall sell, convey,
assign, transfer, and deliver to District, and District shall purchase or otherwise acquire from
CCHU, all of CCHU's right, title, and interest in and to all of CCHU's property and assets,
whether real, personal, or mixed, tangible and intangible, of every kind and description,
wherever located described in Exhibit 2 (collectively, the "Purchased Assets"), but excluding the
Excluded Assets listed on Exhibit 3, free and clear of all liens, claims, encumbrances, security
interests, and impairments of title of any kind or nature (collectively, "Li€o!"). To the extent any
Purchased Asset by its terms cannot be sold, CCHU shall assign or otherwise transfer to District
all of CCHU's rights therein, or if not assignable, sublease or sublicense such assets to District in
a manner satisfactory to District.
(b) Condition of Purchased Assets. The Purchased Assets have been
examined by District, and District agrees to obtain the Purchased Assets "as is."
(c) Purchase Price. There is no purchase price for the Purchased Assets.
(d) Title lnsurance Policy. CCHU shall select a title company and shall
secure a title commitment from said title company for the real property being transferred from
CCHU to the District identified in Exhibit 2 (excluding Water Right No. 25-7090) which CCHU
shall provide to District fourteen (14) days before Closing for District's review and objection in
the event a defect in title or other issue is identified. In the event there are no objections to the
title commitment, at Closing, said title company shall commit to issue to and in favor of District
an ALTA Standard Owner's Policy of Title Insurance issued by the title company with respect to
the real property to be transferred to District insuring fee simple title to such property in District
effective on the Closing Date, subject to the standard exclusions and exceptions in such form of
policy and subject to any permitted exceptions. CCHU shall pay the costs for such title
insurance policy for the real property to be transferred to District, along with any escrow fees
and other closing costs associated with the real property.
3. Limited Assumption of Liabilities. At Closing, District shall only assume liability
for the future use of the Purchased Assets by District. District shall not assume, and therefore
CCHU shall retain liability and/or responsibility, for past actions and operations of CCHU and
CCHU's operation of the water and sewer system (including the sewage lagoons) either currently
known or not currently known to the Parties. District shall likewise not assrune, and therefore
CCHU shall retain liability and/or responsibility, for any currently pending litigation against
CCHU, including, but not limited to, Bonneville County Case No. CV-2014-1849-OC (Norell v.
Country Club Hills Utilities, Inc., et al.).
4. Risk of Loss. CCHU shall bear the risk of loss and repair to the Purchased Assets
prior to Closing, including the cost of repair for material damage or restoration to operating
condition where such damage to or cessation of operation of any of the Purchased Assets occurs
WATER AI\[D SEWER SYSTEM AGREEMENT - 3
prior to Closing. District shall bear the risk of loss to the Purchased Assets from and after
Closing.
5. Closine.
(a) Date and Place. Subject to and upon the terms and conditions of this
Agreement, the closing of the Agreement will take place at the Idaho Falls Country Club
Clubhouse on March 2,2015 (the "Closing Date") unless the Parties otherwise agree.
(b) Delivery of Documents. At Closing, the Panies shall deliver all necessary
executed documents to transfer title and/or ownership of the Purchased Assets to District.
(c) Assisnment of Assessment Accounts. At Closing, CCHU shall assign all
assessment accounts to the District, and thereafter, District shall have any and all rights to such
assessments, including revenue received after Closing from accounts receivable (or assessments
that are otherwise in arrears). In addition, District shall assess in March for utility services
rendered in February by CCHU, which is consistent with CCHU's past practice, and District
shall be entitled to the revenue from such assessments. From these funds, the District shall pay
the February 2015 Rocky Mountain Power bill.
(d) Assessment Accounts Receivable. At Closing, CCHU shall provide an
updated list of accounts receivable to CCHU incuned prior to Closing.
(e) Assisnment of Accounts for Services. At or prior to Closing, CCHU shall
have paid all outstanding balances incurred for services rendered for CCHU up to the Closing
Date except as specified in Paragraph 5(c). At Closing, CCHU shall consent to the assignment
of the accounts for such services to District's name. The District shall transfer after closing all
accounts to its name.
(0 Payment of Taxes. CCHU shall pay all government and property tax
notices associated with the Purchased Assets up to the Closing Date. All government and
property taxes incurred after the Closing Date shall be paid by District. Payment of government
and property taxes shall be pro-rated if necessary.
6. Lease of Existins Lagoons. CCHU hereby leases to the District the existing
sewage lagoons and the property to which it is appurtenant from the Closing Date up until the
sewer lines are connected to the EIRWA system and use of the lagoons is no longer necessary.
Because the District's use of the lagoons shall be the same as it has been historically used,
CCHU shall assume liability for use of the lagoon during the term of the lease. As payment for
lease of the lagoons, District shall pay any and all taxes or assessments associated with the
sewage lagoons and the property to which they are appurtenant. District shall also be responsible
for repair and maintenance of the lagoons and lift station during the term of the lease.
7. Chanse Orders for Rehabilitation of Existinglaqoons. Once the existing sewage
lagoons are no longer needed, they are scheduled to be rehabilitated as part ofthe overall project
funded by the Loan (the Environmental Impact Documenr has allocated five thousand dollars
($5,000.00) for this work) and the District will be responsible for any work that can be
completed as part of the total project within the amounts available for the Loan. CCHU shall
WATER AND SEWER SYSTEM AGREEMENT.4
pay for any change orders that may occur which are specif,rcally related to rehabilitation of the
lagoons that exceed the amount available under the Loan.
8. Water Riehts. The only water right associated with the CCHU system is Water
Right No. 25-7090, which was decreed on September 30, 2005 in the Snake River Basin
Adjudication by the District Court for the Fifth Judicial District of the State of Idatro. The water
right is more fully described in SRBA Decree attached hereto as Exhibit 5. As described in
Exhibit 5, Water Right No. 25-7090 allows domestic use for only 65 lots, but there are currently
an estimated 185 platted lots that are or will be serviced by the CCHU water and sewer systems.
At Closing, CCHU shall pay five thousand dollars ($5,000.00) to District for the anticipated
costs preparing the application for water right permit, filing fees, and other costs associated with
efforts by District to obtain the water right permit to cover the remaining lots (approximately 120
lots).
9. EngineeringServices. CCHU and J. Freiberg Engineering, LLC have entered into
certain agreements for engineering services. Nothing herein shall either obligate or prohibit
District from entering into a new contract with J. Freiberg Engineering, LLC, or another
engineering firm, for engineering services to complete the Recommended Alternative.
10. Representations of CCHU.
(a) Authoriqv. CCHU represents and warrants that it is a corporation,
organized and existing under tdaho law. CCHU represents that it has the power and authority to
make this Agreement and to carry out the provisions hereof. The execution and delivery of this
Agreement has been duly authorized by CCFIU.
(b) Compliance with Aereements. CCHU warrants that it is not in breach of
any agreement relating to or associated in any way with the water and sewer system.
(c) Obligations of CCHU. CCHU will execute, acknowledge and deliver to
District an assignment as to any warranties and repair and maintenance agreements relating to
the property and assets and other such instruments as shall be required or as may be desirable in
order to effectively vest in District good, insurable, and marketable title to the assets, free and
clear of all liens, encumbrances, pledges, security interests and charges.
I l. Representations of District.
(a) Authoritv. District is duly constituted and validly existing under the law
of the State of Idaho. After a majority vote of the Board of Directors of District, District has the
power and authority to enter into and perform this Agreement according to its terms. Thus, the
execution and performance of this Agreement has been duly authorized and approved by all
necessary persons and bodies. The officer(s) executing this Agreement and all documents in
connection with this Agreement are fully authorized to do so.
12. Warranties to Survive Closine. All representations and warranties made by the
Parties herein are also covenants, and each Party shall take all such actions as may be required to
satisfu said covenants and to cause the representations and warranties to be true on and as of theclosing. The Parties' respective obligations to close and consummate the transaction
WATER AI{D SEWER SYSTEM AGREEMENT.5
contemplated herein are contingent upon the representations, warranties and covenants contained
in this Agreement being true, valid and satisfied on and as of the closing. All such
representations and warranties shall survive the closing.
13. Default. Either Party's failure to perform any material term or condition of this
Agreement or a Party's breach of any of such Party's representations or warranties (in which
event the non-defaulting party may pursue any available remedy, including equitable relief) shall
constitute default under this Agreement.
14. Miscellaneous.
(a) Attorneys' Fees. [f either party commences any legal action or proceeding
to enforce any of the terms of this Agreement (or for damages by reason of an alleged breach
hereof), the prevailing party therein shall be entitled to recover from the other, in addition to any
other relief granted, its reasonable attorney's fees, costs and expenses incidental to such legal
action.
(b) Notices. Any notice under this Agreement shall be in writing and be
delivered in person, by U.S. Mail, by private courier, or by facsimile. Notice shall be provided
to the following:
District CCHU
Taylor Mountain Water and Sewer Country Club Hills Utilities, Inc.District c/o Michael Groth
clo Robert L. Harris, Holden, 570 S. Yellowstone
Kidwell, Hahn & Crapo, P.L.L.C. Idaho Falls, Idaho 83402
1000 Riverwalk Dr., Ste. 200
P.O. Box 50130
Idaho Falls, ID 83405
District's Representative
Robert L. Harris
Holden, Kidwell, Hahn & Crapo,
P.L.L.C.
1000 Riverwalk Dr., Ste. 200
P.O. Box 50130
Idaho Falls, ID 83405
CCHU's Representative
Steven L. Taggart
Maynes Taggart PLLC
525 Park Avenue, Suite 2E
Idaho Falls, ID 83402
(c) Merser. This Agreement supersedes any and all other written or verbal
agreements between the Parties hereto regarding the Water Right. Neither CCHU nor District
shall be bound by any understanding, agreement, promise, representation or stipulation, express
or implied, not specifically contained herein.
(d) Remedies Cumulative. Upon any breach, any and all rights and remedies
which either Party may have under this Agreement or by operation of law or equity, shall be
distinct, separate and cumulative and shall not be deemed inconsistent with each other. No such
right or remedy, whether exercised by said Party or not, shall be deemed to be in exclusion of
WATER AI\[D SEWER SYSTEM AGREEMENT - 6
any other right or remedy, any two or more of all such rights and remedies may be exercised at
the same time or separately as desired.
(e) Further Documents. The Parties hereby agree that they shall sign such
other and further documents as may be required to carry into effect the terms and conditions of
this Agreement.
(0 Enforceability. The validity or enforceability of any term, phrase, clause,
paragraph, restriction, covenant, agreement or other provision hereof, shall in no way affect the
validity or enforcement of the remaining provisions, or any part hereof.
(g) Countemarts. This Agreement may be executed in any number of
counterparts for all the convenience of the Parties, all of which, when taken together and after
execution by all Parties hereto, shall constitute one and the same Agreement.
(h) Governing Law. This Agreement shall be governed by the laws of the
State of Idaho.
(i) Successors. This Agreement is for the benefit only of the Parties hereto
and shall inure to the benefit of and bind their respective heirs, agents, personal representatives,
successors and assigns.
CI) Essence of Time. Time is of the essence in this Agreement.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement effective
on the date set fonh above.
*DISTRICT"
TAYLOR MOUNTAIN WATER AND SEWER
DISTRICT
..CCHU"
COUNTRY CLUB HILLS UTILITIES,INC.
By:
By:
---':7-/.'.z ' .l ,.r- o ,'/ rr''-
WATER AI{D Sf,WER SYSTEM AGREEMENT. T
EXHIBIT I
PROPERTIES SERVED BY THE CCHU SYSTEM
Holiday Hills Subdivision, Division No. 1
Holiday Hills Subdivision, Division No. 2
Holiday Hills Subdivision, Division No. 5
Holiday Hills, an ldaho Condominium Project
Country Club Hills, Division No. I
Country Club Hills, First Amended Division No. 2
Country Club Hills, Division No. 3
Idaho Falls Country Club (domestic water only)
t home located at1759 E. 113 S., ldaho Falls, ID 83404 (as of the Effective Date, this
home is owned by Ron Dickemore)
I home located at 11645 S. l0th E., Idaho Falls, ID 83402 (as of the Effective Date, this
home is owned by Robyn Longhurst)
WATER AI{D SEWER SYSTEM AGREEMENT - 8
l.
EXHIBIT 2
PURCHASED ASSETS
All books and records of CCHU, including, but not limited to, customer information,
account information, accounts receivable and meter reading entries.
The following items of real or personal property:
a. 2 wells
b. Storage tank
c. 2 pumps
d. Electrical system
e. Water & sewer lines to various properties
f. Water keys
g. Meter reader tool
The real property identified in the attached warranty deed.
Water Right No. 25-7090.
2.
a-r.
4.
WATER A}tD SEWER SYSTEM AGREf,MENT.9
EXHIBIT 3
EXCLUDED ASSETS
l. Sewage lagoons, lift station and associated real property as described in the attached
deed.
WATER AIYD SEWER SYSTEM AGREEMENT. 10
l.
EXHIBIT 4
ACCOUNTS RECETVABLE
As contained in the CCHU ledger book given to District at Closing.
WATER A}tD SEWER SYSTEM AGREEMENT - 11
EXHIBIT 5
SRBA DECREE FOR WATER RIGHT NO. 25-7090
rN 1t{8 DrSfRt€f courT oF ?Ba PrFm flrDtct[ DrsrRret oF tBs
STATB OF IDAIIO, IX A}ID FOR IIIE COUlrT!' OF MIN FA],I,S
SOURCE:
ouNrt?Y:
PRIOTI?Y DATE:
POI!|' OP DIVEBSIOll:
PI,R,POSE AND
PERIOD OF USE:
GROfrD XATS
1 .00 cFs
?8 .00 trY
ot / !6 1L916
T0lN Rr0E 52l
s2g
NM M MDRASS:
PI,ACS OF USE:
COI,}ITR' CLUB XILI.S T'TILITIBS
C/O I{IKE CROTH DRES
5?0 s YELtOllsToNE llflr
rDMO F&LS. rD 83{02-190?
In Re SRU
Clae xo. 19576
PNTIA'J DECREE ruISUATT 10r,R.c.P. 5a{b} Fot
flat.r Righr 25-0?090
sEsr
SESE
NEE
slt}{E
SENT
2005 SEP 30 PX 02:00
DIS?NIM COURT . SRBA
TIIIN FALLS CO., IDAHO
PILED
PAGB 1
Scp-10-2005
mSnSE within Bomeville County
SESilE
PMMSE OF USE PEXIOD OF gSS
fbiGrtlc 0r-01 TO 1a-11
&u.a!ic usG ia Eor 55 hooe6.
b.eaE ic
QUAYTITI
I .00 cFs
?6.00 Afl
xtthjn Bouncvillr Costy
SHSE
MNE
IENB
f0rN R38E 521
s23
OTEER PROVISIOTiS NBCESSARY FOR DEgINITIOII OR AIXINISTRATIOT OF TIIIS PATEN RICIf!:
THIS PANTIAL DECTEE tS SEECA To SUCfi GEf,EW PROVISIOXS
NSCESSTRY PON fi'B DPFI}'ITION OF TAE RIGII}S OT FOR ?'IE EFFICIEM
A'IIII|tSTRITION OF TAB 9ATAR UG}TTS AS UY BE ULTIH?ELY
DETERHIXED BY TIIU COURT AT I POIIE IN TIE NO LA?ER :ru $.BgilIBl O8 A FINAI UNIPIED DBCREE. I.C. SACTION {2.:'t216}.
RULE 5((b) CERTTPTCATE
f,irh rcrpact to lhe iatuar detcriinad by Lhc .bov6 judghldt o! older, tt i3 hrrcby.caRTIFlED, ln .ccold.nccyilh Rule Sa{b), I.R.c.E., lhat the courg bat dera!6i8cd !ha! lhara ir io juai rG.son lor dG1ay ot the ertry ol !
ltnal judsEan! and !ha! lha court ha, and doar hcrcby dircct th.t the .bove judgdent or o!al!! lhall b€ a llRal
judgnanr upon yhlch execurion sey ia8ue rod.n rPPeaI ily be Erkcn aa pi@idcd by tha Iil hg Appellarc Rulra.
4*t-, |4a**\-/
ffi
PlrBidlnE Judg. o! Lhc
Sn.ke Rives B.sin ldjudlcatioD
SRU PARTII DACRBA PURSUATI" T! I.R.C.P. 5'(b'
x.ter Rlght 25-O?o90
WATER AI\[D SEWER SYSTEM AGREEMENT - 12