Saturday, April 29, 2006

Lacey signs on to water deal

The following article appeared in the April 28, 2006 edition of The Olympian.

Lacey signs on to water deal
County’s three biggest cities in accord on All American plan

BY CHRISTIAN HILL
THE OLYMPIAN

LACEY — The county’s three largest cities now have agreed to jointly buy the water rights of the former Miller brewery after the Lacey City Council signed off on the accord Thursday.

The council approved a settlement that will enable the cities to acquire all water rights owned by All American Bottled Water Corp. and pay $1,750 for every acre-foot of water that the state determines is valid.

In the same vote, the council authorized the cities to supply half of their newly acquired water to All American for its as-yet-unrealized business operation for 99 years. Under the agreement, All American can receive no more than 1.8 million gallons per day.

There was no discussion among Lacey council members before the unanimous vote.

In February, the city of Olympia sued to condemn the water rights at the property in neighboring Tumwater. The cities of Lacey and Tumwater later joined the petition. All three cities need to secure more water to serve their growing populations.

The cities and All American agreed to the settlement to avoid a protracted legal fight.

The negotiated price for each acre-foot is “in the ballpark” of what other cities have paid to purchase water rights, but is higher than what Lacey has paid in the past, City Attorney Ken Ahlf said.

“It’s important we acquire the water rights expeditiously,” he said.

Last June, the city imposed a de facto moratorium on new development within its urban growth area because it is rapidly running out of water it’s authorized to withdraw.

On paper, the former brewery has water rights for industrial use totaling 7,420 acre-feet. An acre-foot is 325,851 gallons.

The cities will ask the Washington State Department of Ecology to change the water rights from industrial to public use. As part of the process, Ecology will determine how many of those “paper” water rights are valid.

It could take Ecology up to three years to make the determination, Tumwater City Administrator Doug Baker said this week. In the meantime, All American can use up to 1.8 million gallons a day, according to the agreement.

The cities fear some of the water rights have become invalid from non-use, Ahlf said. The state can relinquish water rights not used for at least five successive years.

Olympia made changes to the agreement Tuesday to protect the cities’ interests. The Lacey City Council approved the revised agreement. The Tumwater City Council, which voted for the original agreement Monday, is scheduled to approve the revisions Tuesday, Ahlf said.

The Thurston Public Utility District, which provides water for customers in neighborhoods just outside Lacey, is proceeding with a separate court petition to condemn the former brewery’s water rights.

All American has yet to convert the former brewery into a water bottling plant. Its settlement with the cities will allow the company to secure financing to complete the conversion.

A water right gives the holder legal authority to withdraw or divert a specific quantity of water for a specific and beneficial purpose. The authority is required because water in Washington state collectively belongs to the public.

Wednesday, April 26, 2006

Olympia signs on to water deal

The following article appeared in the April 26, 2006 edition of The Olympian.

Olympia signs on to water deal

By Katherine Tam
The Olympian

Two down, one city to go.

On Tuesday night, the Olympia City Council joined neighboring Tumwater in signing onto a settlement agreement to acquire the water rights at the old Miller brewery. The deal also would provide half the water to the owner so a water bottling operation promised two years ago can be launched.

The council made three clarifications to protect the cities’ interests.

A key change ensures that All American doesn’t simply turn on the faucet to satisfy language in the contract requiring that it use some of the water during a consecutive three-year period to preserve the supply.

All American must use the water for water- or beverage-bottling operations or the cities can claim All American’s share, the clarification states.

Olympia’s vote was 4-0-1, with councilmen Joe Hyer and Jeff Kingsbury absent.

Councilwoman Karen Messmer abstained, saying she recognized the deal’s importance but she did not want to vote until other agreements came through.

Those other agreements would outline, for example, the operating arrangement among the cities for the brewery land and facilities, such as wells and pumphouses, they’ll use to draw the water.

Other council members said signing the agreement for the water rights is key now, and other details will be worked out later.

“It’s important to get this relationship nailed down, take advantage of the fact we’re able to negotiate rather than litigate,” Councilman Doug Mah said. “Time really is money.”

All American does not object to the clarifications to the settlement contract, said Tom Lemly, attorney for the brewery owner.

“All American is not interested in wasting a drop of water,” he said. All American could consider increasing production in the winter and decreasing production in the summer so the cities can have more water during the hot months when the cities’ demands peak, he said.

The changes mean the agreement must go back for final approval to the Tumwater City Council, which unanimously signed off on the original contract Monday, said Bob Sterbank, Olympia city attorney.

Tumwater Mayor Ralph Osgood, who was reached by phone after the meeting, said a council vote might not be necessary if the changes aren’t substantial, but he planned to check with his city attorney. The council would reconvene to approve it if necessary, he added.

Lacey is slated to take up the agreement Thursday.

Under the settlement agreement:

• Lacey, Olympia and Tumwater would acquire all of the water rights and pay $1,750 per acre foot. Each city would deposit $500,000 into the Thurston County Superior Court registry as an initial payment.

There’s up to 7,000 acre feet of water, according to the Department of Ecology’s records, meaning the price could be as high as
$12.3 million. All American’s lawyers and city officials think there’s less water than what appears on paper, so they would pay less. Final numbers will come from the state Department of Ecology.

• All American would be supplied with half the water — with a cap of 1.8 million gallons per day — for 99 years. The cities would not pay for the water rights allocated to All American. All American would pay the cities $10 a year, plus a fair share of the operations, maintenance, repair, testing and treatment costs to supply the water.

• If cutting the water supply in half for All American produces less than 1.8 million gallons a day, All American can buy up to 750,000 gallons a day from Tumwater at the city’s standard commercial rate.

• If All American doesn’t use the water for three years in a row, the cities would claim all of it and pay $1,750 an acre foot to the company. During the three years All American doesn’t use the water, the cities can use it at a fee of $17.50 per acre foot a year, plus inflation.

The price for the water rights was based in part on the cities’ experience on recent water right purchases, Sterbank said.

Meanwhile, the Thurston Public Utility District, which is not party to the settlement agreement and filed an eminent domain request on the brewery land after the cities filed theirs, will press ahead with its petition in court, Gary Cooper, head of the commission, said Tuesday.

Olympian reporter Christian Hill contributed to this report.

Tuesday, April 25, 2006

Tumwater OKs brewery deal

The following article appeared in the April 25, 2006 edition of The Olympian.

It's another step along the road, although things are far from over.


Tumwater OKs brewery deal
Agreement shares water rights between 3 cities, bottler

By Katherine Tam
The Olympian

TUMWATER — The first of three cities has signed onto a settlement agreement to buy water rights at the old Miller brewery, possibly for as much as $12.3 million.

The City Council approved the deal at a special meeting Monday night. Officials said they are hopeful that a part of the agreement providing half of the water to the owner, All American Bottled Water Corp., will be an incentive for it to launch its bottling operation as promised. The brewery supplied 400 jobs before it closed three years ago.

“I am looking forward to those 200 jobs, which will replace half the jobs that were there before,” said Ralph Osgood, Tumwater mayor.

Monday’s vote was unanimous, with councilmen Jerry Murphy and Pete Kmet absent.

The Olympia City Council will take up the proposal tonight. Lacey follows suit Thursday.

The three cities and All American reached a settlement agreement late last week. Lacey, Olympia and Tumwater would acquire all of the water rights and pay $1,750 per acre foot. Each city would deposit $500,000 into the Thurston County Superior Court registry as an initial payment.

There’s up to 7,000 acre feet of water, according to Ecology’s records, meaning the total price could be as high as $12.3 million. All American’s lawyers and city officials think there’s less water than what appears on paper, so they would pay less. No one knows how much water there is until the state Department of Ecology transfers the rights from industrial to municipal use.

All American would be supplied with half of the water — with a cap of 1.8 million gallons per day — for 99 years. The cities would not pay for the water rights allocated to All American. Instead, All American would pay the cities $10 a year, plus a fair share of the operations, maintenance, repair, testing and treatment costs to supply the water.

If All American doesn’t use the water for three years in a row, the cities would claim all of it and pay $1,750 an acre foot to the company.

During the three years All American doesn’t use the water, the cities can use it at a fee of $17.50 per acre foot a year, plus inflation.

If cutting the water supply in half for All American produces less than 1.8 million gallons a day, All American can buy up to 750,000 gallons a day from Tumwater at the city’s standard commercial rate.

The settlement proposal is the result of about two months of talks that began a week after Olympia moved to condemn brewery land for water. At one point, All American’s attorney said the owner would be forced to file for bankruptcy unless the cities withdrew. The cities refused.

All American has not filed for bankruptcy so far, according to the federal court’s online database.

Once the cities secure the title to the water, they will be protected and the water rights won’t be affected if All American files for bankruptcy, the city attorneys said. If the company files for bankruptcy before the title is transferred, the attorneys said they aren’t certain what will happen next.

How long it takes for the cities to secure the title depends largely on when Ecology transfers the water rights from industrial to municipal use.

Negotiations are not over. The cities want to buy the land and facilities that are necessary to draw the water, such as wells, pipes and pump houses. The settlement agreement grants officials access to the property so they can determine what they’ll need.

They will try to negotiate that sale out of court, to avoid going through trial to determine the market value, said Christy Todd, Tumwater city attorney.

The Thurston Public Utility District, which serves nearly 3,000 connections, is not a party to the settlement proposal. The commissioners will meet tonight to discuss their next steps.

“The PUD doesn’t count in the cities’ minds,” said Don Taylor, PUD attorney. “They have ignored us.”

The district filed an eminent domain petition of its own after the cities took action. No hearing date has been set.

Katherine Tam covers the city of Olympia for The Olympian. She can be reached at 360-704-6869 or ktam@theolympian.com.

City, tribe hope to settle Cedar River issues

The following article appeared in the April 22, 2006 edition of the Seattle Post-Intelligencer.


City, tribe hope to settle Cedar River issues

Proposed deal would end long-term disputes

Saturday, April 22, 2006

By LISA STIFFLER
P-I REPORTER

Seattle officials and Muckleshoot Indian tribal members recently announced a sweeping agreement to resolve a range of long-standing issues between the two.

They cheered the proposed strategy as a win for both sides, ending a legal dispute over the use of water in the Cedar River, making reparations for historical damage suffered by the tribe and setting up a mechanism for resolving future problems.

"It's truly extraordinary that we have an agreement between the city and the Muckleshoot," City Councilman Richard Conlin said. It's "a huge achievement."

But others in the region -- hunters, state officials and environmentalists among them -- have been less than enthusiastic as they've delved into the plan in the weeks after its release. Many remain puzzled. Some are downright upset.

Negotiations began about a year ago as a way to settle the tribe's court challenge of a plan for water and forest management in the watershed, but grew into a multifaceted agreement worth $40 million in cash and land going to the tribe.

The Cedar is the main source of drinking water for Seattle and other cities. If approved, the deal would cost a Seattle Public Utilities residential customer paying $23.53 a month an additional $3 a year on average over the next 30 years.

A convenience store billed $58.83 a month could pay about $20 more a year in coming decades. City Hall, which pays a $2,160 monthly bill, could expect to pay about $600 more annually over that time.

The agreement seeks to transfer more than 1,230 acres to help settle damages to the tribe when it lost access to the land for traditional uses, including the collection of food and other resources. It also reinforces Seattle's commitment to building a new sockeye hatchery and lets the tribe engage in gathering and hunting on city-owned land that's off limits to the public.

To the surprise of some, it's that last piece that's fueled the greatest amount of concern.

There have been questions about the fairness to other hunters, the apparent exclusion of state regulators in the deal and fears over the safety of the public and city workers.

"The game belongs to the people of the state of Washington," said Daniel Tucker, a board member with the Washington Big Game Council. "It doesn't belong to the city, and it doesn't belong to the Indians."

"Our policy is if it's open to one group of people, it should be open to all groups. We have brought that repeatedly to the city of Seattle," said Lora Leschner, a manager with the state Department of Fish and Wildlife, which is responsible for regulating hunting statewide.

Some point to a 1995 agreement between the city of Tacoma and the Muckleshoot Tribe regulating land use in the Green and Duwamish rivers' watersheds as the approach Seattle should take. It allows some public hunting and makes Fish and Wildlife a partner to the agreement.

Seattle officials steadfastly oppose hunting in the forested watershed by non-tribal hunters.

"This is a water supply for 1.3 million people," said Martin Baker, a city negotiator for the agreement. Allowing public access would risk contamination to the naturally clean water source.

The reason the tribal members are given access to the land is because they are entitled to hunt there because of treaty rights, city officials said.

The city also will pay the tribe $250,000 a year for a decade to study the deer and elk populations on the land to help determine suitable hunting limits and establish an overarching plan for managing the populations.

But the hunting is allowed to start shortly after the agreement's approval, causing some to wonder why the research isn't done first. Critics wonder if the $2.5 million research program is too pricy. And some ask if the tribe has a track record demonstrating that it can manage the animals and police its tribal members to the benefit of the land.

Supporters say yes.

"The tribe has a vested interest in making sure the resources are protected for future generations," said John Halliday, a Muckleshoot member and tribal liaison for the city. "It's not part of tribal culture to decimate a resource."

A legal challenge to the sockeye hatchery is still in the courts. Those opposed to the hatchery fear the sockeye could harm native chinook protected under the Endangered Species Act. The city and tribes support the project, and Seattle potentially would owe millions of dollars to the tribe if the hatchery is axed.

Questions also remain surrounding the amount of natural resources -- wood, berries and plant material -- the tribe can take from the watershed as allowed by the agreement.

The exact acreage of the land to be transferred is unclear, and one parcel is owned by the Woodland Park Zoo, which hasn't agreed to the deal.

"There are all these questions coming up, but there are no answers," said Joan Burlingame, a public representative on the Cedar River Council, an oversight group whose membership also includes agency officials and elected leaders.

The council plans to submit a letter to the city commenting on the plan, but is seeking more information, she said.

Those in favor of the agreement are confident it will win the necessary approval by the City Council, the Muckleshoot Tribal Council and U.S. District Court. A public hearing is scheduled with the council for May 15.

"This thing is going to be fine," said Rollin Fatland, spokesman for the Muckleshoot Tribe. "The issues and questions and concerns expressed by some people are more a reflection of a lack of understanding about the agreement.

"Once they see what's in there and how this agreement is good for hunting and the management (of the watershed), I think they'll be OK."

GETTING INVOLVED

  • Seattle City Council's Environment, Emergency Management and Utilities Committee will discuss the agreement May 4 at 2 p.m. in council chambers at Seattle City Hall, 600 4th Ave.

  • A public hearing on the agreement will be May 15 at 5:30 p.m. in council chambers.

  • Read the proposed agreement: goto.seattlepi.com/r133


    P-I reporter Lisa Stiffler can be reached at 206-448-8042 or lisastiffler@seattlepi.com.

  • Sunday, April 23, 2006

    PUD Posthumously lauds man for his lake

    The following article appeared in the April 23. 2006 Jefferson County edition of the Peninsula Daily News.

    New storage resources to support future growth are key to the continuting economic viability of the rural regions of Washington, coupled with the need to protect our natural resources, including the many species of concern found in our forests and waters. The Public Utility District's foresight and efforts in this area of water resource management are commendable, and an example worth following at all levels.

    As we look toward the challenges of providing adequate stream flows to help assure the success of salmon and other fish species, while also providing for the needs of the people who live here, and those who will be building their homes here in the future, we need to be imaginative and innovative. Storing water in times of high availability, and then releasing it into streams when flows decline is one of the areas where we need to apply a lot of innovation in eastern Jefferson County.

    Water storage and active flow management are going to become increasingly important ways to make up for a possible loss in snowpack related to climate change. If more of our annual precipitation arrives in the form of rain, we will need to adapt to the challenge by capturing the runoff using efficient and comprehensively engineered storage options.

    It's good to see our local Public Utility District anticipating the need and acting on it.

    PUD posthumously lauds man for his lake
    240 acres to be future water source for region

    By Evan Cael
    Peninsula Daily News


    EAGLEMOUNT — Jefferson County Public Utillity District commissioners spent Saturday afternoon at the recently purchased Peterson Lake following a memorial service for Bernard "Bernie" Peterson.

    Family and friends gathered at the Peterson home that overlooks Peterson Lake at the end of Peterson Road, south of Discovery Bay and north of state Highway 104, for a barbecue to celebrate the life of Peterson.

    Peterson died Oct. 31, less than a month after the PUD acquired the lake from him.

    PUD commissioners attended to honor the man who sold 240 acres of lake property last fall to benefit the community and prevent a developer from subdividing the land.

    Public Utility District commissioners signed documents in October agreeing to pay $2.22 million for the property homesteaded by Peterson's grandfather in 1889.

    After several years of a declining utility district tax rate, commissioners now have to consider increasing the tax rate up to 15 cents per $1,000 of assessed valuation to pay for the lake's acquisition.

    Under the property purchase agreement, the utility district pays $225,000 down and $14,300 a month at 6 percent annual interest to the Petersons.

    Peterson signed the purchase and sale agreement on Oct. 3.

    Natural storage site

    Long seeking future water storage, utility district leaders envision Peterson Lake as a natural water storage site for at least the next 30 years.

    District officials said the lake has 26 acres of surface area and is 60 feet deep in the middle, and its level fluctuates less than a foot each year.

    At 565 feet in elevation, the lake is at the headwaters of Chimacum Creek and has never seen a motor boat or development beyond the Peterson home, district officials said.

    The district is considering the lake for a reservoir or well field, and have no plans to use it in the short term.

    Utility district consensus is that the lake could ultimately, perhaps 30 years from now, serve as a backup source of water to growing areas in the county, especially Marrowstone Island, where 50,000 gallons a year are being trucked in to homes with wells that have run dry or are fouled by saltwater intrusion.

    The utillity district will secure the lake, sealing off access to protect the waters believed to be close in quality to when they were first settled in the 1800s.

    Fences are expected to go up and signs will be posted around the site, letting people know it is a federal offense to trespass.

    Costs to study and improve the lake will be paid through state Department of Ecology grants.

    Reporter Evan Cael can be reached at 360-385-2335 or evan.cael@peninsuladailynews.com.

    Cities reach tentative water deal

    This article appeared in the April 22, 2006 edition of The Olympian.

    It's nice to learn that the three cities and the property owner are nearing a deal that will avoid the actual eminent domain taking of the parcel for its water rights. It's a bit disconcerting, though, to note that the PUD is not only left out of the deal, but that it also doesn't get so much as a mention in this story.

    Assuming the deal goes through, another hurdle on the horizon is the water right change application to the Department of Ecology. There's no guarantee that the change will go through with the current water quantities in place. It could be that in changing the use from industrial to municipal that Ecology might decide to reduce the amount of water that can be withdrawn with the water rights.

    This is still well worth keeping an eye on.

    Cities reach tentative water deal
    Olympia, Lacey, Tumwater would pay for all rights at former brewery site

    BY KATHERINE TAM AND CHRISTIAN HILL
    THE OLYMPIAN

    The county’s three largest cities have reached a tentative agreement with the owner of the former Olympia brewery to pay as much as $12.3 million for all the property’s water rights.

    The agreement includes supplying as much as half the water to the brewery’s new owner, All American Bottled Water Corp., for use in a future water bottling business.

    The cities can pay an additional fee to use any water All American doesn’t use. And if the company doesn’t use the water in three years, the cities get all of it.

    “We were able to negotiate rather than litigate,” said Steve Hall, Olympia’s city manager. “It saves time, it saves money and it meets the ultimate goal of preserving it for public use.”

    The agreement could be final in less than a week. Tumwater City Council has called a special meeting to vote on it Monday. Olympia City Council will take it up on Tuesday, Lacey on Thursday.

    If the deal is signed, the cities would own all the water rights and pay $1,750 per acre foot for those rights, once the state Department of Ecology transfers them from industrial to municipal use. There’s up to 7,000 acre feet of water, according to Ecology’s records, meaning the total price could be as high as $12.3 million.

    But the All American attorney and city officials think there’s far less water, so the price would be far less as well. Each city would put $500,000 into the Thurston County Superior Court registry as an initial payment.

    Under a separate supply agreement, the cities would provide half the water — with a cap at 1.8 million gallons per day — to All American for 99 years. In exchange, All American would pay $10 a year, plus a fair share of operations, maintenance, repair, testing and treatment costs to supply the water.

    If the water All American is slated to get is less than 1.8 million gallons a day, All American can buy up to 750,000 gallons a day from Tumwater at the city’s standard commercial rate.

    If All American doesn’t use the water for three consecutive years, the cities would get all of it. During those three years, the cities can use any water that All American doesn’t use and pay the company $17.50 per acre foot a year, plus inflation.

    The deal can be transferred to other parties, only if those parties use it for a water or beverage bottling plant at the brewery.

    Tumwater Mayor Ralph Osgood said the deal allows the public to get the water, while paving the way for All American to move forward with the promise it made two years ago when it bought the old brewery to open a water bottling operation. Osgood and other Tumwater officials have been eager to see the site redeveloped so it will start providing jobs for the community and tax money for the city.

    “Yes, it was a hit to the city of Tumwater with taxes, but not as large as the negative impact of losing 400 family-wage jobs,” Osgood said. “The side issue of losing the revenue was small compared to the loss of the jobs.”

    An All American water bottling venture would employ up to 200 people, company representatives have said.

    Water needs

    Of the three cities, Lacey’s need for water is the greatest. Last June, the city imposed a de facto moratorium on development within its urban growth area because it’s running out of water it can pump from the ground. It used 86 percent of its granted water rights to serve utility customers both in and out of the city limits in the 12-month period ending Feb. 28.

    The city has requested additional water rights totaling 10,500 acre-feet from the state Department of Ecology. The agency is reviewing the requests. It will continue seeking those water rights, even with rights secured through the brewery settlement, said Greg Cuoio, Lacey city manager.

    “This is going to be a helpful piece,” he said of the brewery water, “but a very minor contribution relative to the overall requirements.”

    Cuoio and City Attorney Ken Ahlf have outlined points of the proposed settlement to the council members individually, the city manager said.

    “They are comfortable with the terms and conditions of the agreement, and I anticipate they will respond favorably Thursday,” Cuoio said.

    The legal pursuit for brewery water began Feb. 13 when the Olympia council decided to condemn the brewery land for water rights. Officials feared the water would be lost or that another private party would claim it. State law gives a water holder five years to resume use of a water right or it reverts to the state.

    After initial sore feelings, Tumwater and Lacey joined Olympia’s eminent domain filing as copetitioners. And the cities signed a deal to equally share any water they win in court as well as the cost of getting it.

    Talks with All American began one week after Olympia filed its petition in court and have continued for the last two months. At one point, All American’s attorney said the company would be forced to file for bankruptcy unless the cities abandon the legal proceeding. The cities refused.

    A settlement is expected to shorten how long the court proceedings will be and how much it will cost. That’s because the parties have reached a price tag for the water rights and won’t have to go through trial to determine market value. It also takes away the uncertainty of what could happen if All American files for bankruptcy.

    The company had filed no such action as of Friday, according to the federal court’s online database. Tom Lemly, attorney representing All American, could not be reached immediately for comment.

    “It’s a fairly complicated agreement,” said Bob Sterbank, Olympia’s city attorney. “It took a fair amount of time and effort to put together, a lot of thought and consideration and creativity of all sides.”

    The cities probably would tap their water reserves or look to leverage funds, possibly through selling bonds, to get the money to buy the water rights. Olympia, for example, has about $3 million in its water fund reserve, Hall said. Tumwater has more than $1.5 million in its reserve, Osgood said.

    Lacey’s share of the cost will come from connection charges assessed to developers to “buy in” to the existing water system, Cuoio said. Using the money to expand the water system is an acceptable use, he said.

    The city officials don’t expect to raise utility rates in the short-term to pay for buying the water rights, they said. Nor is it likely the cities would have to come up with the cash immediately, since the Department of Ecology would need time to transfer the water rights from industrial to municipal use and the court proceedings need to be completed.

    The multimillion dollar cost of acquiring the water rights is competitive with how much cities pay to research new water wells, dig them and build pipelines, Osgood said.

    All American’s stated plans to bottle water haven’t materialized, in part, because the president, L. Eric Whetstone, has had trouble securing financing. The man who claimed to be All American’s vice president at one time is suing All American in federal court for breach of contract.

    Don Kubley, an Alaskan lobbyist, claims in court papers he was heavily involved in All American’s acquisition of the former brewery. He further charges Whetstone reneged on a verbal compensation agreement after the sale was closed that would have richly rewarded Kubley once the plant began bottling water.

    Whetstone denies any compensation agreement existed between the two men. Kubley met with city officials and other business people in Washington state, but some of those sessions were without Whetstone’s knowledge, according to court papers.

    The lawsuit is scheduled to go to trial in Washington state on May 22.

    The company president and Kubley entered into a confidential settlement agreement on Dec. 22, 2004, according to a draft of the document obtained by The Olympian. The draft was dated Feb. 16, 2006.

    All American was unable to refinance the loan on the brewery property in order to meet the payment schedule to Kubley as agreed upon, according to the document. The agreement was extended five times previously.

    Whetstone agreed to pay Kubley and his counsel a minimum of $1.4 million if All American was able to refinance the brewery project or sells property through his settlement with the cities by the trial date, according to the document.

    It’s unknown whether the agreement has been amended since February.

    Lemly said it was his understanding that the settlement reached with the cities would avoid the trial with Kubley.

    Wednesday, April 19, 2006

    Legislators back Marrowstone water plan

    The following article appeared in the April 19, 2006 Jefferson County edition of the Peninsula Daily News.

    Legislators back Marrowstone water plan

    By Jeff Chew
    Peninsula Daily News

    PORT TOWNSEND — Two state lawmakers representing the North Olympic Peninsula say they favor a Jefferson County Public Utillity District water system for Marrowstone Island.

    State Sen. Jim Hargrove and Rep. Lynn Kessler, both Hoquiam Democrats, urged Jefferson County Hearing Examiner Irv Bertig to approve the Public Utility DIstrict's application for a shoreline substantial development permit that would allow the agency to install water pipes along Marrowstone roads nearest to the shore.

    "Residents of Marrowstone have been in dire need of potable water for an extensive period of time," the lawmakers wrote to Bertig.

    "The lack of water for these families, including a number of children, has become a public health issue and a serious concern."

    "They've had to drive great distances and endure exceptional sacrifices in order to obtain water for essential needs."

    "Granting this application is a small step toward ensuring that the Marrowstone families are getting the water they desperately need."

    A death in the family forced Bertig to postpone a shoreline permit hearing Tuesday on the Public Utility District's proposed water system for Marrowstone Island.

    The hearing is yet to be rescheduled.

    House Majority Leader Kessler and Hargrove state that water "is a necessity everyone deserves access to."

    Discrict Commissioner Wayne King of Gardiner said he was pleased to see the letter supporting the project.

    "We're just trying to get water out there to those people," King said.

    "That's what our job is."

    King said the Public Utility District is working to establish a reverse osmosis system to convert saltwater to freshwater, and he cited the district's purchase last year of Peterson Lake as a reservoir to meet future district needs.

    Some 100 wells of the estimated 500 on Marrowstone are either dry or contaminated by saltwater intrusion, which is a growing problem.

    As planned, water lines will be extended the full length of Flagler Road, district officials said.

    After the Flagler Road backbone is in place, the lines will be extended to the county roads, which are easily accessible from Flagler Road.

    The project would be complete after lines are installed on all county roads not already constructed and on private roads that include easements.

    Utility district officials have had wetlands delineated on the island where the pipeline will run.

    The district built a water reservoir to also provide water to the state park during a fire and as a backup to Marrowstone residents in case of a water shortage.

    The proposed project would bring water to about 300 homes on the island.

    Utility district officials have reapplied for county and state permits after prevailing over a lawsuit filed by a group of residents opposed to the project.

    Utility district officials are also beginning construction of a well near Jefferson County Airport.

    Mayor forecasts water deal

    The following article appeared in the April 19, 2006 edition of The Olympian.


    At this point, it looks like the municipalities involved in the eminent domain condemnation process are negotiating the owner into a "willing seller" position for the water rights. Of course, how many options does the owner have while the property is under condemnation? Would anyone else want to purchase it now? What chance does the current owner have to actually obtain a fair and full market price for the water rights under these conditions?


    Mayor forecasts water deal
    Tumwater’s Ralph Osgood expects cities to reach accord within one month

    By Jim Szymanski
    The Olympian

    TUMWATER — A deal for Thurston County’s three major cities to purchase water rights from All American Bottled Water Corp. could be reached within a month, Mayor Ralph Osgood predicted Tuesday.

    He made the announcement at an annual “State of the City” speech to the Tumwater Chamber of Commerce. At first, he predicted a deal in two weeks, but later in the day was more confident about a one-month negotiation period.

    “We’re talking high-stakes negotiations here; they’re up and down from day to day,” Osgood said. “But I think they’re getting very close. I would hope we could get something within a month.”

    Lacey City Attorney Ken Ahlf, who with his peers from Olympia and Tumwater is negotiating with All American, said there is validity to Osgood’s statement about a settlement in two weeks.

    “Things are going well,” he said.

    Ahlf declined to disclose details about the points of negotiation between All American and the cities because they haven’t been discussed with elected leaders from the three cities.

    Asked whether the proposed settlement would allow All-American to retain water rights, the city attorney responded any agreement would protect the company’s interests.

    Tom Lemly, the Seattle attorney representing All-American, couldn’t be reached for comment Tuesday.

    Osgood said he was holding out hope that the water company might retain enough water rights in a deal to begin bottling water at the city’s former Miller brewery site.

    “I want to see something happen at the brewery,” Osgood told about 50 members of the Tumwater Chamber of Commerce. “There are potentially 200 family-wage jobs to be had there. Around the state, people are actively competing to get those kinds of jobs.”

    All-American has been a source of frustration for Olympia, Lacey and Tumwater after it failed to obtain sufficient financing since it acquired the former Miller brewery property in 2004. All-American has proposed selling its water rights to the cities, leasing 2.5 million gallons a day for its water bottling operations at a nominal fee and reaching a purchase price for the rest of the water.

    Olympia, Tumwater and Lacey city officials have joined in condemnation proceedings against All-American out of fear they might permanently lose rights to the water if the company were to seek bankruptcy court protection. The cities want the water because it is an important natural resource for growth and development.

    But city representatives are trying to avoid a lengthy and costly court condemnation process.

    “The litigation will take at least a couple years and be incredibly expensive,” Olympia Councilman Joe Hyer said Tuesday. “If they (All-American) fail to perform, we don’t want them to have water rights.”

    At the same time, Osgood said he was holding out hope that All-American could obtain sufficient financing in a sale of water rights to start bottling water.

    Nearly 400 employees lost their jobs when Miller closed the brewery.

    Were All-American to retain some water rights, it would be a “very strong competitive edge” in the company’s stated goal of converting the brewery into a water bottling plant, Osgood said.

    Talks aimed at a deal are delicate enough that he can’t predict success just yet, Osgood noted.

    Initially, Olympia moved on its own to condemn the brewery property, which angered city officials in Tumwater and Lacey. Though the cities now are cooperating on a deal to share the water rights, Osgood said the wounds from Olympia’s solo move are healing slowly.

    “There’s no question that the action Olympia took hurt the trust between the cities,” Osgood said. “The relationships are a little tense right now. We’re walking very carefully with one another.”

    Hyer, too, cautioned that the cities’ talks with All-American are not guaranteed to succeed.

    “There are so many things that could upset that,” Hyer said.

    Officials want to pinpoint how much water there is and who would pay to treat the water to improve its taste, Hyer said.

    Until Olympia’s interests can be best protected, Hyer said he would not predict that a deal will be worked out.

    “We want to make sure that any deal we make with them protects the city’s interests,” he said.

    Further, Hyer noted, any deal would take the approval of 21 elected officials in the three cities.

    It’s still too early to assume political support for a water deal, Hyer said.

    Olympian reporter Christian Hill contributed to this report.

    Tuesday, April 04, 2006

    New community farm, PUD differ over water issue

    The following article appeared in the April 4, 2006 Jefferson County Edition of the Peninsula Daily News.

    Some of the opposition to the PUD using the Sparling well to serve water for the Marrowstone Island public water system centers around concern that withdrawing the water from that location might have negative impacts on instream flows for Chimacum Creek. This article tells us that there's a protective layer that will protect the well from any potential nitrate issues from Sunfield Farm runoff or infiltration. That would tend to indicate that the same protective layer would protect Chimacum Creek's instream flows from anything related to increased pumping from the Sparling well.

    Which view do you suppose has the greater validity?


    New community farm, PUD differ over water issue
    Agency worried animal waste could foul well

    By Jeff Chew
    Peninsula Daily News

    PORT HADLOCK — Concerns that an educational and sustainable agriculture project could foul the Tri-Area's largest groundwater source are without merit, a representative of Sunfield Farm said Monday.

    Abby Jorgensen, Sunfield site committee member, said that Jefferson County Public Utility District officials have not discussed with Sunfield Farm representatives the farm's waste management concept.


    Just the same, Jorgensen said the farm's approach to manure and other waste management is taken seriously.

    "Biodynamic animal farm'

    "A biodynamic animal farm requires meticulous animal waste management as part of its integral and sustainable system." Jorgensen said in a prepared statement Monday.

    Helen Curry, Sunfield board president, adds: "We are very aware of the sensitive nature of the whole environment of the valley in which Sunfield is, and our educational mission actually involves raising the awareness of the sensitive nature of this area."

    She said Sunfield wants to demonstrate how farming, open space and commerical activities can co-exist "when they have balanced, sustainable types of practices."

    PUD Commissioner Wayne King said he was concerned that Sunfield bypassed PUD in its state Environmental Policy Act and building, storm water, commercial and conditional use permits applications.

    "We're concerned about this recharge area in the Chimacum Creek basin," King said Monday.

    "I would like to see a detailed plan of how they're going to retain the cow manure and animal waste."

    "My concern is it will leach into the well area."

    On the farm site off Rhody Drive near Kennedy Road, Sunfield Farm is establishing a learning center for all ages interested in creating balance between nature, agriculture, and our human needs, representatives said.

    Programs are developing for youth from public and independent schools with a focus on sustainable agriculture and environmental education.

    The farm will also be home to a pre-kindergarten through eighth-grade school using the Waldorf style of teaching.

    Sunfield Farm , formerly a dairy farm run by the Spalding family, was acquired in April, 2004 by the Sunfield Education Association.

    It was placed under a conservation easement by the Jefferson Land Trust.

    Sunfield is a nonprofit community organization founded in 1998 with a broad mission that includes developing hands-on educationap programs in organic, sustainable agriculture.

    Biodynamic agricultutre is founded on a holistic and spiritual understaning of nature and the human being, Sunfield leaders say. The concept builds on the pioneering research of Rudolph Steiner.

    Every biodynamic farm aims to become self-sufficient in compost, manure, and animal feeds, according to the Steiner concept.

    Sunfield is expected this year to produce three acres of organic/biodynamic-grown vegetables. The produce will be sold to Community Supported Agriculture program subscribers, at the Port Townsend Famers Market and The Food Co-op in Port Townsend.

    Fences will be built to contain Dexter calves, Nubian goats, chickesn and a donkey.

    Animal waste, which PUD officials fear could generate nitrates in the water table through leaching, is a major concern.

    The Sparling well, the Tri-Area's largest groundwater source and operated by PUD, is about 500 feet away at Rhody Drive and Kennedy Road.

    Sparling well pumped 164 million gallons fo water in 2005, according to (Bill) Graham.

    The Kively well, by contrast, delivered 34 million gallons of water to PUD customers.

    The Sparling wellhead protection area includes the farm site.

    Four phases

    It extends from the upper Anderson Lake Road area, including Anderson Lake State Park, part of a "Susceptible aquifer recharge area," and runs as far north as Irondale Road.

    "It's basically all of the Tri-Area," said PUD Resource Manager Bill Graham, adding that the farm is upstream in the aquifer.

    "So if anything was to infiltrate on that property, it's most likely it could reach our well," Graham said.

    In the farm's case, he said, county regulations would require a septic system that diminish(es) nitrates.

    "They'll have to do an alternative septic system based on the regulations," said Graham.

    PUD concerns have been largely generated because the agency was unaware that there were four phases in the project.

    Mark Denbro, president of Jefferson Land Trust, which is managing the farm's property as a conservation easement, said the biodynamic principle behind the type of organic would ensure that the land and water would be protected.

    The conservation easement protects the land from being subdivided and developed.

    "It's pretty much the way people used to have to farm," Denbro said, "adding some benefits of science, but they apply their respect and techniques for the land."

    "There's a commitment that we're here to stay to protect the land forever, so we need to protect it forever."

    County Commissioner David Sullivan, D-Cape George and a former PUD commissioner, said he believed issues between PUD and Sunfield Farm can be resolved.

    Sullivan said from what he has learned, the water that recharges the Sparling well comes from a hillside.

    "There is a real thick protective layer of glacial till that protects the aquifer down below," said Sullivan.

    "That's why we have wetland and Chimacum Creek there."

    Impervious protection

    With the natural impervious protection of glacial till, the Sparling deep well water source is indeed protected, said Sullivan.

    "It's not a bad question to ask, though," Sullivan said of PUD concerns about wellhead protections, adding that they should be discussed and worked out to ensure protection of the water source.

    County Associate Planner Mo-chi Lindblad, Jefferson County Department of Community Development, said although the public comment period technically ended March 15, she was still taking comments from those concerned about the farm's possible impact on the area.

    While the state environmental protection act review approval is within the county Department of Community Development's decision-making purview, the other permits much go before the county hearing examiner, who will also listen to public comments at a hearing yet to be scheduled, said Lindblad.

    Port Townsend/Jefferson County Editor Jeff Chew can be reached at 360-385-2335 or jeff.chew@peninsuladailynews.com.