Olympia signs on to water deal

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

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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.