The Tumwater City Council authorized Mayor Debbie Sullivan on December 6 to sign a memorandum of agreement with Lacey and Olympia, paving the way for Tumwater’s takeover of Lacey’s portion of the Brewery Wellfield site.
The agreement outlines how the three cities may transfer water rights, land, wells, water system infrastructure, and associated liabilities in the wellfield, which they have been sharing jointly since 2009.
Tumwater’s water resources director Dan Smith explained that Lacey no longer wants its part of the wellfield as it found that reclaiming water was more cost-effective than sourcing water from the site. Lacey’s changing water needs prompted the three cities to enter into negotiations on how they might transfer ownership of the site.
The wellfield is located near Cleveland Avenue and adjacent to the Tumwater Valley Golf Course. It contains more than 30 wells which range from 72 to 195 feet deep. Smith said the wells were constructed between 1948 and 1982, meaning additional facilities will have to be constructed to utilize the wells. The site also has a reservoir that has a capacity of one million gallons, but it no longer meets current seismic safety standards.
Transfer of ownership
The agreement sets out a framework for how any of the three cities may transfer assets and rights associated with the site. Though the agreement does not specify which cities would be the transferor and recipient, the property transfer is likely between Tumwater and Lacey.
Smith explained that Lacey had also reached out to Olympia about selling its portion of the wellfield to the latter city, which rejected the offer.
“The City of Olympia’s water right portfolio is sufficient to support them into the future,” Smith said. “They did not express any interest in [Lacey’s] portion of the water rights.”
The process of transferring ownership starts with water rights and property valuation to determine how much the recipient city of Tumwater will pay the transferor.
Under the agreement, WestWater Research, which conducted the original water rights valuation, will re-evaluate the current value of the water rights. For property valuation, R.F. Duncan & Associates will provide the current-day value of three jointly owned parcels, including associated structures.
If the two cities involved in the transfer agree to the valuation, the transferor — Lacey in this case — will issue the recipient city a “right to use in perpetuity certificate.”
Smith explained that the certificate allows the recipient city to use the transferor’s water rights without actually owning those rights. Full transfer of ownership will only occur after the recipient city re-perfects the use of the water rights.
Once the recipient city holds the certificate and pays the agreed-upon valuation cost, they will also take over related liabilities such as the decommissioning of the old wells, demolition of the reservoir, well buildings, and the costs for project management and design.
Smith said that overall liabilities would cost $3,040,000.
Lacey, Olympia to reimburse Tumwater
The agreement also sets out how much Lacey and Olympia are required to reimburse Tumwater for fees and costs – which Tumwater has been paying.
Since they acquired the site, Tumwater has been paying stormwater utility fees for three jointly-owned properties. The fees have accrued to $69,247.58, which will be split between the three cities so that each is liable for $23,082.53.
Tumwater has also been paying RH2 Engineering, a consultant that helped develop the memorandum of agreement and an interlocal agreement. The contract with the firm costs $57,000, which will be split so that each city covers $19,000.
Lacey and Olympia are required to pay the fees within 60 days after the signing of the memorandum of agreement. Tumwater would periodically invoice the other two cities for jointly-incurred utility fees moving forward until a transfer of ownership takes place.
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