July 10, 2002

Florence City Council
250 Hwy 101
Florence, Oregon 97439

RE:  Intergovernmental Agreements
City of Florence Resolution No. 16, Series 2002

Dear Councilors:

A little over a year ago, June 1, 2001, we sent to you a draft of a proposed form of Intergovernmental Agreement Regarding Annexation, Withdrawal of Territory, and Sale of Water between Heceta Water District and the City of Florence.  The city has rejected the form of the proposed agreement, but has not proposed an alternative agreement.  It  appears we are essentially at an impasse regarding the terms of an intergovernmental agreement.

The district is very concerned over the lack of progress toward an agreement with the city regarding the matters addressed in the draft agreement proposed by the district.  That concern has only been heightened as a result of the city’s adoption of Resolution No. 16, Series 2002, which is captioned “A Resolution Approving Annexation of Contiguous Territory to the City of Florence.”  That resolution was approved by the city council on June 3, 2002, and it proposes to annex to the city territory within the boundaries of the water district.

The resolution contains a recital that “council directed staff to work toward a process of removing this property from Heceta Water District.”  It is not exactly clear what the city council meant by the direction described in the recital, but we do not believe negotiations between the district and the city will be very productive in the absence of an intergovernmental agreement.  Without an agreement, the water district intends to oppose the annexation before the boundary commission.  Moreover, without an intergovernmental agreement, the water district will also oppose the
withdrawal of territory from the district at such time as the city decides to proceed under ORS 222.520.

ORS Chapter 195 mandates that local governments coordinate their planning duties, powers and responsibilities.  Such coordination is to occur by agreement.  With respect to areas within the city’s  urban growth boundary that are served by the water district, ORS 195.060 specifically mandates that there be an urban service agreement between the city and the water district, which agreement must address the issues described in ORS 195.065.  Those issues include managing and administering provision of services to urban users.  ORS 195.070(1) describes the factors to be addressed in such agreements, which factors include the following:

     (a)  Financial, operational and managerial capacity to provide the service;

     (b)  The effect on the cost of the urban service to the users of the service, the quality and quantity
     of the service provided and the ability of urban service users to identify and contact service
     providers, and to determine their accountability, with ease;

     (c)  Physical factors related to the provision of the urban service;

     (d)  The feasibility of creating a new entity for the provision of the urban service;

     (e)  The elimination or avoidance of unnecessary duplication of facilities;

     (f)  Economic, demographic and sociological trends and projections relevant to the provision of
     the urban service;

     (g)  The allocation of charges among urban service users in a manner that reflects differences in
     the costs of providing services to the users;

     (h)  Matching the recipients of tax supported urban services with the payers of the tax;

     (i)  The equitable allocation of costs between new development and prior development; and

     (j)  Economies of scale.

As you know, the city and the district had both a Memorandum of Understanding as well as a detailed Intergovernmental Agreement addressing the roles of each local government in providing water service in the area, including the joint construction and operation of a new filtration plant.  Unfortunately, those agreements were terminated in connection with the settlement of the various claims and appeals filed by Aaron Jones et al.  Those agreements have not been replaced and as a result, neither the city nor the district is in compliance with the applicable coordination statutes.

It was the district’s hope that at least a tentative agreement could be reached between the district and the City before involving the county or DLCD in the process.  Although the applicable statutes provide many mandates for intergovernmental coordination, they do not provide much direction with respect to what is supposed to happen if two local governments simply cannot agree.  Our legal counsel has discussed this issue with DLCD and was advised that it rarely has to take administrative action because local governments have, in practice, been able to resolve their differences and reach agreement among themselves.

DLCD’s Dispute Resolution Coordinator has informed our legal counsel that DLCD has a grant program that will fund mediation.  Dave Perry, DLCD’s Regional Representative for the south coast may also be able to provide some coordination assistance.

The district wants to work cooperatively with the City.  But it takes two sides to cooperate.  One of the factors that must be considered in the intergovernmental agreement is “economies of scale.”  ORS 195.070(1)(j).   The district arguably has the best source of water along the entire Oregon coast.  We are also investing a substantial sum in a new state of the art filtration plant. We have a manager and a staff that keep the district running efficiently.  The district’s planning has been based on a consideration of the economies of scale.  If the city annexes substantial portions of the district’s territory and then attempts to withdraw that territory from the district, the district’s planned for economies of scale may be lost.  The city should not be removing territory from the district until the city has grown and annexed so much territory within the boundaries of the district that it is in a position to withdraw all of the territory within the district and assume its operations.  The district has proposed a reasonable formula for such ultimate withdrawal of all of the district’s territory.  The city has not offered any reasonable counterproposal that recognizes the interests of the district and its substantial investment in infrastructure, equipment and staff.

Please let me know if the City is interested in pursuing an agreement along the lines previously proposed.  If not, we will involve the county and DLCD in the process.  Furthermore, we will oppose any future annexations before the boundary commission until a statutorily mandated intergovernmental agreement is signed by the parties.

Yours truly,

(signed) TED CONDO, Chairman

cc:   Paul V. Vaughan, District Counsel
       Lane County Boundary Commission