CITY OF SNOHOMISH TRUST WATER RIGHTS AGREEMENT

This Trust Water Rights Agreement (the "Agreement") is entered into by and between the State of Washington, Department of Ecology ("Ecology") and the City of Snohomish (the "City" or "Snohomish"). Snohomish and Ecology are each a "Party" and are together "Parties" to this Agreement. This Agreement is dated and effective the ~ day of h.e <.eAM. lo v- , 2019.

Recitals

WHEREAS, Snohomish historically dive1ted and used water from the Pilchuck River for municipal water supply and, in response to the Water Right Registration Act of 1967, the City filed with Ecology Water Right Claim No. 43282, dated October 15, 1973, to document the historical use of the Pilchuck River water right since 1890 (the "Pilchuck Claim"); and

WHEREAS, Snohomish holds Water Right Cettificate No. Sl-00500C, with priority date December 9, 1931, that authorizes diversion of 5.0 cubic feet per second ("cfs") and 3,000 acre­feet per year ("AF") from the Pilchuck River for municipal water supply purposes in the area served by the City (the "Pilchuck Certificate"); and

WHEREAS, the City's Pilchuck Claim and Pilchuck Certificate (together, the "Municipal Water Rights") and the Municipal Water Rights' actual historical use are summarized in Exhibit A, which is attached to and incorporated into this Agreement; and

WHEREAS, Snohomish had historically used the Municipal Water Rights to supply all of the City's water needs from the Pilchuck River source by means of a diversion dam, water intake structure, and a 14.6 mile water transmission main first constructed in 1912 and improved in 1932-1934;and

WHEREAS, in 1981, Snohomish rebuilt the water transmission main and constructed a water treatment plant near the diversion point on the upper Pilchuck River north of Lake Roesiger to supply the southern half of the City, and improved an intertie to receive wholesale water supply from the City of Everett to supply the northern half of the City; and

WHEREAS, by approximately 2006, the 14.6 mile water transmission main was approaching the end of its useful life and presented a risk of failure that could cause interruption of service and extraordinary costs to remedy, and the water treatment plant experienced operational challenges that reduced capacity and that would be costly to remedy; and

WHEREAS, Snohomish undertook a comprehensive review and evaluation of its water supply system and alternatives, including completion of the Water Treatment Plant and Water Supply Study in 2009 which examined the City's existing Pilchuck River water treatment plant and alternative sources of water supply, and including extensive dialogue with agencies, tribes, non-governmental organizations, and other stakeholders; and

WHEREAS, on June 21,2016, the City Council adopted Resolution No. 1347 "stating a policy for the future closure of its water treatment plant and the removal of its water supply intake and diversion dam on the Pilchuck River conditioned on several outcomes including the intent to protect and preserve its water rights in the Pilchuck River system"; and

WHEREAS, Resolution No. 1347 provides for a series of coordinated actions to implement the foregoing policy including obtaining all water supply (for both southern and northern zones) from the City of Everett, decommissioning the transmission main and water treatment plant, planning for removal of the existing dam and intake structure on the Pilchuck River, arranging for substitute water supply for customers along the transmission main, and entering an agreement with Ecology to protect and preserve the Municipal Water Rights; and

WHEREAS, in Resolution No. 1347, the City Council deems it to be in the public interest to declare its policy and intent to protect and preserve the Municipal Water Rights to the greatest extent possible for current, near te1m, and long term water planning purposes; and

WHEREAS, in February 2017, Snohomish acted, pursuant to Resolution No. 1347, to cease water diversions from the Pilchuck River and to convert entirely to Everett water supply; and

WHEREAS, full implementation of Resolution No. 1347 including this Agreement will enable removal of the historical diversion dam to promote fish passage in the upper Pilchuck River; and

WHEREAS, Snohomish and The Tulalip Tribes, on June 19, 2018, entered an "lnterlocal Agreement Between The Tulalip Tribes and the City of Snohomish for Cooperative Action in Pilchuck Dam Removal" in which the parties agree to coordinate and partner to facilitate necessary dam removal activities; and

WHEREAS, Snohomish filed with Ecology and Ecology accepted the filing of Proof of Appropriation of Water, dated October 15, 1973, that confinned construction of the water works and complete application of water to the permitted use, and thereafter Ecology issued the Pilchuck Certificate, dated February 28, 1974; and

WHEREAS, Ecology and Snohomish believe that the Pilchuck Certificate meets the criteria set forth under RCW 90.03.330(3) (regarding a water right certificate issued after construction of works for diverting and distributing water for municipal supply purposes); ':md

WHEREAS, the water right holder, Snohomish, intends to retain ownership of the Municipal Water Rights in their entirety for future use or disposition; and

WHEREAS, Snohomish commissioned RH2 Engineering, Inc. ("RH2") to study the historical beneficial use of municipal water and sources of information and data, and RH2 authored a technical memorandum concluding that beneficial use of the Municipal Water Rights likely peaked in 1960 at quantities of 5. 72 cfs and 2,113 AF as set forth in Exhibit A to this Agreement; and

CITY or SNOHO~ns,-1 TRUST WATER RIGHTS AGREEMENT Page l2

WHEREAS, as a result of the historical configuration and operation of the City's water system, the RH2 technical memorandum also concludes that the quantities eligible for placement in the Trust Water Program are 5.72 cfs and 4,141 AF in the Pilchuck River (primary reach) and 5. 72 cfs and 2,113 AF in the lower Snohomish River ( secondary reach), as set fo11h in Exhibit B to this Agreement; and

WHEREAS, Snohomish desires to make a temporary trust water donation of the Municipal Water Rights, consistent with historical beneficial use, to assist in providing instream flows in the Pilchuck River, and to preserve surface water resources on a temporary basis, as Snohomish seeks to protect and preserve the full quantities of the Municipal Water Rights, including any as-yet unused quantities, as a City asset; and

WHEREAS, the Parties desire to provide for management and administration of the Municipal Water Rights in the State Trust Water Rights Program, as authorized by state law under chapter 90.42 RCW ("Trust Water Program"), during the term of this Agreement.

NOW THEREFORE in consideration of the foregoing recitals, incorporated herein, and mutual covenants and promises contained herein, the Parties hereby agree as follows:

1. Term of Agreement.

This Agreement will take effect on the first day that an authorized representative of each Patty signs the Agreement below and delivers its signed Agreement to the other Party and will remain in force and effect for a term of 50 years. At least one year before the expiration of the term of the Agreement, Snohomish and Ecology will meet and confer in light of conditions at the time.

2. Temporary Conveyance.

Pursuant to the terms and conditions of this Agreement, Snohomish hereby conditionally conveys to the Trust Water Program the Municipal Water Rights equal to 5.72 cfs and 2,113 AF for a tempora1y period ohime ("Temporary Trust Water"). After review of the historical evidence presented by Snohomish, the Parties agree that the extent and quantity of the Temporary Trust Water is based on historical beneficial use of water for municipal water supply purposes as summarized in Exhibit A.

The duration of Snohomish 's temporary conveyance of the Temporary Trnst Water will begin the date that this Agreement takes effect and will continue for the tenn of this Agreement, provided that Snohomish may withdraw some or all of the Temporary Trust Water with Notice to Ecology at least 30 days in advance. Ecology will hold the Temporary Trust Water in the Trust Water Program exclusively for instream flow. Without prior consent and a written agreement approved by the City, Ecology will not reallocate or reappropriate the Temporary Trust Water; Ecology will not authorize the Temporary Trnst Water for another or a different use; Ecology will not approve or issue new water right pennits or authorizations; and Ecology will not authorize or approve water bank credits or interests that are mitigated or otherwise supported by the Temporary Trust Water.

CITY OF SNOHOMISI l TRUST WATER RIGHTS AGREEMENT Page I 3

For the trust water rights to be held and administered by Ecology, the rates and annual volumes of water, based on the Municipal Water Rights, proposed to be placed in the Trust Water Program for the primary and secondary reaches is stated in Exhibit B. Specifically, the Pilchuck River primary reach quantities are 5. 72 cfs and 4,141 AF and the lower Snohomish River secondary reach quantities are 5.72 cfs and 2,113 AF. The primary and secondary river reaches are as described and mapped in the City's trust water application (ECY Fo1m 070488) and the supporting materials including the RH2 memorandum.

3. Ecology Acceptance and Fiduciary Responsibility.

Ecology accepts the temporary conditional conveyance of the Temporary Trust Water into the Trust Water Program. Ecology, as trustee, will hold and administer the Temporary Trust Water pursuant to RCW 90.42 and this Agreement. As such, Ecology has a fiduciary responsibility to protect and manage the Temporary Trust Water consistent with the intent of the Parties in this Agreement and applicable law.

4. City Intent Regarding Municipal Water Rights.

The City intends to retain ownership of the Municipal Water Rights in their entirety for municipal water supply purposes, including the quantiti~s not donated to the Trust Water Program under this Agreement. Specifically, the City intends to retain ownership and control over the non-donated, remainder of the City's municipal water rights for municipal supply purposes. Except for any future City actions expressly authorized and taken to convey, alienate, or otherwise dispose of a specific portion of the Pilchuck Certificate, the City states its intent to hold and retain the Pilchuck Certificate, including the unused quantities, for future beneficial use. Specifically, the City disclaims any intent or purpose to abandon the Municipal Water Rights, or any portion thereof, as a result of the City's removal of its Pilchuck River diversion works, the entry into this Agreement, or any.other City action or omission. The City states its intent to document City intent in future planning documents and to maintain and preserve title, extent, and validity of all of the Municipal Water Rights. Specifically, the City will revise the City's water rights assessment consistent with this Agreement during the next Water System Plan update with the Department of Health.

5. Change & Transfer Applications.

The Parties acknowledge that Snohomish will engage in water supply planning and watershed discussions regarding long-term use, transfer, or other disposition of the Municipal Water Rights. The Parties further acknowledge that multiple alternatives are likely to be potentially viable that require examination and evaluation. During the term of the Agreement, the Parties agree to meet and confer from time-to-time regarding potential alternatives to preserve water resources for future City needs and municipal purpose uses, to provide instream flows in the Pilchuck River and downstream in the Snohomish River, and to facilitate water resources management in the watershed to advance the public interest.

CITY OF SNOHOMISH TRUST WATER RIGHTS AGREEMENT Page J 4

Accordingly, the Parties anticipate that, during the term of this Agreement, Snohomish may submit one or more applications regarding the Municipal Water Rights to enable planning or contracting for and to authorize the following:

a) New points of diversion or withdrawal for future City exercise and beneficial use of the Municipal Water Rights.

b) Establishment of or enrollment in water bank(s). c) Transfer to other entities for instream or out-of-stream use. d) Further donation to the Trust Water Program. e) Other alternatives identified in the future. f) Changes to purpose of use, place of use, season of use, or point of diversion or

withdrawal, or other terms and conditions related to the above.

Ecology agrees to accept and process any such change or transfer or other applications in the normal course of business under the application requirements, procedures, and staff resources in place and available at the time, provided that Ecology will not assert the existence of this Agreement as grounds for delay of an application.

6. Notice Procedure.

All notices ("Notice") to be given by either Party to the other pursuant to this Agreement shall be in writing and shall be deemed to have been duly given if delivered personally, sent by nationally recognized overnight delivery service, or made by electronic mail and by first class US mail to the following contacts. The date of actual receipt of notice by a Party shall be deemed to be the date of delivery. A Pm1y's contact may be changed with written notice to the other Party.

DEPARTMENT OF ECOLOGY:

Water Resources Section Manager Northwest Regional Office 3190 160th A venue SE Bellevue, WA 98008-5452

CITY 01' SNOHOMlSH TRUST WATER RJGI-ITS AGREEMENT

CITY OF SNOHOMISH:

City Administrator 116 Union A venue Snohomish, WA 98290

Or (for US Mail):

City Administrator P.O. Box I 589 Snohomish, WA 98291-1589

Page I 5

7. Legal Relations.

(a) The Parties do not intend to create any third-party beneficiaries, and nothing in this Agreement shall be deemed to create any third-party beneficiary relationships.

(b) This Agreement constitutes the entire agreement between the Parties pertaining to the subject matter contained herein and supersedes all prior and contemporaneous agreements, representations, and understandings. This Agreement and its provisions may be amended, supplemented, changed, waived, discharged, modified or terminated only by a writing signed by each of the Parties.

(c) This Agreement will be governed and enforced under the laws of the State of Washington. Venue for any action arising under or related to this Agreement shall be in Washington State couit for and in the County of Snohomish, State of Washington.

( d) No waiver of any right or provision of this Agreement shall be effective unless made in writing and signed by the Parties. The waiver by any Party of a breach of any obligation or provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach, and no failure by either Pa1ty to exercise any right or privilege under this Agreement shall be deemed a waiver of such Party's rights or privileges or shall be deemed a waiver of such Party's rights to exercise the same at any subsequent time or times.

(e) Should any provision of this Agreement be found to be invalid, unauthorized, or unenforceable by any court of competent jurisdiction, such provision shall be stricken and the remainder of this Agreement shall nonetheless remain in full force and effect. In the event that the stricken provision is an essential pa1t of the consideration suppo1ting this Agreement or if the absence of the stricken provision would materially alter the intent of the Parties, then the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions and outcomes contemplated under this Agreement are fulfilled to the greatest extent possible.

(f) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

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IN WITNESS WHEREOF, the authorized representatives of the Patties have duly executed this Agreement as of the date stated below.

STATE OF WASHINGTON

DEPARTMENT OF ECOLOGY

Dated:

Ii/ I l} WI 7

CITY OF SNOHOMISH

By:

John T. Kartak, Mayor

Dated:

/:i. -'/·/7

~ -d: _ __

atAdams,CityClerk

Ap<Z as to Form:

~~A~~r

CITY OF SNOHOMISH TRUST WATER RIGHTS AGREEMENT Page 17

Exhibit A

City of Snohomish Pilchuck River Municipal Water Rights & Actual Beneficial Use Summary

S 1-043282 CL 1890 2.5 2.17 Not

803 Year Specified Round

S1-00S00C 12/9/1931 5.0 3.55 3,000 1,310 Year

Round

Total 7.5 5.72 3,000+ 2,113 Year Round

Exhibit B

City of Snohomish Trust Water Right Reaches

Primary Pilchuck River Diversion Dam to 5.72 4,141 I Pilchuck River Mile 2

Contributed by S1-043282CL 2.17 1,571

Contributed by S1-00500C 3.55 2,570

- - --

Secondary Pilchuck River Mile 2 to Snohomish 5.72 2,113

River and continuing to Puget Sound

Contributed by S1-043282CL 2.17 803

Contributed by S 1-00SO0C 3.55 1,310

75805v l8

EX!IIBITS A AND B TO CITY OF SNOHOMISH TRUST WATER RIGHTS AGREEMENT