Agreement for Dissoulution and Transfer of Assets and Liabilities with Meridian Heights Water and Sewer District First AddendumFIRST ADDENDUM TO THE AGREEMENT FOR THE DISSOLUTION AND
TRANSFER OF ASSETS AND LIABILITIES FROM MERIDIAN HEIGHTS WATER
AND SEWER DISTRICT TO THE CITY OF MERIDIAN; SETTLEMENT
AGREEMENT AND RELEASE
This First Addendum to the Agreement for the Dissolution and Transfer of Assets and
Liabilities from Meridian Heights Water and Sewer District to the City of Meridian; Settlement
Agreement and Release ("First Addendum") is made and entered into, and made effective as of
the date of the latest signature below (the "Effective Date"), by, between and among MERIDIAN
HEIGHTS WATER & SEWER DISTRICT, a political subdivision of the State of Idaho, and its
successors, legal representatives, agents, assigns, and all other persons acting for, by, or through it
(the "District"), L.C. DEVELOPMENT, INC., an Idaho corporation, and its successors, heirs, legal
representatives, agents and assigns ("L.C."), and the CITY OF MERIDIAN, an Idaho municipal
corporation, and its successors, legal representatives, agents, assigns, and all other persons or
entities acting for, by, or through it ("City"), collectively called the "Parties."
WHEREAS, the Parties entered into an Agreement for the Dissolution and Transfer of
Assets and Liabilities from Meridian Heights Water and Sewer District to the City of Meridian;
Settlement Agreement and Release (the "Agreement") on October 4, 2013; and
WHEREAS, Section I0(d)(ii) of the Agreement contemplated that the District would take
all steps necessary as required by law to issue a voter approved Revenue Bond in the amount of
$1.5 million prior to Closing (as defined in the Agreement) and such bonds would be assumed by
the City at Closing; and
WHEREAS, Section 10(d)(ii) of the Agreement also contemplated that the District would
establish a special sewer assessment on District residents prior to Closing (as defined in the
Agreement) which assessments would be used to repay the bonds, and that such special assessment
would survive Closing and the authority to collect the same would be transferred to the City; and
WHEREAS, Section 10(e) of the Agreement contemplated that the approximate deficit of
$814,575 necessary to connect District residents to both City water and sewer (the "Deficit")
would be funded by the District's Revenue Bond as set forth in Section 10(d)(ii) of the Agreement;
and
WHEREAS, subsequent to execution of the Agreement, the District determined that it did
not need to utilize the IDEQ loan referenced in Section 10(d)(i) of the Agreement; and
WHEREAS, subsequent to execution of the Agreement the City Council and the Board of
Directors of the District (the "Board") have continued to investigate the most economically prudent
mechanism for financing the Deficit, including issuance of the bonds as contemplated in the
Agreement or City financing of the Deficit; and
WHEREAS, on August 19, 2014, the District held a public hearing duly published and
noticed in accordance with Idaho Code §63-1311A and the Idaho Open Meetings Law on its
proposed special assessment fee as contemplated in the Agreement; and
WHEREAS, on September 23, 2014, the District adopted Resolution 14-6 establishing the
special assessment fee as contemplated by the Agreement and this First Addendum and effective
as of October 1, 2014; and
WHEREAS, subsequent to execution of the Agreement, the District detennined that it
would need to utilize some of its office supplies and equipment following Closing in order to
finalize the District's audit and otherwise wind up the District's affairs; and
WHEREAS, the City Council and the Board believe it is in the mutual best interest of the
residents of the City and the District that the City finance the connection costs for the District's
residents to connect to the City's water and sewer systems; and
WHEREAS, the City Council and the Board desire to amend Section 10(b) to reflect that
the District will transfer its office equipment and supplies to the City within a reasonable time after
Closing in order to wind up the affairs of the District and to amend Sections 10(c), 10(d)(i),
I0(d)(ii) and 10(e) of the Agreement to accurately reflect the Revenue Anticipation Note issued to
the City by the District , the liabilities that will be transferred to the City upon Closing and to
reflect the City's agreement to finance the connection costs for District residents to connect to the
City's water and sewer systems upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises herein contained, and for
other good and valuable consideration, acknowledged by each of them to be satisfactory and
adequate, the District, the City and L.C. hereby mutually undertake, promise and agree, each for
itself, and its successors and assigns, as follows:
1. Amendment of Section 10(b) of the Agreement. The Parties agree that Section
10(b) of the Agreement shall be amended as follows, with deletions in strikethrough and additions
in underline:
Section 10(b): Transfer of Assets. Except for office supplies and equipment at
the District's office, which shall be transferred to the City within a reasonable time after Closing
in order that the District may wind up its affairs, at Closing MHWSD shall transfer, give and assign
to the City, and the City agrees to accept the same, all subject to and upon the terms and conditions
contained herein, all right, title and interest of the MHWSD in and to the Water System, Sewer
System, Cash Assets, Water Rights, and Other Real and Personal Property and all other assets of
the MHWSD of every kind and description, tangible or intangible, pertaining to, used in or
necessary for the operation of the Water System and the Sewer System (the "Acquired Assets"),
other than assets specifically excluded as set forth in Section 10(c).
2. Amendment of Section 10(c) of the Agreement. The Parties agree that Section
10(c) of the Agreement shall be amended as follows, with deletions in strikethrough and additions
in underline:
FIRST ADDENDUM - 2
Section 10(c): Excluded Assets. The MHWSD sewer lagoons and surrounding real
property, the Easement, and the MHWSD storm water pond (i the miss... Pmperty) are
specifically excluded from the assets that shall be acquired by the City pursuant to this Agreement
except that the sewer lagoons and surrounding real property, consisting of 13.71 acres (the
"District Properly") shall be subiect to the Revenue Anticipation Note ("RAN") issued to the City
from the District described in Section 10(d)(ii) of this Agreement. The following agreements are
also specifically excluded from the assets that shall be acquired by the City: (i) Service Agreement
hetween the MHWSD and Francisco and Ricki Sabala for water service: (ii) MOU between the
MHWSD and Francisco and Ricki Sabala; (iii) MOU between the MHWSD and Rick and
Charlaine Fisch; and (iv) MOU between the MHWSD and Alexandria P. McNish.
3. Amendment of Section 10(d)(i) of the Agreement. The Parties agree that Section
10(d)(i) of the Agreement shall be amended as follows, with deletions in strikethrough and
additions in underline:
Section 10(d)(i): Loans. The MHWSD has
an outstanding loan from IDWR with an approximate
balance of $270,000 $236,481.00. These This loans shall be assumed by the City at Closing.
4. Amendment of Section 10(d)(H) of the Agreement. The Parties agree that Section
I0(d)(ii) of the Agreement shall be deleted in its entirety and replaced with the following:
Section 10(d)(ii): Bond Anticipation Note and Revenue Anticipation Note. The
MHWSD executed a Bond Anticipation Note (`BAN") in the principal sum of $1,100,000 in favor
of U.S. Bank National Association on June 24, 2011, of which the MHWSD has utilized
approximately $242,803.27. The City has agreed to accept a RAN issued by the District in the
amount of $622,803.27 in order for the District to pay the BAN, complete the decommissioning
of the sewer lagoons, conduct the marketing, auction and sale of the District Property, and
undertake the winding up of the District as set forth in this Agreement. The MHWSD anticipates
using some of the proceeds from the sale of the District Property to repay the amount owing on
the RAN prior to Closing. In the event that the proceeds from the sale of the District Property are
insufficient to close out the RAN prior to Closing, the City agrees the outstanding balance due on
the RAN at Closing shall be included in the Deficit amount and paid as described in Section 10(e)
herein.
5. Amendment of Section 10(e) of the Agreement. The Parties agree that Section
10(e) of the Agreement shall be amended as follows, with deletions in strikethrough and additions
in underline:
Section 10(e): Funding of Deficit. The Parties acknowledge that (i) a deficit of
roughly $814,575.00 is expected in order for MHWSD to connect to both City water and sewer,
as reflected on Exhibit L attached hereto (the "Deficit"); (ii) there may be additional election costs
of MHWSD to hold an election to dissolve the District; (iii) there may be additional costs of
decommissioning the District's Sewer Lagoons if the District opts to perform the
Decommissioning pursuant to 7(a) of this Agreement; (iv) there may be additional costs to wind
FIRST ADDENDUM - 3
fees, marketing and fees incurred for the auction and subsequent sale of the District Property and
(iv) there may be additional revenues to lower the dDeficit from the sale of the District's
decommissioned Sewer Lagoon sites,; and (v) there may be add t;e«el eest., to finalize an4 ; e
44 „ eetie« to !'tity sen,ieesnet being paid ., e..A;«ed herein by the Cit., or 1,.. T — . 1,
eevered by the a ;..ti«.. Revenue Bond available to the M14W8D .pen the te««.......d ,.,..,.1'
PaAies agree to eeepeFt4e in good faM to iise m few Revenue Bond ftmds as possible to limit the
te..ms t1,eree f a«,1 appl;eable laws, mie..and .Mations
(1) In the event that the sale of the District Property results in the District being
able to nay all of the debts and obligations described in I O(e)(iii) & (iv) herein, so lone as
the special assessment does not have to be increased from that established by the District
Board on September 23, 2014, the District and the City will apply any surplus funds equally
to reduce the City's credit described in Section 9 of the Agreement and the Deficit
described in the First Addendum.
(2) In the event the District is not able to sell the District Property for the
minimum bid set at the auction and in subsequent sales attempts, the District and the City
agree to meet to jointly decide how to best address the sale or retention of the District
Property to pay the RAN and address the Deficit before Closing. At that time, if desired by
the City and allowed by applicable law, the District will provide the City a Deed of Trust
or other suitable security in the sewer District Property.
(3) The Parties agree that the City will finance the Deficit upon the following
terms and conditions:
Amount: $814,575.00, or such other amount as agreed to by
the City and the District prior to Closing including
any sum owing on the RAN as described in Section
10(d)(ii) herein.
Administrative Fee: 3.5% annually
ial Assessment Fee: The MHWSD agrees to establish a special
assessment fee pursuant to Idaho law for its residents which assessment shall be used to
repay the Deficit financing. The special assessment fee shall survive Closing and all
authority to collect the same shall be transferred to the City. The special assessment fee
shall include the administrative fee as set forth herein and may provide for a lump sum
payment by District users. The Parties agree to work together to limit as much as possible
the monthly water and sewer rates and other costs to MHWSD residents. At such time as
the Deficit is paid in full, not to exceed twenty (20) years, the City agrees to remove the
FIRST ADDENDUM - 4
special assessment fee from the properties within the MHWSD The City agrees to notify
the residents within the MHWSD at least annually of the balance due on the Deficit and
the approximate date that the special assessment fee will cease.
6. Remaining Terms. All other terms of the Agreement shall remain in full force and
effect.
7. Counterparts. This Addendum may be executed in counterparts, each of which
shall constitute and original.
CITY OF MERIDIAN
Tammy erd, Mai
Date: a3
ATTEST
Jaycee H&man, City Clerk
L.C. DEVELOPMENT, INC.
Lee Centers, President
Date:
Approved as to form:
CITY OF MERIDIAN
FIRST ADDENDUM - 5
MERIDIAN HEIGHTS WATER
& SEWER DISTRICT
�-
By:
Gord Hamilton, Chairman
Date: ---5f
z a o
ATTEST:
/ II
6 W I i
William Nary, City Attorney
MOORE SMITH BUXTON & TURCKE, CHTD.
Susan E. Buxton, of the firm
Attorneys for Meridian Heights Water & Sewer District
WILSON & MCCOLL
Brian F. Wilson
Attorneys for L.C. Development, Inc.
FIRST ADDENDUM - 6