1. Final Agenda For February 20, 2019

Documents:

2019_02_20_FINALAGENDA.PDF

2. Preliminary Agenda For February 20, 2019

Documents:

0 PRELIMINARY AGENDA.PDF

3. Agenda Packet For February 20, 2019

Documents:

022019_AGENDAPACKET.PDF Mukilteo Water and Wastewater District 7824 Mukilteo Speedway Mukilteo, WA 98275 Ph: 425-355-3355 ▪ Fax: 425-348-0645

BOARD OF COMMISSIONERS REGULAR MEETING February 20, 2019 ▪ 7:00 PM FINAL AGENDA

Call Meeting to Order Roll Call Approval of Agenda Visitors and Comments from the Audience Minutes 1. Approve the Minutes of the Regular Meeting of February 6, 2019 Consent Agenda 2. The following items have either been previously discussed or are routine in nature. Any item may be removed at the request of a Commissioner for further discussion. The Board may approve all of these items with a single motion. 2.1 Approve Vouchers in the amount of $401,611.67 2.2 January Investment Funds Report Business Items 3. CliftonLarsonAllen LLP Agreement 4. Investment Limits 5. Other Business Additional Reports 6. Management 6.1 General Manager’s Report 6.2 Customer Past Due/Aging Report 6.3 Discharge Monitoring Report 6.4 VERBAL REPORTS: Department Head Updates . Legal . Engineering . Commissioners Executive Session 7. Sewage Disposal Agreement between the District and the City of Everett Pursuant to RCW 42.30.110(1)(i) to discuss potential litigation with District legal counsel. Conclude

SCHEDULE OF UPCOMING MEETINGS Regular Meetings are held the 1st and 3rd Wednesdays of each month at 7:00 p.m. at the District Office March 6, 2019 March 20, 2019 April 3, 2019 Mukilteo Water and Wastewater District 7824 Mukilteo Speedway Mukilteo, WA 98275 Ph: 425-355-3355 ▪ Fax: 425-348-0645

BOARD OF COMMISSIONERS REGULAR MEETING February 20, 2019 ▪ 7:00 PM PRELIMINARY AGENDA

Call Meeting to Order Roll Call Approval of Agenda Visitors and Comments from the Audience Minutes 1. Approve the Minutes of the Regular Meeting of February 6, 2019 Consent Agenda 2. The following items have either been previously discussed or are routine in nature. Any item may be removed at the request of a Commissioner for further discussion. The Board may approve all of these items with a single motion. 2.1 Approve Vouchers in the amount of $ 2.2 January Investment Funds Report Business Items 3. CliftonLarsonAllen LLP Agreement 4. Investment Limits 5. Other Business Additional Reports 6. Management 6.1 General Manager’s Report 6.2 Customer Past Due/Aging Report 6.3 Discharge Monitoring Report 6.4 VERBAL REPORTS: Department Head Updates . Legal . Engineering . Commissioners Executive Session 7. Sewage Disposal Agreement between the District and the City of Everett Pursuant to RCW 42.30.110(1)(i) to discuss potential litigation with District legal counsel. Conclude

SCHEDULE OF UPCOMING MEETINGS Regular Meetings are held the 1st and 3rd Wednesdays of each month at 7:00 p.m. at the District Office March 6, 2019 March 20, 2019 April 3, 2019

Mukilteo Water and Wastewater District 7824 Mukilteo Speedway Mukilteo, WA 98275 Ph: 425-355-3355 ▪ Fax: 425-348-0645

BOARD OF COMMISSIONERS REGULAR MEETING February 20, 2019 ▪ 7:00 PM PRELIMINARY AGENDA

Call Meeting to Order Roll Call Approval of Agenda Visitors and Comments from the Audience Minutes 1. Approve the Minutes of the Regular Meeting of February 6, 2019 Consent Agenda 2. The following items have either been previously discussed or are routine in nature. Any item may be removed at the request of a Commissioner for further discussion. The Board may approve all of these items with a single motion. 2.1 Approve Vouchers in the amount of $ 2.2 January Investment Funds Report Business Items 3. CliftonLarsonAllen LLP Agreement 4. Investment Limits 5. Other Business Additional Reports 6. Management 6.1 General Manager’s Report 6.2 Customer Past Due/Aging Report 6.3 Discharge Monitoring Report 6.4 VERBAL REPORTS: Department Head Updates . Legal . Engineering . Commissioners Executive Session 7. Sewage Disposal Agreement between the District and the City of Everett Pursuant to RCW 42.30.110(1)(i) to discuss potential litigation with District legal counsel.

Conclude

SCHEDULE OF UPCOMING MEETINGS Regular Meetings are held the 1st and 3rd Wednesdays of each month at 7:00 p.m. at the District Office March 6, 2019 March 20, 2019 April 3, 2019

MUKILTEO WATER AND WASTEWATER DISTRICT BOARD OF COMMISSIONERS REGULAR MEETING

Minutes of February 6, 2019 The Regular Meeting of the Board of Commissioners of February 6, 2019 was called to order at the District office by Commissioner Johnson at 7:00 p.m.

ROLL CALL/ Commissioners: IN ATTENDANCE Thomas Rainville, Tom McGrath, Mike Johnson

Engineering Eric Delfel (Gray & Osborne)

Staff: Jim Voetberg, General Manager; Rick Matthews, Operations/Engineering Manager; Gil Bridges, Treatment Plant Manager; Kendra Chapman, Executive Assistant/HR

APPROVAL OF Motion by Commissioner McGrath, second by Commissioner Johnson to AGENDA approve the agenda as presented. The motion passed unanimously.

VISITORS AND Jeff Clark a citizen of Mukilteo. COMMENTS FROM THE AUDIENCE

MINUTES Motion by Commissioner McGrath, second by Commissioner Johnson, to approve the minutes of the regular meeting of the Board of Commissioners on January 16, 2019. The motion passed unanimously.

CONSENT Motion by Commissioner Johnson, second by Commissioner McGrath, to AGENDA approve the Consent Agenda as presented. The motion passed unanimously. Vouchers Approved Vouchers in the amount of $270,857.59 Fund SubFund No. Voucher No. Amount Water Maintenance 740 8144-8188 $92,618.43 Water Capital 746 8193-8194 41,169.07 Wastewater Maintenance 840 8144-8188 59,133.77 Wastewater Capital 846 8189-8192 77,936.32

Payroll Approved Payroll in the amount of $178,746.63

Page 2 Board of Commissioners Meeting Minutes February 6, 2019 Page 2

BUSINESS ITEMS

Approve General Manager Voetberg presented the item. Voetberg gave a brief Intergovernmental overview of the King County Directors’ Association (“KCDA”), noting the Cooperative association is a cooperative purchasing program utilized by local and state Purchasing government agencies with no cost to participate. Voetberg added Procurement approving the Interlocal Cooperative Purchasing Agreement, with the Agreement with ability to piggyback off KCDA contracts, will be a benefit to the District. KCDA General discussion occurred. Resolution No. 482-19 Motion by Commissioner McGrath, second by Commissioner Johnson to adopt Resolution No. 482-19, authorizing the General Manager to enter into an Intergovernmental Cooperative Purchasing Agreement with King County Directors’ Association. The motion passed unanimously.

Authorize General Manager Voetberg presented the item noting the purchase of Purchase of video equipment is included in the 2019 Capital Budget and will be utilized Boardroom Video for Board meetings, Staff meetings and other trainings throughout the Equipment District.

Operations/Engineering Manager Matthews noted the purchase will be made through the King County Directors’ Association cooperative purchasing agreement from a company called CDW-G.

General discussion occurred.

Motion by Commissioner Johnson, second by Commissioner McGrath to authorize the purchase of an InFocus Mondopad Launch and mobile cart in the amount of $11,233.20, including Washington State Sales Tax. The motion passed unanimously.

Page 3 Board of Commissioners Meeting Minutes February 6, 2019 Page 3

WWTF Headworks Wastewater Treatment Plan Manager Bridges presented the item noting #1 & #2 Washer this item is included in the 2019 Capital Budget to replace the lower bodies Compactor Lower of the #1 and #2 Headworks washer/compactors. Bridges added the Body replacement of the lower bodies will greatly reduce the time of cleaning the Replacement washer/compactors when they clog up. Bridges noted bids were solicited through the MRSC Small Works Roster with Kusters Zima submitting the lowest bid.

General discussion occurred.

Motion by Commissioner McGrath, second by Commissioner Johnson to authorize the purchase of two washer/compactor lower body units from Kusters Zima in the amount of $12,572.00, including Washington State Sales Tax. The motion passed unanimously.

WWTF Scum Wastewater Treatment Plan Manager Bridges presented the item noting Pump #1 this item is included in the 2019 Capital Budget to replace #1 scum pump. Replacement Bridges added the existing pumps are 20-years old and at the end of their useful life. Bridges noted bids were solicited through the MRSC Small Works Roster with APSCO, LLC submitting the lowest bid.

General discussion occurred. Commissioner Johnson asked if the old pumps would be kept on-hand to be used in case of an emergency, which Gil Bridges responded they would.

Motion by Commissioner Johnson, second by Commissioner McGrath to authorize the purchase of a scum pump from APSCO, LLC in the amount of $10,991.57, including Washington State Sales Tax. The motion passed unanimously.

Gray & Osborne General Manager Voetberg gave a brief overview of the 2017 Water and Scope of Work Sewer Improvements Project with Strider Construction. Voetberg noted Amendment for Gray & Osborne incurred unplanned costs associated with this project 2017 WSI Project including assisting the District reach an agreement to close out the project, additional inspection time and the cost to hire Trenchless Construction to inspect the bore work performed by Strider’s subcontractor.

Eric Delfel confirmed the additional time and costs associated with work on this project.

General discussion occurred.

Motion by Commissioner Johnson, second by Commissioner McGrath to authorize additional Construction Management costs by Gray & Osborne relating to the 2017 Water and Sewer Project, Lift Station No. 4 Abandonment schedule in the amount of $31,965. The motion passed unanimously.

Page 4 Board of Commissioners Meeting Minutes February 6, 2019 Page 4

Other Business None.

ADDITIONAL REPORTS

Management General Manager’s Report General Manager Voetberg reported WASWD’s legislative update was included in the packet.

Voetberg reported a discussion occurred during the previous Board meeting regarding the policy for Agency Issuer investments, which currently has a limit of 35%. Voetberg added Commissioner comments were discussed regarding the possibility of lowering the limit. Voetberg noted an investment was maturing February 22nd and prior to reinvestment, further discussion on Agency Issuer limits would assist Staff in directions to the investment brokers helping to reinvest the maturing investment.

Commissioner Rainville stated the current Agency Issuer limit of 35% was high given the size of the District and believed it should be set at a lower limit. After General Discussion, Staff was asked to bring back additional information including policy limits from other jurisdictions and actual investment options given the meeting is February 20th and the reinvestment will occur on the 22nd.

Water Comparison Report The Board received the Water Comparison report and had no comment.

Verbal Reports Treatment Plant Manager Bridges reported the treatment plant is running well.

Operations/Engineering Manager Matthews reported the 61st Place Wall Project has been completed by the City of Mukilteo and the road is now open. Matthews also reported District Staff repaired a Lift Station No. 5 force main break and given this is a second break in the past couple of months, Staff will be reviewing whether a total replacement is needed. Matthews also reported he is working with the engineers on the Mukilteo Ferry Project to get signed plans for the project. Matthews noted the 2019 Water and Sewer Improvements Project pre-construction meeting is set for the following day.

Engineering Mr. Delfel reported he is hopeful to closeout out the Lift Station 10 project at the next Board meeting.

Commissioners Commissioner McGrath reported the WASWD Commissioners Workshop was a good workshop and included “Piggybacking” as a topic.

Commissioner McGrath noted he would not be at the next Board meeting on February 20th.

Page 5 Board of Commissioners Meeting Minutes February 6, 2019 Page 5

Commissioner Johnson suggested the Sno-King meeting on February 11th be cancelled due to inclement weather. General Manager Voetberg and Commissioner Rainville agreed. Voetberg noted he will check with other Sno-King members and if most agree will send out a notice of cancellation.

CONCLUDE There being no further business, the President of the Board concluded the meeting at 7:41 p.m.

President/Commissioner Rainville

Vice President/Commissioner McGrath

Secretary/Commissioner Johnson

Page 6 MUKILTEO WATER AND WASTEWATER DISTRICT INVESTMENT FUNDS REPORT 1/31/2019

Sub-Fund Invstmt Maturity 1/31/2019 1/31/2018 ID # Fund Description Type Date Amount Rate Amount Rate

Unrestricted Investments:

740 Water Maintenance Fund State Pool N/A $930,557.48 2.501% $612,875.22 1.437%

746 Water Capital Fund State Pool N/A 1,889,874.98 2.501% 2,078,732.87 1.437% Opus MM N/A 807,016.51 2.550% 790,852.92 1.450% FNMA 3/12/2018 477,579.25 0.750% FNMA 3/28/2018 1,003,660.00 0.770% FHLB 5/18/2018 1,450,000.00 0.900% FFCB 2/22/2019 1,387,454.60 2.130% FHLB 6/14/2019 1,531,950.00 2.350% FHLB 8/5/2019 1,631,842.08 2.656%

840 Wastewater Maintenance Fund State Pool N/A 1,074,252.74 2.501% 1,204,339.91 1.437%

846 Wastewater Capital Fund State Pool N/A 2,439,409.87 2.501% 3,127,988.17 1.437% Opus MM N/A 910,480.25 2.550% 892,244.40 1.450% FHLMC 8/28/2018 2,200,000.00 1.000% FHLMC 4/15/2019 2,978,205.00 2.291% RFCSP 10/15/2019 1,999,664.64 1.430% 1,999,664.64 1.430%

Total Unrestricted Investments $17,580,708.15 $15,837,937.38

Restricted Investments:

851 ULID #11 Revenue Bond Fund State Pool N/A 106,597.31 2.501% 87,765.51 1.437%

852 SRF Loan Reserve Fund-Big Gulch State Pool N/A 68,873.85 2.501% 68,288.84 1.437%

855 PWTF Loan Fund State Pool N/A 660,433.02 2.501% 662,512.35 1.437%

857 Bonds Reserve Fund State Pool N/A 6,533.29 2.501% 56,234.23 1.437% FNMA 03/12/18 754,072.50 0.750% FHLB 8/5/2019 840,000.00 2.656%

858 2012 Bond Fund State Pool N/A 77,889.78 2.501% 77,147.18 1.437%

861 2015 Bond Fund State Pool N/A 197,338.57 2.501% 63,746.98 1.437%

Total Restricted Investments 1,957,665.82 $1,769,767.59

Total Investments $19,538,373.97 $17,607,704.97

Investment Type Amount % Amount % State Pool $ 7,451,760.89 38.14% $ 8,039,631.26 45.66% Opus Money Market 1,717,496.76 8.79% 1,683,097.32 9.56% FNMA (Fannie Mae) - 0.00% 2,235,311.75 12.70% FFCB (Federal Farm Credit Bank) 1,387,454.60 7.10% - 0.00% FHLB (Federal Home Loan Bank) 4,003,792.08 20.49% 1,450,000.00 8.24% FHLMC (Freddie Mac) 2,978,205.00 15.24% 2,200,000.00 12.49% RFCSP (Resolution Funding Corp) 1,999,664.64 10.23% 1,999,664.64 11.36% Total Investments $ 19,538,373.97 $ 17,607,704.97

Page 7 BUSINESS OF THE MUKILTEO WATER AND WASTEWATER DISTRICT BOARD OF COMMISSIONERS

SUBJECT: CliftonLarsonAllen LLP Agreement MEETING DATE: February 20, 2019 FROM: Sue Parks, Finance Managers APPROVAL: Jim Voetberg, General Manager q.·/

CURRENT YEAR MULTl-YR. PROJ. Expenditure Amount Budgeted Spent to Date Amount Available Spent to Date Requested N/A $24,000 $0.00 $24,000 $24,100

EXHIBITS ATTACHED:

Agreement for Consulting Services - 2018 Annual Statements

SUMMARY STATEMENT/ISSUES:

In 2018 the District entered into an Agreement for Consulting Services with CliftonLarsonAllen LLP (CLA) for the 2017 Financial Statements. Dave Hoagland has always done a great job on the financials, completing them in a very timely manner. He also provided guidance with the 2016-2017 audit performed by the State Auditor's Office in 2018. Staff is recommending utilizing CLA for the 2018 Financial Statements. Pending Board approval, they are scheduled to begin work on March 11, 2019. Attached is the draftAgreement for Consulting Services, which is a repeat of last year's agreement, with the CLA Review Engagement Letter attached as Exhibit A, and State Schedules Engagement Letter attached as Exhibit B. This year's cost includes a 5.3% increase from last year.

RECOMMENDATION/SUGGESTED MOTION:

Authorize the General Manager to execute an Agreement for Consulting Services between MWWD and CliftonLarsonAllen LLP in an amount not to exceed $24, 100, including expenses.

Page 8 AGREEMENT FOR CONSULTINGSERVICES

This Agreement ("Agreement") is made and entered into this 20th day of February, 2019, by and between Mukilteo Water and Wastewater District, a Washington municipal corporation ("District") and CliftonLarsonAllen LLP a Washington corporation ("Consultant") (individually a "Party" and collectively the "Parties") for the purposes forthbelow.

1. Scope of Consulting Services. Consultant shall provide consulting services to the District under the terms of this Agreement for the following Project: 2018 year-end accounting services ("Project"). The scope of services is more fully described on Exhibits A and B attached hereto and incorporated herein by this reference ("Scope of Work").

2. Compensation and Pavment. District shall pay Consultant for the time and materials devoted to the Project as consideration for the performance of the services set forth on Exhibit A, not to exceed the amount of Twenty-Four Thousand One Hundred and 00/100 Dollars ($24,100.00), including out-of-pocket expenses. Such compensation shall be payable in the followingmanner:

a. Consultant shall submit a detailed monthly billing for all services provided describing in reasonable and understandable detail the services rendered, feescharged and expenses incurred by Consultant during the previous month in accordance with a schedule ofrates and charges set forth on Exhibit A ("Fees"), including fees and expenses for additional services authorized by District as provided herein. District shall pay the invoice within sixty (60) days ofreceipt, except as to any disputed amounts.

b. Upon District's failure to pay within sixty (60) days ofreceipt the undisputed amount set forth in any monthly billing submitted to District by Consultant, such unpaid balance will bear interest at the rate of .5% per month until the amount of such unpaid balance, plus interest thereon shall be paid in full.

c. Consultant shall maintain accounts and records of fees billed and expenses incurred as described in this Section 2 in accordance with generally accepted accounting principles, and agrees to make such accounts, records and supporting documentation available to the District and its authorized representatives for inspection at mutually convenient times, both during the Project work and for three (3) years followingthe final payment forservices rendered or termination ofthe Consultant's services under this Agreement.

3. Schedule of Work. Consultant shall commence the performance ofits services under this Agreement upon receipt of notice to proceed from the District to do so and shall provide the services in accordance with the schedule on Exhibit A, subject to delays for causes beyond the reasonable control of Consultant or as otherwise agreed to by District.

4. Subcontractors. Consultant shall not subcontract or assign any portion of the work covered by this Agreement without the prior written approval of the District, such consent to be given in District's sole discretion. Subject to the provisions of the preceding sentence, this

-1- Page 9 Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto.

5. Independent Contractor. Consultant is an independent contractor and not an employee of the District. Consultant shall be responsible in full for payment of its employees, including insurance and deductions, and forpayment to any subcontractors. No personnel employed by Consultant shall acquire any rights or status regarding the District. All of the services required hereunder shall be performed by Consultant or under its direction, and all personnel engaged therein shall be fully qualified under applicable state, federal and local laws to undertake the work performed by them.

6. Changes in Scope of Services. The District may require changes or modifications in the scope of services to be performed under this Agreement. Any such changes or modifications shall be in writing and signed by the parties to this Agreement. The compensation forthe changes or modifications,whether a decrease or increase, shall be on the same terms and conditions as set forth in Paragraph 2 above or in a manner otherwise mutually agreedto by the parties.

7. Insurance. Consultant shall maintain throughout the performance of this Agreement the followingtypes and amounts of insurance.

a. Comprehensive vehicle liability insurance covering personal injury and property damage claims arising from the use of motor vehicles with combined single limits of Two Million Dollars ($2,000,000).

b. Commercial General Liability Insurance written on an occurrence basis with limits no less than Two Million Dollars ($2,000,000) combined single limit per occurrence and Two Million Dollars ($2,000,000) aggregate for personal injury, bodily injury and property damage. Coverage shall include, but not be limited to: blanket contractual; products/completed operations; broad form property damage; explosion, collapse and underground (XCU) if applicable; and employer's liability; and

c. Professional liability insurance (Errors and Omissions insurance) with limits no less than Two Million Dollars ($2,000,000).

The insurance policies shall: (1) state that coverage shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability; (2) be primary to any insurance maintained by the District, except as respects losses attributable to the sole negligence of the District; and (3) shall state that the Districtwill be given 45 days prior written notice of any cancellation, suspension, non-renewal or material change in coverage.

The District shall be named as an additional insured on the Commercial General Liability Insurance policy with regard to work and services performedby or on behalf of the Consultant and a copy of the endorsement naming the District as an additional insured shall be attached to the Certificate of Insurance.

-2- Page 10 Before commencing work and services, Consultant shall provide to the District a Certificate of Insurance and required endorsements evidencing the insurance described above. The District reserves the right to request and receive a certified copy of all required insurance policies.

The above insurance limits do not constitute a limit on Consultant's liability to the District. Any payment of deductible or self-insurance retention shall be the sole responsibility of Consultant.

Consultant shall be solely responsible for the safety of its employees and subcontractors at the Project work site, and shall comply with all applicable federal, state and local statutes, regulations and ordinances regarding safety.

8. Indemnification. Consultant shall defend, indemnifyand hold harmless the District, its elected and appointed officers, employees and agents and volunteers from and against all claims, injuries, damages, liabilities, losses of suits, including attorneys' fees and costs, arising out of or relating to Consultant's wrongful performance under this Agreement, except for injuries or damages caused by the sole negligence of the District. For the purposes of this indemnification, Consultant specifically and expressly waives any immunity granted under the Washington Industrial Insurance Act, Title 51 RCW. This waiver has been mutually negotiated and agreed to by the parties. If a court of competent jurisdiction determines that this contract is subject to RCW 4.24.115, Consultant's obligation to defend, indemnify and hold harmless the District, its officers, employees, agents and volunteers shall be limited to the extent of Consultant's negligence. The provisions of this Section shall survive the expiration of termination of this Agreement.

Consultant represents and warrants that Consultant has the legal right to perform the consulting services for the District described herein, and that the Consultant and its employees and agents ( collectively "Consultant" for the purposes of this provision) have not contracted with or promised anyparty that Consultant would not solicit fromor undertake professional services for the District. Consultant shall defend, indemnifyand hold harmless the District, its elected and appointed officers, employees and agents from and against all claims, damages, liabilities, losses or suits, including attorneys' fees and costs, arising out of or relating to any claim, allegation or suit by any third party alleging that Consultant's performance of the consulting services herein violates or is a breach any contract agreement or promise not to performsuch services forthe District.

9. Ownership of Documents. Consultant agrees to returnto District upon terminationof this Agreement all documents, logs, drawings, photographs and other written or graphic material, however produced, received from District and used by Consultant in performance of its services hereunder. All documents, logs, drawings, specifications, designs, mylars, surveys, survey data, reports and other work product (collectively referred to as "Work Product") produced by Consultant in connection with the services rendered under this Agreement shall be owned by District. District shall own all copyrights to such Work Product and Consultant agrees to assign all ownership rights to such Work Product to the District. Reuse of any such Work Product by the District for other than a specific project or modification in use by the District of any of the Work Product without the Consultant's prior written approval shall be at the District's sole risk. Consultant shall be entitled to maintain copies of all work product in their files,subject to their records retention policy.

-3- Page 11 10. Standard of Care. Consultant warrants that its services shall be performed with the level of care, skill and competence of the consulting profession in accordance with the standard for professionalservices at the time the services are rendered.

11. Right of Entry. District shall provide for the right of entry of Consultant and its subcontractors and all necessary equipmentin order to complete the services under this Agreement.

12. Compliance with Codes and Standards. Consultant's Professional Services shall be consistent with the standard of care and shall incorporate those publicly known federal, state and local laws, regulations, codes and standards that are applicable at the time Consultant renders its services.

13. Discoverv of Hazardous Materials. The Parties recognize that unanticipated hazardous materials or suspected hazardous materials may be discovered on District's property or on property included as part of the site of work but not owned by District. The discovery of unanticipated hazardous materials may delay the Consultant's provision of the services required herein. In that event, the partiesmay extend the Contract Completion Date by mutual agreement.

14. Termination. This Agreement may be terminated by either Party upon five (5) days written notice for any reason. In the event of termination, Consultant shall be entitled to compensation for all services performed and costs incurred through and including the date of termination, except as to any disputed amounts.

15. General Provisions. a. Notices. Any notice or demand desired or required to be given under this Agreement shall be in writing and deemed given when personally delivered, sent by facsimile machine, or deposited in the United States Mail ( or with an express courier), postage prepaid, sent certified or registered mail, and addressed to the parties as set forth below or to such other address as either Party shall have previously designated by such a notice:

To the District:

Mukilteo Water & Wastewater District 7824 Mukilteo Speedway Mukilteo, WA 98275 Attn: General Manager

To the Consultant:

CliftonLarsonAllenLLP 3000 Northup Way, Suite 200 Bellevue, WA 98004 Attn: David Hoagland

b. Entire A�reement. This Agreement and its exhibit attachments contain the entire understanding between the District and Consultant relating to the consulting services which

-4- Page 12 are the subject of this Agreement. This Agreement merges all prior discussions, negotiations, letters of understanding or other promises whether oral or in writing. Subsequent modification or amendment of this Agreement shall be in writing and signed by the parties to this Agreement.

c. Waiver. Waiver of any breach or default hereunder shall not constitute a continuing waiver or a waiver of any subsequent breach either of the same or of another provision of this Agreement.

d. No Third PartyRights. This Agreement is made only for the benefit of the District and Consultant and successors in interest and no third party or person shall have any rights hereunder whether by agency, as a third party beneficiary, or otherwise.

e. Jurisdiction/Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Washington. Any suit to enforce or relating to this Agreement shall be brought in King CountySuperior Court, King County, Washington.

f. Severability. If any term, covenant or condition of this Agreement is held by a court of competent jurisdiction to be invalid, the remainder of this Agreement shall remain in effect.

g. Effective Date. The effective date of this Agreement shall be the date that this Agreement has been signed by authorized representatives of both Parties hereto ("Effective Date").

CliftonLarsonAllenLLP Mukilteo Water & Wastewater District ("Consultant") ("District")

By ______� By ______Typed Name ______Typed Name Jim Voetberg Its ______Its General Manager Dated ______�-� Dated ______

-5- Page 13 EXHIBIT A CliftonLarsonAllenLLP 10700 NorthupWay, Suite 200 BeUevue. WA 98004 425-250-61oo I tax 425-250-6050 CLAconnect.com

January26, 2019

Mr. Jim Voetberg, General Manager Mukilteo Water and Wastewater District 7824 Mukilteo Speedway Mukilteo, WA 98275

Dear Mr. Voetberg:

We are pleased to confirm our understanding of the terms and objectivesof our engagement and the nature and limitations of the review and accounting services CliftonlarsonAllenLLP ("CLA," ''we," "us,"and "our") will provide for Mukilteo Water and Wastewater District ("you," "your," or "the entity") for the year ended December 31, 2018.

David G. Hoagland, CPA is responsible for the performance of the review engagement.

Reviewand preparation services We will prepare the financial statements of Mukilteo Water and Wastewater District, which comprise the statement of net position as of December 31, 2018, and the related statements of revenues, expenses and changes in fund net position and cash flows for the year then ended, and the related notes to the financial statements, and perform a review engagement with respect to those financial statements.

The Governmental Accounting Standards Board (GASB} provides for certainrequire d supplementary information (RSI) to accompany the entity's basic financial statements.

Additional supplementary information accompanying the financial statements will also be prepared and presented for purposes of additional analysis and is not a required part of the basic financial statements.

The Management's Discussion and Analysis portionof RSI information will not be subject to the review engagement. The remaining supplemental information will be subject to the review engagement.

Accounting services We will also provide the following accounting services:

• Preparation of a trial balance.

• Preparation of adjusting journal entries.

@ Amemberof

InternationalNexia

Page 14 January 26, 2019 Mukilteo Water and Wastewater District Page 2

Engagement objectives The objectives of our engagement are to:

a. Prepare financial statements and supplementaryinformation in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) based on information provided by you.

b. Obtain limited assurance as a basis for reporting whether we are aware of any material modifications that should be made to the financial statements in order for the statements to be in accordance with U.S. GAAP.

c. For the Management's Discussion and Analysis portion of RSI, apply accounting and financial reporting expertise to assist you in the presentation of the supplementary information without undertakingto obtain or provide any assurance that there are no material modifications that should be made to the supplementary information in order for it to be in accordance with U.S. GAAP.

d. Obtain limited assurance as a basis for reportingwhether we are aware of any material modifications that should be made to the remaining supplementary information in order for the supplementary information to be in accordance with U.S. GAAP.

Our responsibilities We will conduct our review engagement in accordance with Statements on Standards for Accounting and Review Services (SSARSs) promulgated by the Accounting and Review ServicesCommittee of the American Institute of CertifiedPublic Accountants (AICPA) and comply with the AICPA's Code of Professional Conduct, including the ethical principles of integrity, objectivity, professional competence, and due care.

Engagement procedures and limitations A review engagement includes primarily applying analytical procedures to your financial data and making inquiries of entity management. A review engagement is substantially less in scope than an audit engagement, the objective of which is the expression of an opinion regarding the financial statements as a whole. A review engagement does not contemplate obtaining an understanding of the entity's internal control; assessing fraud risk; testing accounting records by obtaining sufficient appropriate audit evidence through inspection, observation,confirmation, or the examination of source documents; or other procedures ordinarily performed in an audit engagement. Accordingly, we will not express an opinion regarding the financial statements and the supplementary information.

Our engagement cannot be relied upon to identify or disclose any financial statement misstatements, including those caused by fraud or error, or to identify or disclose any wrongdoing within the entity or noncompliance with laws and regulations. However, we will inform the appropriate level of management of any material errors and of any evidence or information that comes to our attention during the performance of our review procedures that indicates fraud may have occurred. In addition, we will inform you of any evidence or information that comes to our attention during the performance of our review procedures regarding noncompliance with laws and regulations that may have occurred, unless they are clearly inconsequential. We have no responsibility to identify and communicate deficiencies in your internal control as part ohhis engagement. You agree that we shall not be responsible for any misstatements in the entity's financial statements that we may not identify as a result of misrepresentations made to us by you.

Page 15 January 26, 2019 Mukilteo Water and Wastewater District Page 3

Our report We will issue a written report upon completion of our review of the entity's financial statements. We cannot provide assurance that an unmodified accountants' review report will be issued. Circumstances may arise in which it is necessary for us to report known departures from U.S. GAAP, add an emphasis-of-matter or other­ matter paragraph(s), or withdraw from the engagement. If our reportis other than unmodified, we will discuss the reasons with you in advance. If, for any reason, we are unable to complete the review of your financial statements, we will not issue a report on such statements as a result of this engagement.

Our reportwill include a paragraph stating the RSI accompanying the financial statements is required by U.S. GAAP to be presented to supplement the basic financial statements. Although not a required partof the basic financial statements, the RSI is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reportingand form placing the basic financial statements in an appropriate operational, economic, or historic context. The Management's Discussion and Analysis portionof RSI is the representation of management. We will not audit or review such information and will not express an opinion, a conclusion, or provide any assurance on such supplementary information. The remaining RSI is also the representation of management. The report will state the supplementary information was subjected to review procedures applied in our review of the basic financial statements. We will not audit the supplementary information and will not express an opinion on such supplementary information

Our reportwill include a paragraph stating the additional supplementary information accompanying the financial statements is presented for purposes of additional analysis; is not a required part of the basic financial statements; is the responsibility of management; and was derived from, and relates directly to, the underlying accounting and other records used to prepare the financial statements. The report will state the additional supplementary information was subjected to review procedures applied in our review of the basic financial statements. We will not audit the additional supplementary information and will not express an opinion on such supplementary information.

Management responsibilities The engagement to be performed is conducted on the basis that management acknowledges and understands that our role is to prepare financial statements and supplementary information in accordance with U.S. GAAP and to obtain limited assurance as a basis for reportingwhether we are aware of any material modifications that should be made to the financial statements in order for the statements to be in accordance with U.S. GAAP. Management has the following overall responsibilities that are fundamental to our undertaking the engagement in accordance with SSARSs:

a. The selectidn of U.S. GAAP as the financial reporting framework to be applied in the preparation of the financial statements.

b. The preparation and fair presentation of the financial statements in accordance with U.S. GAAP.

c. The inclusion of all informativedisclosures that are appropriate for financial statements prepared in accordance with U.S. GAAP.

d. The preparation and fair presentation of the supplementary information.

Page 16 January 26, 2019 Mukilteo Water and Wastewater District Page4

e. The design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

f. The prevention and detection of fraud.

g. To ensure that the entity complies with the laws and regulations applicable to its activities.

h. The accuracy and completeness of the records, documents, explanations, and other information, including significant judgments, you provide to us for the engagement.

i. To provide us with the following:

i. Access to all information relevant to the preparation and fair presentation of the financial statements, such as records, documentation, and other matters.

ii. Additional information that may be requested for the purpose of the engagement.

iii. Unrestricted access to persons within the entity of whom we determine it necessary to make inquiries.

iv. At the conclusion of the engagement, a letter that confirms certain representations made during the review.

Responsibilities and limitations related to accounting services For all accounting services we may provide to you, including the preparation of your financial statements, management agrees to assume all management responsibilities; oversee the services by designating an individual, preferably within senior management, who possesses suitable skill, knowledge, and/or experience to understand and oversee the services; evaluate the adequacy and results of the services; and accept responsibility for the results of the services.

The responsibilities and limitations related to the accounting servicesperformed as part of this engagement are as follows:

• We will prepare a trial balance for use during the review. Our preparation of the trial balance is limited to formatting information into a working trial balance based on management's chartof accounts or general ledger. You will be required to review, approve, and accept responsibility for the trial balance.

• We will prepare a draftof your financial statements and related notes. Since the preparation and fair presentation of the financial statements is your responsibility, you will be required to review, approve, and accept responsibility for those financial statements prior to their issuance and have a responsibility to be in a position in fact and appearance to make an informed judgment on those financial statements.

• We will prepare a draft of the supplementary information. You will be required to review, approve, and accept responsibility for the supplementary information.

Page 17 January 26, 2019 Mukilteo Water and Wastewater District Page 5

• We will propose adjusting journal entries as needed. You will be required to review and approve those entries and to understand the nature of the changes and their impact on the financial statements.

Use of financial statements The financial statements and our review report thereon are for management's use. If you intend to reproduce and publish the financial statements and our report thereon, they must be reproduced in their entirety. Should you intend to include the financial statements in a document, such as an annual report or an offering document, you agree to notify us before issuance.

With regard to the electronic dissemination of financial statements that have been subjected to a review engagement, including financial statements published electronically on your website, you understand that electronic sites are a means to distribute information and, therefore, we are not required to read the information contained in those sites or to consider the consistency of other information in the electronic site with the original document.

We may issue preliminary draft financial statements to you for your review. Any preliminary draft financial statements should not be relied on or distributed.

Engagement administration and other matters CLA will not disclose any confidential, proprietary, or privileged information of the entity to any persons without the authorization of entity management or unless required by law. This confidentiality provision does not prohibit us from disclosing your information to one or more of our affiliatedcompanies in order to provide services that you have requested from us or from any such affiliated company. Any such affiliated company shall be subject to the same restrictions on the use and disclosure of your information as apply to us.

Our engagement and responsibility end on delivery of our signed report. Any additional services that might be requested will be a separate, new engagement. The terms and conditions of that new engagement will be governed by a new, specific engagement letter for that service.

Limitation of remedies Our role is strictly limited to the engagement described in this letter, and we offer no assurance as to the results or ultimate outcomes of this engagement or of any decisions that you may make based on our communications with you or our reports.

Fees Our fees for these services will be based on the time involved and the degree of responsibility and skills required, plus expenses including internal and administrative charges. Based on our preliminaryestim ates, the fee including expenses, for this engagement and the compilation engagement regarding the schedules required by the Washington State Auditor's Office as part of your year-end reporting, which has been described to you in a separate engagement letter is an amount not to exceed $24,100. The fee estimate is based on anticipated cooperation from your personnel and their assistance with preparing requested schedules. If the requested items are not available on the dates required or are not accurate, the estimated fee for services will likely be higher. If unexpected circumstances require significant additional time, we will advise you before undertaking work that would require a substantial increase in the fee estimate. Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. In accordance with our firm policies, work may be suspended if your account becomes 60 days or more overdue and will not be resumed until your account is

Page 18 January26, 2019 Mukilteo Water and Wastewater District Page 6

paid in full. If we elect to terminate our services for nonpayment, our engagement will be deemed to have been completed even if we have not issued our report. You will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket expenditures through the date of termination.

Agreement We appreciate the opportunity to be of service to you and believe this letter accurately summarizes the significant terms of our engagement subject to the provisions of the Agreement for Consulting Services between the District and CLA. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign, date, and return a copy to us to indicate your acknowledgment and understanding of, and agreement with, the arrangements for our engagement to prepare your financial statements and to perform a review engagement with respect to those same financial statements, and the parties' respective responsibilities.

Sincerely,

CliftonlarsonAllen LLP

David G. Hoagland, CPA Principal 425-828-1546 [email protected]

Response: This letter correctly sets forth the understanding of Mukilteo Water and Wastewater District.

Authorized Management Signature:------

Printed Name:------

Title: ______

Date: ______

Page 19 EXHIBIT B CliftonlarsonAllenLLP 10700Northup Way, Suite 200 f: Bellevue,WA 98004 42�250-6100 l fax 425-250-6050 CLAconnect.com

January26, 2019

Mr. Jim Voetberg, General Manager Mukilteo Water and Wastewater District 7824 Mukilteo Speedway Mukilteo, WA 98275

Dear Mr. Voetberg:

We are pleased to confirm our understanding of the terms and objectives of our engagement and the nature and limitations of the compilation and other accounting services CliftonLarsonAllen LLP ("CLA," "we," "us," and "our") will provide for Mukilteo Water and Wastewater District ("you," "your," or "the entity") for the year ended December 31, 2018.

David G. Hoagland, CPA is responsible for the performanceof the compilation engagement.

Compilation and preparation services We will prepare the schedules required by the Washington State Auditor's Office as partof your year-end reporting,which comprise Schedule 1- Schedule of Revenues, Expenditures, Expenses; Schedule 9 -Schedule of Liabilities; Schedule 15 - Schedule of State Financial Assistance; Schedule 16 -Schedule of Expenditures of Federal Awards; Schedule 19 -Schedule of Labor Relations Consultants; Schedule 21- Schedule of Local Government Risk Assumption (collectively "the schedules" as of December 31, 2018, and for the year then ended, in the form prescribed by the Washington State Auditor's Office,and perform a compilation engagement with respect to those schedules.

Other accounting services We will also provide the following other accounting services:

• Preparation of a trial balance.

• Preparation of adjusting journal entries.

Engagement objectives The objectives of our engagement are to:

a. Prepare the schedules in accordance with the requirements prescribed by the Washington State Auditor's Office based on information provided by you.

b. Apply accounting and financial reporting expertise to assist you in the presentation of schedules without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the schedules in order for them to be in accordance with the requirements prescribed by the Washington State Auditor's Office.

@ Amemberof Nexia International

Page 20 January26, 2019 Mukilteo Water and Wastewater District Page 2

Our responsibilities We will conduct our compilation engagement in accordance with Statements on Standards for Accounting and Review Services (SSARSs) promulgated by the Accounting and Review Services Committee of the American Institute of Certified Public Accountants (AICPA) and comply with the AICPA's Code of Professional Conduct, including the ethical principles of integrity, objectivity, professional competence, and due care.

Engagement procedures and limitations We are not required to, and will not, verify the accuracy or completeness of the information you will provide to us for the engagement or otherwise gather evidence for the purpose of expressing an opinion or a conclusion. Accordingly, we will not express an opinion, a conclusion, nor provide any assurance on the schedules.

Our engagement cannot be relied upon to identify or disclose any misstatements in the schedules, including those caused by fraud or error, or to identify or disclose any wrongdoing within the entity or noncompliance with laws and regulations. We have no responsibility to identify and communicate deficiencies in your internal control as part of this engagement. You agree that we shall not be responsible for any misstatements in the entity's schedules that we may not identify as a result of misrepresentations made to us by you.

Our report As part of our engagement, we will issue a reportthat will state that we did not audit or review the schedules and that, accordingly, we do not express an opinion, a conclusion, nor provide any assurance on them.

There may be circumstances in which the reportmay differ from its expected form and content. If, for any reason, we are unable to complete the compilation of your schedules, we will not issue a reporton such schedules as a result of this engagement.

Management responsibilities The engagement to be performed is conducted on the basis that management acknowledges and understands that our role is to prepare schedules in accordance with the requirements prescribed by the Washington State Auditor's Officeand assist management in the presentation of the schedules in accordance with the requirements prescribed by the Washington State Auditor's Office. Management has the following overall responsibilities that are fundamental to our undertakingthe engagement in accordance with SSARSs:

a. The selection of the financial reporting framework to be applied in the preparation of the schedules

b. The preparation and fair presentation of the schedules in accordance with the requirements prescribed by the Washington State Auditor's Office.

c. The inclusion of all informative disclosures required to be included in the form prescribed by the Washington State Auditor's Office.

d. The design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of schedules that are free from material misstatement, whether due to fraud or error.

e. The prevention and detection of fraud.

Page 21 January 26, 2019 Mukilteo Water and Wastewater District Page 3

f. To ensure that the entity complies with the laws and regulations applicable to its activities.

g. The accuracy and completeness of the records, documents, explanations, and other information, including significant judgments, you provide to us for the engagement.

h. To provide us with the following:

i. Access to all information relevant to the preparation and fairpresent ation of schedules, such as records, documentation, and other matters.

ii. Additional information that may be requested for the purpose of the engagement.

iii. Unrestricted access to persons within the entity with whom we determine it necessary to communicate.

Responsibilities and limitations related to accounting services For all accounting services we may provide to you, including the preparation of schedules, management agrees to assume all management responsibilities; oversee the services by designating an individual, preferably within senior management, who possesses suitable skill, knowledge, and/or experience to understand and oversee the services; evaluate the adequacy and results of the services; and accept responsibility for the results of the services.

The responsibilities and limitations related to the accounting services performed as part of this engagement are as follows:

• We will prepare a trial balance for use during the compilation. Our preparation of the trial balance is limited to formatting information into a working trial balance based on management's chart of accounts or general ledger. You will be required to review, approve, and accept responsibility for the trial balance.

• We will prepare a draft of your schedules. Since the preparation and fair presentation of the schedules is your responsibility, you will be required to review, approve, and accept responsibility for those schedules prior to their issuance and have a responsibility to be in a position in fact and appearance to make an informed judgment on those schedules.

• We will propose adjusting journal entries as needed. You will be required to review and approve those entries and to understand the nature of the changes and their impact on the schedules.

Use of schedules The schedules and our compilation reportthereon are for management's use. If you intend to reproduce and publish the schedules and our reportthereon, they must be reproduced in their entirety. Should you intend to include the schedules in a document, such as an annual report or an offeringdocument, you agree to notify us before issuance.

Page 22 January 26, 2019 Mukilteo Water and Wastewater District Page4

We may issue preliminary draft schedules to you for your review. Any preliminarydraft schedules should not be relied on or distributed.

Engagement administration and other matters CLA will not disclose any confidential, proprietary, or privileged information of the entity to any persons without the authorization of entity management or unless required by law. This confidentiality provision does not prohibit us from disclosing your information to one or more of our affiliated companies in order to provide services that you have requested from us or from any such affiliated company. Any such affiliated company shall be subject to the same restrictions on the use and disclosure of your information as apply to us.

Our engagement and responsibility end on delivery of our signed report. Any additional services that might be requested will be a separate, new engagement. The terms and conditions of that new engagement will be governed by a new, specific engagement letter for that service.

Limitation of remedies Our role is strictly limited to the engagement described in this letter, and we offer no assurance as to the results or ultimate outcomes of this engagement or of any decisions that you may make based on our communications with you or our reports.

Fees Our fees will be based on the degree of responsibility and contribution of the professionals working on the engagement, plus expenses, including internal and administrative charges and are included in our estimated fees as provided in the engagement letter regarding the review of your financial statements. Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. In accordance with our firm policies, work may be suspended if your account becomes 60 days or more overdue and will not be resumed until your account is paid in full. If we elect to terminate our servicesfor nonpayment, our engagement will be deemed to have been completed even if we have not issued our report. You will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket expenditures through the date of termination.

Page 23 January 26, 2019 Mukilteo Water and Wastewater District Page 5

Agreement We appreciate the opportunityto be of service to you and believe this letter accurately summarizes the significant terms of our engagement subject to the provisions of the Agreement for Consulting Services between the District and CLA. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign, date, and return a copy to us to indicate your acknowledgment and understanding of, and agreement with, the arrangements for our engagement to prepare your schedules and to perform a compilation engagement with respect to those same schedules, and the parties' respective responsibilities.

Sincerely,

CliftonlarsonAllenLLP

David G. Hoagland, CPA Principal 425-828-1546 [email protected]

Response: This letter correctly sets forth the understanding of Mukilteo Water and Wastewater District.

Authorized Management Signature:------

Printed Name:------

Title: ______

Date: ______

Page 24 BUSINESS OF THE MUKILTEO WATER AND WASTEWATER DISTRICT BOARD OF COMMISSIONERS

SUBJECT: Investment Limits

MEETING DATE: February 20, 2019 FROM: Sue Parks, Finance Manager S APPROVAL: Jim Voetberg, General Manager .::::::;t/

CURRENT YEAR MULTI-YR. PROJ. Amount Expenditure Amount Budgeted Amount Available Spent to Date Committed Requested N/A N/A N/A N/A N/A

EXHIBITS ATTACHED:

SUMMARY STATEMENT/ISSUES: At the February 6, 2019 Board meeting there was a discussion regarding limits for GSE­ Agency Obligations. The District's Investment Policy has a 35% per Issuer limit on Agency Obligations, with the District currently at 20% through Federal Home Loan Bank (FHLB) investments. A concern mentioned was that for the District's size, Agency limits per issuer may be too high. An informal survey was conducted to evaluate the District's investment limits with other Sewer and Water Districts/Cities. Larger entities such as the City of Marysville and Alderwood Water & Wastewater District have Agency limits of up to 35%. Not surprisingly, few Districts the size of MWWD are their own treasurer with investments and investment policies. Of those responding, Cross Valley has an investment policy which has the same Agency investment limits as the District's, up to 35%, while Lake Whatcom Water and Sewer District has a limit of up to 50%. On February 22, 2019 an FFCB (Federal Farm Credit Bank) Agency Obligation matures, which the District will immediately reinvest. Prior to the Board meeting on the 201h, investment options will be requested from the District's brokers. Should the best investment option not be with FHLB, the District will continue to hold FHLB investments at 20%. However, should the best option be with FHLB, the District's investments through the FHLB issuer would increase to approximately 27%. Again, the investment options will be presented to the Board at the meeting. Staffhas no strong feeling or recommendation to either keeping the existing Agency limit or reducing it to a lower percentage recognizing the size of the District is a reasonable consideration in establishing Agency investment limits. Given Commissioner McGrath will be absent from the meeting, it is suggested the Board provide direction on the upcoming reinvestment (should it be necessary) and any modifications to the Investment Policy be considered at the meeting of March 61h.

RECOMMENDATION/SUGGESTED MOTION: Discussion Only

Page 25 Mukilteo Water and Wastewater District 7824 Mukilteo Speedway Mukilteo, WA 98275 Phone 425 355-3355 Fax 425-348-0645

MEMORANDUM

To: Board of Commissioners From: Jim Voetberg, General Manager g-ti' Date: January 23, 2019 Subject: Manager's report forthe meeting of February 6, 2019

WASWD Legislative Update: Attached for Board review is a legislative update from WASWD dated February 5, 2019.

Everett Sewer Wheeling: Under Article X ofthe sewage disposal agreement with Everett, a credit is given to the District for Everett sewage which flows through District facilities. The wheeling credit is based on Equivalent Dwelling Units (EDU's) where a single family dwelling is counted as 1 EDU andthe number ofEDU's formulti-family and commercial buildings is based on water consumption and converted to an EDU by dividing the water consumption (based in CCF) by 9. In other words, formulti-family and commercial buildings every 9 CCF (6,732 gallons) consumed is 1 EDU. For example, a Multi-family/commercial building utilizing 27 CCF ofwater equates to 3 EDU's. Based on the total number of Everett customer EDU's flowing through District's facilities a credit is applied against the District's costof sending sewage to Everett's wastewater treatment facility.

While monitoring Everett's wheeling data, Finance Manager Sue Parks noticed the increase in EDU's appeared smaller thanone would expect given the increase in building activity. Upon a more in-depth review, Sue discovered Everett was accounting for new single family dwellings as multi-family/commercial accounts, making the EDU's based on flow. When the single family account did not utilize 9 CCF per month, the calculated EDU became O for that month. Working with Everett, Sue has corrected the accounting for single family buildings including a reimbursement forthe past six yearsthis has occurred. Going forward, the total number of EDU' s will increase resulting in a larger credit. For past miscalculations, Everett will pay the District $89,000.

Kudo's to Sue forfinding and correcting this issue.

Page 26 Washington Association of Sewer & Water Districts Legislative Update EDUCATE • ADVOCATE • COLLABORATE February 5, 2019

SESSION REFLECTIONS- WEEK 3

Hundreds of hairstylists spontaneously showed up in Olympia last week and blew up legislation aimed at their industry along with another independent contractor bill. Their success is a lesson in the power of action. Otherwise it's business as usual with many bills continuing to be introduced. New bills that we're tracking and weighing in on as appropriate are in bold below. Updates to bills are noted in italics. With it being a long session, there are about three weeks for bills to move out of their committee of origin in order for them to stay alive this session. Bills have to move quickly to meet the February 22 cut-off deadline. That is important to keep in mind as you read about some new bills that could have significant impact if they got any traction.

LEGISLATIVE PRIORITIES

Public Works Trust Fund: The Governor's proposed $130 million budget for the Public Works Assistance Account (PWAA) is far short of the $217 million the Public Works Board (PWB) requested, and $140 million is proposed to be transferred from the PWAA to the Education Legacy Trust Account. There won't be any action on this until close to mid-march. In the meantime, WASWD is leading an effortwith AWC, Association of Counties, and WPUDA to send a supportletter to legislators similar to what was sent to the Governor. In the next update I will include informationfor you to contact your legislator by phone or email about supporting continued PWAA funding. The timing willbe ripe in early March for that contact.

Small District Commissioner Health Care: HB 1241 & SB 5122 would allow all districts, not just districts with more than 5000 customers, to decide if they will offer health care benefits to Commissioners. With the Senate billpassed out of Committee, it has been approved to be on the consent calendar. The House billpassed out of committee, although Rep. Vicki Kraft(R-17 Clark County) voted against it because she thinks commissioners shouldn't be able to give themselves permission to approve their own insurance.

WASWD WATCH LIST

Transparency of Local Taxing Districts: SB 5024 requires utility bills to itemize state and local taxes collected and paid by the district, and includes provisions distinguishing requirements for different size utilities as well as authorization for districts to collect reimbursement for the cost of itemizing from the jurisdiction for which the district is collecting taxes. The PUD was successful in getting an amendment to use insertsor website information as an alternative to a line item on bills. It passed out of committee with Senators Salomon and Honeyfordvoting "no." It was referred to rules committee. No action expected soon.

Wrongful Injury or Death: SB 5163 & HB 1135 significantly expand exposure to liability for districts, including changes to the beneficiaries entitled to recover for damages. A hearing is scheduled on 216. WASWD continues to coordinate with Liability Reform Coalition on the bill.

12720 Gateway Drive, Ste 204, Tukwila, WA 98168 • 206.246.1299 • 800.244.0124 • FAX: 206.246.1323 • [email protected] • www.waswd.org

Page 27 Washington Association of Sewer & Water Districts Legislative Update EDUCATE • ADVOCATE • COLLABORATE February 5, 2019

Unit Price Contracting Authority: SB 5381 proposes to extend authority and define procedures for unit priced contracting by water and sewer districts that will allow districts to have bids for ongoing activity and extended contracts for recurring needs. John Peterson, Clark Regional Wastewater District testified last week.

OTHER BILLS BEING TRACKED

SB 5106 & HB 1040- Natural Disaster Mitigation. These bills, requested by the Officeof Insurance Commissioner (OIC), create a work group to study and make recommendations on natural disaster mitigation and resiliency activities. WASWD is working directly with the OIC to get a district representative on the study group.

SB 5115 - Appliance EfficiencySta ndards. Requested by the Department of Commerce, the bill proposes to allow the state to pre-empt federal standards for water using fixtures that are more stringent than current state standards. The bill continues its way through committee hearings with WASWD watching to be sure it doesn't go beyond its limitedimpact to districts.

SB 5136 - Water Infrastructure Program. Establishes the water infrastructure program to provide competitive grants for projects that increase the availability of water for out-of-stream uses, reduce flood risk, improve fish passage, or reduce stormwater pollution. Requires the Office of Columbia River, the Officeof Chehalis Basin, the Fish Barrier Removal Board, and the Department of Ecology (DOE) to review applications to ensure projects meet certain criteria. It is a significant new program that comes with no money. There was a hearing last week, but it was not passed out of committee.

SB 5327 & HB 1336 - Expanding career connected learning opportunities. This Governor's request bill sets up a program for developing state funded apprenticeship programs. Nothing to report.

SB 5618 - Public Works bid limits. Amends Title 39 to increase the amount that can be used on small works roster and builds in an escalator. WASWD is talking to potential allies about support of the bill. Committee hearing is this week.

SB 5657 - Opioid pollution/wastewater. Requires publicly owned wastewater treatment plants that directly discharge to Puget Sound to control pollution from opioids. No hearings scheduled.

SB 5775 - Water & Sewer individual metering. Requires multi-family owners, landlords, and property managers that charge individual dwelling units or rental units for water and sewer utilities to provide for submetering or direct metering of each dwelling unit or rental unit of the property for the purpose of third-party billing. There appears to be no obligation or requirement fordistricts. Committee hearing is scheduled this week.

SB 5787 - City, district public records. Specifies hours of availability for inspection and copying of public records. No committee hearings scheduled. 12720 Gateway Drive, Ste 204, Tukwila, WA 98168 • 206.246.1299 • 800.244.0124 • FAX: 206.246.1323 • [email protected] • www.waswd.org

Page 28 Washington Association of Sewer & Water Districts Legislative Update EDUCATE • ADVOCATE • COLLABORATE February 5, 2019

SB 5788- Local Infrastructure funding. Accomplishes the same as House bills 1680 and 1691. Directs PWB funding of projects to housing, and culverts for ten years.

HB 1006 - New requirements for locating underground facilities. Revises underground facilities provisions regarding the requirements of facility operators and excavators and the one­ number locator service. WASWD continues advocating for a seat on the Safety Committee. Bill is being heard in Local Government Committee this week.

HB 1143 - Notification of using fire-fighting foam. Requires notice to the Department of Ecology within 24 hours of use of PFOS/PFAS. Nothing to Report.

HB 1591 - Homelessness rights. Creates a right for people experiencing homelessness to "survive" in "public spaces," when there are no reasonable alternatives, without being subject to civil or criminal penalties or "harassment" by law enforcement or private security personnel. The impact to districts is uncertain, but it could result in legal risks to a district's response to encampments or other homeless activity on district property. The bill is currently in the House Committee on the Judiciary and Civil Rights, but is not scheduled for a hearing.

HB 1622 & SB 5675 - Drought preparedness. Shifts the focus of drought response to domestic use from irrigation. It provides tools for Department of Ecology to manage drought situations. No committee hearings scheduled this week.

HB 1680 - Local infrastructure funding. Specifies that public works projects may include natural or green infrastructure. Allows for up to 1 % of the biennial capital budget appropriation for the Public Works Board to be used for value planning grants. Ends the deposit of 4.1 percent of the Real Estate Excise Tax (REET) into the Education Legacy Trust Account, in fiscal year 2019 rather than fiscal year 2020. Prioritizes use of those funds to support housing development through 2023.

HB 1691 - Local infrastructure/public works board. Like HB 1680 this bill for public works projects to include natural or green infrastructure and up to 1 % of the PWB funding to be for value planning grants. This bill, however, ends the diversion of the Refuse Tax into the Education Legacy Trust Account and prioritizes its use for grants to address fish barriers for ten years. It is a new area of funding for the PWB. No committee hearing scheduled.

HB 1747 - Risk-based water standards. Directs Department of Health to develop standards for on-site non-potable water systems. Not scheduled for hearings. No committee hearing scheduled.

HB 1797 - Accessory dwelling units. Imposes requirements for development of accessory attached and detached dwelling units including utility connections and conditions for calculating connection fees. No committee hearing scheduled.

12720 Gateway Drive, Ste 204, Tukwila, WA 98168 • 206.246.1299 • 800.244.0124 • FAX: 206.246.1323 • [email protected] • www.waswd.org

Page 29 Washington Association of Sewer & Water Districts Legislative Update EDUCATE • ADVOCATE • COLLABORATE February 5, 2019

HB 1782 - Advisorygroup meetings. Extends the scope of the Open Public Meetings Act (OPMA) to include advisory boards, committees, or other entities established to provide advice or recommendations to a governing body or to conduct official business delegated by a governing body or executive. Committee hearing is this week.

HB 1860 - Addressing Lead in drinking water in Schools. Requires schools to come up with an action plan to prevent elevated lead levels. Committee hearing not scheduled.

MEMBER ACTION

NONE AT THIS TIME.

ACTIONALERTS: Please be prepared to contact your legislatorspersona/Iv if vou receive a WASWD Action Alert.

12720 Gateway Drive, Ste 204, Tukwila,WA 98168 • 206.246.1299 • 800.244.0124 • FAX: 206.246.1323 • [email protected] • www.waswd.org

Page 30 Washington Association of Sewer & Water Districts Legislative Update EDUCATE • ADVOCATE • COLLABORATE February 5, 2019

2019 Session CutoffCalendar , February 22, 2019 Last day to read in committee reports in house of origin, except House fiscal committees and Senate Ways & Means and Transportation committees.

March 1, 2019 Last day to read in committee reports from House fiscal I committees and Senate Ways & Means and Transportation L_ committees in house of origin. Last day to consider bills in house of origin (5 p.m.). March 13, 2019 ______J April 3, 2019 Last day to read in committee reports from opposite house, except House fiscal committees and Senate Ways & Means and:J Transportation committees. - -- April 9, 2019 Last day to read in opposite house committee reportsfrom House fiscal committees and Senate Ways & Means and Transportation committees.

April 17, 2019* Last day to consider opposite house bills (5 p.m.) (except initiatives and alternatives to initiatives, budgets and matters I necessary to implement budgets, differences between the houses, and matters incident to the interim and closing of the I session). I � Last day allowed for regular session under state constitution. _J f­I April 28, 2019 1 ! * After the 94th day, only initiatives, alternatives to initiatives, budgets and matters necessary to implement budgets, matters that affect state revenue, messages pertaining to amendments, differences between the houses, and matters incident to the interim and closing of the session may be considered.

12720 Gateway Drive, Ste 204, Tukwila, WA 98168 • 206.246.1299 • 800.244.0124 • FAX: 206.246.1323 • [email protected] • www.waswd.org

Page 31 Customer Notice Tracking

Reminder Notices Delinquency Notices Door Tags Turn-Offs Billing Period Dec '14 - Jan '15 1,078 397,764.56 425 108,705.20 139 28,408.81 25 4,827.02 Feb '15 - Mar '15 965 333,267.88 389 95,105.33 127 24,187.57 22 4,265.31 Apr '15 - May '15 1,035 274,529.05 410 102,481.56 138 25,381.42 31 6,022.03 June '15 - July '15 1,097 305,455.28 458 108,113.74 153 31,521.41 25 4,863.59 Aug '15 - Sept '15 1,111 405,507.89 416 102,708.19 138 53,474.71 20 3,593.58 Oct '15 - Nov '15 962 273,695.37 370 93,455.62 107 22,232.11 20 4,521.98 Dec '15 - Jan '16 970 269,424.01 410 127,400.68 100 20,103.60 13 2,646.09 Feb '16 - Mar '16 951 263,738.22 375 98,232.71 104 31,483.52 19 3,654.17 Apr '16 - May '16 1,097 368,952.52 376 82,065.84 116 23,661.53 22 4,942.86 June '16 - July '16 939 240,323.89 393 88,332.29 132 27,635.13 30 5,879.50 Aug '16 - Sept '16 899 231,073.18 323 60,061.68 146 27,017.95 20 3,252.52 Oct '16 - Nov '16 924 242,841.29 410 89,532.44 131 25,968.85 22 4,503.22 Dec '16 - Jan '17 985 320,559.84 419 94,319.79 114 24,225.75 22 4,120.29 Feb '17 - Mar '17 908 256,840.80 373 80,910.24 99 19,335.65 14 3,289.78 Apr '17 - May '17 998 255,466.95 406 89,753.83 106 22,398.26 26 7,177.28 June '17 - July '17 1,007 272,523.31 359 87,400.53 107 23,594.21 18 4,132.11 Aug '17 - Sept '17 983 274,344.92 412 106,503.50 115 26,398.92 21 5,616.66 Oct '17 - Nov '17 940 268,838.48 382 106,909.10 118 25,503.67 24 4,988.90 Dec'17 - Jan '18 1,143 270,511.72 337 86,647.84 122 29,883.76 19 5,239.89 Feb '18 - Mar '18 1,139 288,575.21 407 104,439.56 118 26,783.04 16 3,742.27 Apr '18 - May '18 1,136 304,233.79 445 105,126.03 117 28,815.04 18 4,616.59 June '18 - July '18 1,176 333,647.69 439 111,466.68 142 37,320.11 23 6,358.63 Aug '18 - Sept '18 1,099 313,815.22 410 105,692.59 172 42,823.98 31 8,271.72 Oct '18 - Nov '18 1,101 304,380.55 455 147,884.09 120 28,499.27

Current Liens: - Bills are due 15 days after billing date. Number Total Due - Reminder Notices sent out 30 days days after billing date. Liens (not in Foreclosure) 3 $2,264.64 - Delinquent Notices sent out 45 days after billing date. Liens in Foreclosure 9 $47,490.74 - Shut-off Notices sent out 55 to 60 days after billing date. Total Liens 12 $49,755.38 - Shut-off is 65-70 days after billing date.

Customer Aging Report

Number Under 30 days 30-60 Days 60-90 Days 90-120 Days Over 120 Days Total

Non-Liened Accounts 3137 $ 1,219,052.50 $ 275.25 $ 6,445.12 $ 68. 53 $ 4.07 $ 1,225,845.47 Liened Accounts 12 $ 3,460.23 $ 512.19 $ 2,151.36 $ 464.62 $ 43,166.98 $ 49,755.38 Total 3149 $ 1,222,512.73 $ 787.44 $ 8,596.48 $ 533.15 $ 43,171.05 $ 1,275,600.85

Page 32 Notice Tracking - Amount

400,500.00

350,500.00

300,500.00

250,500.00

Axis Title Axis 200,500.00

150,500.00

100,500.00

50,500.00

500.00

Reminder Notices Delinquency Notices Door Tags Turn-Offs

Page 33 Notice Tracking - Number of Notices

1,400

1,200

1,000

800

600

400

200

-

Reminder Notices Delinquency Notices Door Tags Turn-Offs

Page 34 Washington Department of Ecology Electronic Submission Cover Letter

WQWebDMR - Permit# WA0023396 - DMR Submission Id: 1661442 - 2/7/2019 1:02:17 PM

Company Name Signer Name System Name Mukilteo Water & Wastewater District Thomas G. Bridges WQWebPortal

Attachments: Document Name Or Description Document Name Submitted Copy of Record for Mukilteo Water Wastewater Copy of Record MukilteoWaterWastewaterDistrict Thursday February 7 2019 District

Attestation Agreed to at Signing:

I certify I personally signed and submitted to the Department of Ecology an Electronic Signature Agreement. I understand that use of my electronic signature account/password to submit this information is equal to my written signature. I have read and followed all the rules of use in my Electronic Signature Agreement. I believe no one but me has had access to my password and other account information.

I further certify: I had the opportunity to review the content or meaning of the submittal before signing it; and to the best of my knowledge and belief, the information submitted is true, accurate, and complete. I intend to submit this information as part of the implementation, oversight, and enforcement of a federal environmental program. I am aware there are significant penalties for submitting false information, including possible fines and imprisonment.

For Ecology Use Only

STw1WSwG/vLw1EYzocivmXbjDpT4NoRK13TbqTU1mRo4Ux/xvm2L6nhsvtsovysWKVBB7j180Pe6uEbO1dfzIhGElE3L 28aVG0nv/pVom+g=

Report Received: 2019-02-07 13:02 Page 1 of 1 Pages

Page 35 Washington State Department of Ecology Discharge Monitoring Report (DMR) Page: 1 of 3 Permit Number: WA0023396 Permittee: MUKILTEO WATER AND WASTEWATER DISTRICT WWTP Facility County: Snohomish Receiving Waterbody: Monitoring Period:01/01/2019 - 01/31/2019 Outfall: 001 - PUGET SOUND (CENTRAL) Version: 1

Monitoring Week Point IN1 IN1 IN1 IN1 IN1 001 001 001 001 001 001 1-T 1/1/19 1.03 257 2208 241 2070 3.9 33 98.5 8.0 69 96.7 1-W 1/2/19 0.99 268 2213 281 2320 4.4 36 98.4 6.5 54 97.7 1-Th 1/3/19 1.14 252 2396 235 2234 5.3 50 97.9 8.5 81 96.4 1-F 1/4/19 1.03 223 1916 8.5 73 96.2 1-Sa 1/5/19 1.06 247 2184 6.5 57 97.4 2-Su 1/6/19 1.28 224 2391 14.8 157 93.4 2-M 1/7/19 1.19 259 2570 8.0 79 96.9 2-T 1/8/19 1.15 236 2263 193 1851 4.9 47 97.9 5.8 55 97.0 2-W 1/9/19 1.26 383 4025 219 2301 4.2 44 98.9 5.0 53 97.7 2-Th 1/10/19 1.18 313 3080 183 1801 4.9 48 98.4 7.5 74 95.9 2-F 1/11/19 1.00 206 1718 5.5 46 97.3 2-Sa 1/12/19 1.00 287 2394 6.0 50 97.9 3-Su 1/13/19 1.10 204 1871 4.8 44 97.7 3-M 1/14/19 1.01 234 1971 7.3 61 96.9 3-T 1/15/19 0.97 266 2152 219 1772 5.3 43 98.0 6.0 49 97.3 3-W 1/16/19 0.92 211 1619 281 2156 4.0 31 98.1 5.0 38 98.2 3-Th 1/17/19 0.93 192 1489 221 1714 3.8 29 98.0 5.0 39 97.7 3-F 1/18/19 0.87 234 1698 5.0 36 97.9 3-Sa 1/19/19 0.87 229 1662 5.5 40 97.6 4-Su 1/20/19 0.95 259 2052 4.5 36 98.3 4-M 1/21/19 1.01 226 1904 6.3 53 97.2 4-T 1/22/19 1.09 248 2254 234 2127 5.4 49 97.8 6.0 55 97.4 4-W 1/23/19 1.05 258 2259 265 2321 3.8 33 98.5 6.8 59 97.5 4-Th 1/24/19 0.99 254 2097 212 1750 3.6 30 98.6 4.0 33 98.1 4-F 1/25/19 0.88 282 2070 6.5 48 97.7 4-Sa 1/26/19 0.88 302 2216 5.0 37 98.3 5-Su 1/27/19 1.01 228 1921 7.0 59 96.9 5-M 1/28/19 0.91 277 2102 7.0 53 97.5 5-T 1/29/19 0.93 237 1838 221 1714 4.6 35 98.1 7.0 54 96.8 5-W 1/30/19 0.90 249 1869 259 1944 4.9 37 98.0 4.3 32 98.4 5-Th 1/31/19 0.84 263 1842 225 1576 5.2 36 98.0 6.3 44 97.2

Daily Minimum

1.01 259 2240 239 2009 4.5 39 6.4 55 97 Average DL: 2.61 Report Only DL: 5210 Report Only DL: 6489 <= 30 <= 653 <= 30 <= 653 >= 85 4.9 46 7.6 73 Weekly Average <= 45 <= 980 <= 45 <= 980 1.28 383 4025 302 2570 Maximum Report Only Report Only Report Only Report Only Report Only

Daily Maximum

Monthly geometric mean

Weekly Geometric Mean Page 36 Washington State Department of Ecology Discharge Monitoring Report (DMR) Page: 2 of 3

Monitoring Week Point 001 001 001 1-T 1/1/19 6.79 13.3 1-W 1/2/19 8 6.67 13.6 1-Th 1/3/19 6 6.61 14.0 1-F 1/4/19 42 6.55 14.2 1-Sa 1/5/19 6.91 14.0 2-Su 1/6/19 6.95 14.0 2-M 1/7/19 6.67 13.9 2-T 1/8/19 6 6.52 13.7 2-W 1/9/19 6 6.88 13.8 2-Th 1/10/19 13 6.53 13.9 2-F 1/11/19 6.64 14.1 2-Sa 1/12/19 6.79 13.8 3-Su 1/13/19 6.84 13.5 3-M 1/14/19 6.59 13.6 3-T 1/15/19 5 6.60 13.3 3-W 1/16/19 12 6.70 13.3 3-Th 1/17/19 16 6.73 13.4 3-F 1/18/19 6.38 13.9 3-Sa 1/19/19 7.00 13.9 4-Su 1/20/19 7.04 13.7 4-M 1/21/19 6.99 13.6 4-T 1/22/19 7 6.77 13.7 4-W 1/23/19 14 6.64 13.9 4-Th 1/24/19 7 6.73 14.1 4-F 1/25/19 6.63 13.8 4-Sa 1/26/19 6.94 13.3 5-Su 1/27/19 6.88 13.3 5-M 1/28/19 6.58 13.9 5-T 1/29/19 4 6.72 13.6 5-W 1/30/19 4 6.71 13.3 5-Th 1/31/19 4 6.79 13.5 6.38 Daily Minimum >= 6.0 (RO) 13.7 Average Report Only

Weekly Average

Maximum

7.04 Daily Maximum <= 9.0 (RO)

Monthly geometric 8 mean <= 200

Weekly Geometric 13 Mean <= 400 Page 37 Washington State Department of Ecology Discharge Monitoring Report (DMR) Page: 3 of 3 I certify under penalty of law, that this document and all attachments were prepared under my direction or supervision in accordance with a system designed to assure that qualified personnel properly gather and evaluate the information submitted. Based on my inquiry of the person or persons who manage the system or those persons directly responsible for gathering information, the information submitted is, to the best of my knowledge and belief, true, accurate, and complete. I am aware that there are significant penalties for submitting false information, including the possibility of fine and imprisonment for knowing violations.

Thomas Bridges 2/7/2019 1:02:11 PM Signature Date

Page 38 Washington Department of Ecology Electronic Submission Cover Letter

WQWebDMR - Permit# WA0023396 - DMR Submission Id: 1661798 - 2/11/2019 10:40:50 AM

Company Name Signer Name System Name Mukilteo Water & Wastewater District Thomas G. Bridges WQWebPortal

Attachments: Document Name Or Description Document Name Submitted Copy of Record for Mukilteo Water Wastewater Copy of Record MukilteoWaterWastewaterDistrict Monday February 11 2019 District 2019 Q1 EFF 2019 Q1 EFFLUENT B19-A647

Attestation Agreed to at Signing:

I certify I personally signed and submitted to the Department of Ecology an Electronic Signature Agreement. I understand that use of my electronic signature account/password to submit this information is equal to my written signature. I have read and followed all the rules of use in my Electronic Signature Agreement. I believe no one but me has had access to my password and other account information.

I further certify: I had the opportunity to review the content or meaning of the submittal before signing it; and to the best of my knowledge and belief, the information submitted is true, accurate, and complete. I intend to submit this information as part of the implementation, oversight, and enforcement of a federal environmental program. I am aware there are significant penalties for submitting false information, including possible fines and imprisonment.

For Ecology Use Only

UEuZbe8aB1tFe7pxUAsL7yytj5cg6TzUXz +UERoRqiYIwE1qvET/PmUp8eOzehY24+Gr3ccAPsA6v37qfcttxaLR3+ZNUgiCqvgc5h81Hqg=

Report Received: 2019-02-11 10:40 Page 1 of 1 Pages

Page 39 Am Test Inc. Professional 13600 NE 126TH PL Analytical Suite C Services Kirkland, WA 98034 (425) 885-1664 www.amtestlab.com ANALYSIS REPORT

Mukilteo Water & WW District Date Received: 01/16/19 PO BOX 260 Date Reported: 2/ 8/19 Mukilteo, WA 98275 Attention: Brianna Sheppard All results reported on an as received basis.

______

AMTEST Identification Number 19-A647 Client Identification 2019 JAN Q1 EFF Sampling Date 01/15/19, 09:00

Nutrients PARAMETER RESULT UNITS Q D.L. METHOD ANALYST DATE Ammonia Nitrogen 0.159 mg/l 0.02 EPA 350.1 JC 01/18/19 Total Nitrogen (TKN) 1.95 mg/l 0.2 EPA 351.2 MJ 02/01/19 Total Nitrate + Nitrite 3.5 mg/l 0.02 EPA 353.2 JC 01/23/19 Sol-Reactive Phosphorus 2.7 mg/l 0.001 SM 4500PE JH 01/16/19 Total Phosphorus 3.21 mg/l 0.005 SM 4500PF KW 01/22/19

______Kathy Fugiel President

Page 40 Washington State Department of Ecology Discharge Monitoring Report (DMR) Page: 1 of 1 Permit Number: WA0023396 Permittee: MUKILTEO WATER AND WASTEWATER DISTRICT WWTP Facility County: Snohomish Receiving Waterbody: Monitoring Period:01/01/2019 - 03/31/2019 Outfall: 001 - PUGET SOUND (CENTRAL) Version: 1

Monitoring Week Point 001 001 001 001 001 3-T 1/15/19 3.21 2.7 0.159 3.5 1.95 3.21 2.7 0.159 3.5 1.95 Maximum Report Only Report Only Report Only Report Only Report Only

I certify under penalty of law, that this document and all attachments were prepared under my direction or supervision in accordance with a system designed to assure that qualified personnel properly gather and evaluate the information submitted. Based on my inquiry of the person or persons who manage the system or those persons directly responsible for gathering information, the information submitted is, to the best of my knowledge and belief, true, accurate, and complete. I am aware that there are significant penalties for submitting false information, including the possibility of fine and imprisonment for knowing violations.

Thomas Bridges 2/11/2019 10:40:49 AM Signature Date

Page 41 BUSINESS OF THE MUKILTEO WATER AND WASTEWATER DISTRICT BOARD OF COMMISSIONERS

SUBJECT: Sewage Disposal Agreement Between the District and the City Of Everett

MEETING DATE: February 20, 2019

Jim Voetberg, General Manager FROM: �/

CURRENT YEAR MULTI-YR. PROJ. Expenditure Amount Budgeted Amount Committed Amount Available Spent to Date Requested NIA N/A

EXHIBITS ATTACHED: • 1983 Agreement for sewage disposal between the City of Everett and Mukilteo Water District • Property Appraisal Report dated August 10, 2018

SUMMARY STATEMENT/ISSUES:

As earlier reported, Everett Public Works has been contemplating the purchase of 171 acres of Everett General Government property near their wastewater facility as a biosolids disposal site. Everett has informed the District they consider this a "Capital Improvement", subject to cost sharing per the 1983 sewage disposal agreement. The 1983 Agreement, as amended in 2003, obligates the District to pay 4% of "Capital Improvements". In this property purchase instance, the District share of costs would equal $54,800 (4% of $1.37 Million).

Everett Public Works has recently indicated they plan on moving forward with the property purchase. Aftertalking with John Mile, I have sent an email to Everett Public Works questioning whether this is a "Capital Project" pursuant to the 1983 Agreement for sewage disposal between the City of Everett and Mukilteo Water District. One of a few concerns is that while the contract is silent on biosolids, lagoon operations which creates biosolids, is specifically identified as an operation cost and paid through a separate established maintenance and operations formula (See Article II of the Agreement).

I have asked John Milne to discuss with the Board his thoughts on the property purchase as it applies to the 1983 sewage disposal Agreement with the City of Everett. Because this issue may lead to a contractual issue with the City of Everett, the discussion will be held in executive session.

RECOMMENDATION/SUGGESTED MOTION: I move to convene an executive session pursuant to RCW 42.30.110(1) (i) to discuss potential litigation with District legal counsel. We expect to be in Executive Session until __ (state time).

Page 42 NO SALES TAX REQUIRED

1//AY fi- 1983 1983 MAY -5 AH JI: 52 AGREEMENT FOR SEWAGE DISPOSAL !�K���r OEit!il '/. WH.Lfft.MS,. AUOITOR BETWEEN .SNOHOMI Slf COUNTY. WASH. . •• , •. THE CITY OF EVERETT AND Deputy \ MUKILTEO WATER DISTRICT ��

THIS AGREEMENT made as of this ---1.._ day of J{,(# 1983, between MUKILTEO WATER DISTRICT of Snohomish County, a municipal corporation of the State of Washington, hereinafter referred to as the "District" and THE CITY OF EVERETT, a munici­ pal corporation of the State of Washington, hereinafter referred to as "City." WITNESSETH: WHERE AS, the Ci·ty and the District previously entered into a Contra9t on September 7, 1977, regarding sewage disposal; and WHEREAS, the City and the District wish to rescind said Contract upon the entering of this Contz::act; a_nd WHEREAS, the City and the District recogniz·e the need for the District to participate in the costs of certain facili­ ties of the City sewerage system which are necessary to serve the District; and WHEREAS, the District agrees to contribute toward the costs of said City sewer facilities which benefit the District. NOW, THEREFORE, the parties agree:

. . I • (A) In order that· 1;,l'fe -·city may provide sanitary sewerage transmission and treatment services for sewage £lowing from the District into the City sewer system, the City and the District ·agree that the following sewerage system facilities shall be constructed and maintained by the City to service the following capacity requirements of the District:

8805050204 VOL 1787 PAGE2622 Page 43 District Capacity Facility Requirements

s. End Interceptor to Southwest Interceptor 2,500 gprn s. End Interceptor Northern Segment 2,500 gpm Headworks 2,500 gpm Sewer Treatment Plant · lo 7 MOD- \. • '-" M G- I'::, (.. '2-01)3 A""'-tvq,b�,,,\.) Based. on the above-stated District capacity requirements, the estimated costs for the District's share of the above-facilities is set forth in Exhibit A attached hereto and incorporated herein by reference. The capacity requirement immediately above are defined as follows:

GPM shall be defined as the average maximum flow over a one hour period. MGD shall be defined a� the average daily flow over a one year period. {B) It is currently anticipated that the following sewerage system facilities shall be improved by the City in order to provide capacity in the following total amounts:

Total Facility Facility Capacities

S End Interceptor to Southwest Interceptor 29 I 700 gpm s. End Interceptor Northern Segment 40,300 gpm, Headworks 80,000 gpm Sewer Treatment Plant 40.4-MGD

The above shall be defined. . in accordance with definitions set forth above.

- 2 - ·.8805050204 VOL 1787 P.\GE2623 Page 44 The District Capacity Requirements in Section (A) above were established by the District and submitted by the District to the City for inclusion in this Agreement. In reliance on said District Capacity Requirements established by the District, the City will size, design and construct, maintain or improve sewer facilities to serve both the City's and the District's capacity requirements. In the event that it is determined that the City's or the District's sewage flows exceed their respective capacity requirements, the City or the District, whichever is exceeding its allotted capacity, shall pay any and all damages or fines incurred by the City or the District in any manner related to or arising from exceeding the stated District or City Total Capacity Requirements. City shall notify District at any time that facility capacity problems are anticipated by the City and th� City and the District shall meet to discuss and plan for future remedial measures at any time after the City's o.r Dis- trict's flows exceed 80% of its· above.,..stated capacity require­ ments. In the event the District exceeds its allotted capacity and the City and District have not reached agreement as to remedial measures, the City, after notification to the Dis­ trict, may take any one or all of the following remedial steps: (1) Refuse to allow any new sewer connections in the area tribu­ tary to the undersized facility; ( 2) Re-size, re-design and re-construct or improve the above facilities to such capacity as is determined will accommodate the capacity required; ( 3) Purchase or sell capacity from City or other District; and/or (4) Tak• all reasonable steps to reduce 16ading. In the event the City elects the second remedial step, the District agrees, as ·

liquidated damages, to pay. : .. to. the City ali costs incurred by the City for the design ·and: improvement of any of said facilities, including but not limited-�to all costs set forth in Section I(C) . he_!'eof, except the cost of design and construction to meet the City's and or other µistricts' additional capacity requirements. Said costs shali be due and payable as provided in Section I(C). In the event that step (1) above is deemed necessary by the City

- 3 - 88.05 05 0 2 o 4' VOL 1787 PAGE2624 Page 45 or District, the party contemplating action shall submit notice thereof at least thiz:ty ( 36) days prior to taking final action. The District shall have no responsibility for total facility capacities, except as provided herein; provided that, in the event the City determines to refuse new connections tributary to facilities which are at or exceed capacity, District will refuse also to allow new connections to such facilities. The City shall take all reasonable actions to ensure the preservation to the District of any and all unused District capacity throughout that part of the Everett sewerage system described in §I hereof serving the District, until used and/or sold by the District. In the event the City utilizes the full capacity Of said part of the system affecting the District prior to the District's full use of its contracted capacity, either of the following remedies shall apply, at the election of the District: l) The City shall compensate the District in monies for its loss of the remaining portion of its unused capacity. Compensation shall be by negotiation and, in the event the parties cannot agree upon such compensation, the amount shall be determined by arbitration under the procedure set forth in §II hereof.

2} City shall, at its own expense, expand its facili­ ties, in order to accommodate the balance of the District's contracted for capacity.

(C) The District agr�es to pay to the City from the gross revenues of the sewer sy'st�� the _following percentage share of total costs of said fac�lities (said percentage share being ca-!_culated by di vi ding the District's Capacity Requirements by the Total Facility Capacities above):

- 4 -

VOL 1787 PAGE2625

Page 46 Percentage Sh�re Of Total Cost Facility Payment to City

s. End Interceptor to Southwest Interceptor .a. 4% s. End Interceptor Northern Segment ! Headworks i/ 3.1% ii Sewer Treatment Plant 4-r-2-1- q:I 1\ /i The total cost of each facility to which said percentage shall be applied shall include but not be limited to engineering costs and fees, all payments to consulting engineers or contractors, or otherwise, for labor, materials, equipment, overhead, etc., right-of-way, or land costs, testing, inspection, legal fees, and interim financing costs. Payments to the City shall commence with approval ·by the City of the Engineer's and/or the Con­ ,I tractor's progress payments for work performed so that payments 1'1: Ji from the District will coincide with the City's payments to 11 i Engineers/Contractors. Final total costs will be established and adjusted upon release of all claims against said projects. The District's obligation to the City shall be junior to all present and future bonded indebtedness of the District.

II. In addition to the payments set forth in Section I above, ,I the District shall pay the City from the gross revenu�s of its sewer system a sewage disposal maintenance and operation charge (M & 0 charge) determined- on the basis of 38% of the City's monthly sewer service rate for single family residences X 1. 20 X surcharge total District_ customer equivalents. Payments shall b�_rnonthly, due within thirty (30) days of billing. The General formula for determination of the M & O Charge is:.

- 5 - 8305050204' VDL 1787tAUE2fi26 Page 47 District% Share of Total Costs X City Single Family Service Rate District% of Total Customer F.quiva.lents X 1. 20 Surcharge = Monthly-S�r Rate Per Custcxrer F.quiva.lent

in accordance with the following understandings: (A) Customer · equivalents shall be single family residence eq uivalents and _shall constitute the total number of single family re sidences to which the District or the City provides service and effluent to the City's treatment plant, plus all other metered water usage divided by 900 cubic feet per month. The City's total single family equivalents shall be determined from the City's Decemb�r billings. The District's single family equivalents shall be determined monthly for purposes of deter­ mining the District's monthly M & 0 Charge. For purposes of determining the District's percentage of total equivalents, the determination shall be based on the District's December billing. (B) The City's monthly service rate shall ·be the current City of Everett single family residence sewer service rate; or as such rate may be revised in the future. ,i ·1 {C) The District's % share of total costs for the year 1981 is agreed to be 0.65%. The District's % of total system customer equivalents for the year 1981 is agreed to be 1.7% The District's % of City monthly service rate {before 1.20 surcharge) is agreed to be 38% for the year 1981. On or about February of 1983, and each year thereafter, the City shall submit to the District a proposed new percentage of City monthly service rate to be used for the forthcoming year, together with a summary o� the final previous year's sewer expenditures. Said · new.' p·e"i-centage of total costs shall be applied to the monthly M: _& O charge commencing �pril 1, 1983, through March 31, 19 84, · ·and each year thereafter shal1 be subJect to modification as provided herein. In the event of disagreement between the· City and the District as to the Dis­ trict's percentage share of total costs for the forthcoming year,

- 6 - .83.05 05 0 2 04· VOL 1787 PAGE2627 Page 48 the parties shall arbitrate their differences in accordance with the commercial..... __ arbitration rules of the American Ar bitration Association,:� using a three-arbitrator .panel through the Seattle Regional Office. The determinations made by the panel shall be' retroactive to April 1 of such yea� The District's percentage share of total costs is not expected to include all Everett sewer system costs. The pr evious year's cost analysis may be used as a guideline wherein, after determination of the District's percentage share of total cus­ tc;,mer equivalents as of December 31, line items of the Everett sewer system expenditures were reduced or increased in accordance with the exercise of judgment and experience as to the costs to serve the District. In determining the District's percentage share of total costs, it is agreed that the·following guidelines will be followed: (1) The District shall not be charged for in-City drainage., (2) The District shall not be charged the costs of construction and maintenance of lateral or collec­ tor service lines to in-City customers. ( 3) Because of the District's current payment for capital facilities as stated in Article l hereof, the District shall not be· charged for the City's 1980 bond issue. The District will be charged in accordance with its total percentage of total customer equivalents as of December 31 each year on the 1978 bond issue. District's M & 0 shall not include future bond issues of the City except in the event ·City bond issue funds are··used to construct facilities of benefit to the District The parties .. ·'Shalr 'meet to discuss· said . bene£its.

(4) Mukilteo shall. . not be charged lift station costs as long. as .it -continues not to utilize any City lift stations. (5) Unless actual- cost analysis demonstrates a higher amount of benefit, the District shall be charged at 1% of the following costs: Maintenance of manholes and lids Cleaning sewer mains Repair of sewer mains Customer records and collection VOL 1787 PAGE2628 8305050204' - 7 - Page 49 (6) The following general system costs will be applied in accordance with the District's December 31 percentage of total customer equivalents: Treatment and lagoon operations, including sewer lagoon acquisition costs in the event such costs are paid from this account Administration and supervising costs Engineering and records I Outside services and consulting Injuries and damages (insurance) Bad debts and un collectable expenses 11II Regulatory expenses 'f Miscellaneous g�neral expenses I General Plant I Taxes and payments in lieu of tax I Interest on accounts ( 7) Special programs which are not included as a capital cost urider Article I herein will be analyzed by City and District according to bene­ fits. (8) The 20% surcharge shall remain constant. The _.City shall notify the District in writing of all contemplated rate changes in order to all�w the District to appear and present evidence. Said notice shall be the same as for citizens of the City. If the City fails to so notify, the District shall be allowed a special_hearing to present evidence for the Council concerning rate modification. III. The District may deliver to the City all of the sewage and industrial waste collected by the District within the boundaries of Exhibit B, and .the City shall accept the sewage and waste delivered for treatment and disposal as hereinafter provided subject to such reasonable rules and regulations as may be adopted from time to time by the City.Council,.subject_ to capaci­ ties set forth in Section I . hereof. In the event tha� an adja­ cent city/district o�ta��s�capability to serve certain areas of the District as deter�ined by the District to be beneficial to it then and in that ev�nt; after notification to the City 60 -days prior to the flow diversion and consultation with the City, the District may in its sole di•cretion serve such areas by connections to others in a different flow direction. This will not release. the District from any portion of any required pay­ ments to the City under §I above. 3.0505 0204' - 8 - VOL 1787 PAGf 2629 Page 50 IV. Sewerage facilities of the District which may be :required for the delivery ·of sewage and wastes to the City may be con­ nected to facilities of the City sewerage system. Such connec­ tion shall be accomplished at the expense of the District and in accordance with the rules and regulations of the City. The initial points of connection of the District's system to the City's system are herewith fixed and shall be in the trunk lines of the City system. The City and the District may, as hereinafter provided, mutually agree to designate additional or alternate points of connection for receiving the District's sewage to the City system which may include connections to other districts which in turn connect to the City system. The Dis- trict has already installed flumes to measure inflow into City's system. City will install metering devices·to measure its inflow into District's system. The District and the City shall install at their respective expense flow recording devices at locations which will best measure incoming sewage flows when capacity concerns become evident. v. The District shall be responsible for the delivery to the City sewerage system of sewage collected by the District which is required to be delivered to the City hereunder, for the construction, maintenance and operation of local sewerage facili­ ties, and for the payment of all costs incident to the collection of such sewage and its delivery to the City sewerage system. It is expressly understood that the District will be respo�sible for the delivery of its sewage _to the City sewerage system at such points as provided in Article IV. The City may but shall not be obligated to construct 1:.r·unk lines and pump stations located within the District upon r.easonable notice to the District. It ��-sonte�plated that the District will build local sewers or build or secure the use of other facilities to deliver its sewage

9

.880505020.f VOL 1787 PAGE2630 Page 51 to the City at the points hereinbefore described. All Dis-. trict s�wers or other �emp?rary sewerage facilities carrying sewage delivered to the City shall be constructed and maintained in accordance with the rules and regulations of the City which shall be consistent with APWA, DSHS and DOE standards. All such District sewers or temporary facilities will be maintained by the District at no expense or risk to the City. VI. City may upon written approval of the District discharge sewage into District sewerage facilties within the District service areas contemplated under this Agreement: whenever District sewage capacity is available; provided further that I in such event, the City shall be obligated to pay its ·fair 1;I !] :, pro-rated share of the facility based on the method of assessment ·I us�d to.. finance said facility and M & O costs related to such discharges, including but not limited to lift station costs. VII. Permanent books and records shall be kept by the City and the District in order to establish rates, volumes of sewage delivered and discharged into and treated by the City sewerage system wherever such volumes ar_e measured and the number of Residential Customers and Residential Customer Equivalents reported. The records required by this paragraph shall be available for examination by either party at any reasonable time after five (5) working days' notice for a period of seven years. VIII. In the event of third_ party claims for injuries or ·aamages arising out of or relate�· t·� this Agreement, the City and the District shall have rights; _of indemnity against the other at any _t��� after a claim is filed and for a period of three years following release or pa�ment of a claim. Indemnification shall be determined_ on the. basis of proportionate share of fault, if

- 10 -

.8S.05 05 0 204' VOL 1787 PAGE26 Page 52J1 any. In the event that a lawsuit is filed against either pary in which the other is not named, rights of indemnification·shall be determined by binding arbitration under the procedure described in Article II hereof. IX. The District shall not have the right to assign this Agree­ ment or any of its rights and obligations hereunder either by • operation of law or by voluntary agreement without the written consent of the City and neither party may terminate its obliga­ tions hereunder by dissolution or otherwise without first secur­ ing the written consent of the other party and this Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto. Provided that the District, by agreement of the City, may sell unneeded capacity to others who are a party to agreements with the City. x. In the event the City annexes any of the District's area served by facilities under this Agreement, then the City at any time may elect to provide sewer service to customers served by the .District in the City's annexed area. If the City so elects, the District's Capacity Requirements shall be reduced proportion­ ately as the sewage flows in the annexed. area·relate to the total District sewage flows, as stated in Section I hereof, and the City shall be required to pay compensation to the District for said customers and capacity as follows: A. Local facilities serving customers in the annexed area shall become the responsibility of the City; · provided that the District shall continue to maintain and be responsible for any general District.' .facilities, such as lift stations, or interceptors, trunk sewers and laterals serving both the annexed area and the non-annexed area. In cases where sewage from such annexed areas is transmitted through general District facilities to City facilities, the'City shall pay the District the mainten­ ance and operation M & O charge determined from the following general formula:

880505 0204· - 11 - VOL '1787 PAGE2632Page 53 City's% of Share of Total Costs X District Single Family Service Rate City's% of Total Custaner Equivalents X 1.20 Surcharge le ss the City's Monthly Sewer Rate to District = Monthly Serwer Rate Per Custaner F.quivalent The guidelines for determining the above rates shall be consis­ tent with those shown in §II herein. Pursuant to RCW 35.l�A, the City shall make annual payments to the District for the annexed area's pro-rata share of the !I District's total outstanding sewer revenue bond obligations in Ii i accordance with annex�d area's pro-rata share of the remaining i annual payments schedule of said obligations at the time of I election. . In the event that the re are any local facilities in the annexed area assumed by the City which have been constructed .I w±th District-wide funds or revenue bond fun ds {excluding devel oper or privately installed facilitie s or facilities con­ ,!11 structed from assessments in the annexed area), then the City jl

shall pay the greater of either the total amount of the said ,I•/ :, pro-rata share of the District's outstanding bonded indebtedness or the depreciated value of said local facilities based on a 50 year straight line depreciation of actual costs. Payment of the said annexed area's share of the District's outstanding indebted­ ness shall be made annually thirty ( 30) days prior to the District's bonded indebtedness payment schedule. Payment for the said depreciated value of District constructed local facilities shall be lump sum upon the City's election to assume said facilities unless otherwise agreed. Where the Cit y effluent flows into District facili t_ies, then the City shall pay to the District according to·the:sa�e formula. B. In the event that the total due under §XA above is not sufficient to compensate··the District for the annexed area's pro-rata share of sewer system facilties, as paid to the City

- 12 - 830 505 0204' VOL .1787 PAGE 2633 Page 54 by the District under Section I hereof, then the City shall increase the amount due under ( § )XA by an amount equal to the annexed area's pro-rata share of sewer system facilities as provided in Section I hereof, said amount to be based on the depreciated value of said facilities on the date of the City's election to serve, as determined on a 50 year straight line depreciation formula. In the event that there is an am ount due hereunder and said a.mount is to be added to the annexed area's share of annual payments on outstanding indebtedness, then the total due shall be amortized in equal payments on the basis of the outstanding bond issue having the least number of years remaining to be paid. In the event that the amount due hereunder relates to District-constructed· facilities under { § )XA above, then the total due hereunder shall be lump sum due on the date of.the City's election. ,�. Any annexations made by the City of portions of the sewer function of the District where the City takes action to provide service to District customers shall remove such areas from the sewer function of the District for all purposes except payments for bonded indebtedness as set forth herein. XI. _ ..-- /''. ------This Agreement shall be in full force and effect and binding upon the parties until March 31, 2023. Thereafter, the parties shall be required to continue service for additional five year periods in the event the other party gives notice of intent to continue pursuant to the above procedure until the year 2033 at which time, in the · event the parties mutually agree that sewer treatment and transmission service by the City should· be continued, the parties shall meet and negotiate mutually ac_ceptable terms for continued service.) · XII. The September 7, 1977 Contract between the parties is hereby rescinded. DATED: -4�Y__._4__ /;.._ 9_:;$.;...... ;3=-----

- ·13 - 830505 0204' VOL 1787PAGE2634 Page 55 MUKILTEO WATER DISTRicr CITY OF EVERETT

ATTEST:

APPROVE.D AS TO FORM:

/�-!?-�City Attorney

880 -14- 5050204' VOL 1787 PAGE2635 Page 56 Valbridge Property Advisors I Puget Sound 2927 Colby Avenue, Suite 100 Everett,WA 98201 425-258-2611 425-252-1210 fax valbridge.com

Page 57 Corporate Office Smith Tower 2927 Colby Avenue 18728 Bothell Way NE 419 BerkeleyAvenue 506 2nd Avenue Suite 100 SuiteB Suite A Val bridge SUlte 1001 Everell, WA 98201 Bothell, WA 98011 Fircrest,WA 98466 PROPERTY ADVISORS Seattle, WA 98104 425-258-2611 phone 425-450-4040 phone 253-274-0099 phone Puget Sound 206-209- 3016 phone 425-252-1210 fax 425-949-7109 fax 425-949-7109 fax 425-94 9-7109 fax valbridge.com

Restricted Appraisal Report August 10, 2018

Michael Palacios Real PropertyManager Cityof Everett 3200 Cedar Street Everett, WA 98201

RE: APPRAISAL OF 171.37 ACRES OF FARMLAND LOCATED ALONG LOWELL­ SNOHOMISH RIVER ROAD, EVl;Rm, WASHINGTON (Our File #18-0198).

Dear Mr. Palacios:

In response to your request, we have completed an appraisal of the agricultural property tocated along Lowell-Snohomish River Road, Everett; WA. The intended user of this report is the City of Everett. The purpose of the report ls to provide an estimate of market value of the fee simple interest In the property.

The property consists of 171.37 acres of agrkultural rand with a history of rotating crops and is currently owned by the City of Everett. rt is made up of seven tax parcels bounded by Lowell· Snohomish River road to the north and east and the rail road tracks to the SOlJthwest. Only one tax parcel has a mailing address; 4426 Lowell-SnohomishRiver Roac:t,Everett, WA. The propertyis zoned AgricU.lture, A· 1, by the City of Everett and is entirely within the floodplain, floodway and density fringe area of the Snohomish River. No sewer or public water is available, and the flood plain location ptohibits development of structures.

The subject propertyis as described below.

Tax Parcel No. land Area (acres) 28050400200900 35;07 28050400201400 20,93 28050400201(i00 4.64 28050400300100 53.?1 28050400300200 2Hi) 28050400300400 11.:.9* *total .parcel area is 31.45 acres but only the area east of the RR tracks is inc-lu(fedi1S. the subiect oroperty.

28050400400100 a--,-�1AB TOTAL �,�.!z7? acres

18,0198 Lowell Farmland.docx� C,,p}r.i.�i'Jr ©.":,;;8 Page 58 Val bridge lOWELLFARMLAND ·.� PROPERTY ADVISORS PUqet�u,Jd

Agriculture tandvalues in the Puget Sound region have been rising steadily since 201 l, at an average of more than 10% per year. There is strong demand for smaller Mhobby farms" as well as land for larger commercial crop · operations. Blueberry growers from Canada have been purchasing agriculture land in Whatcom, Skagit and Snohomish counties based on productive soils, close-jn location and access to major freeways, which has been driving values in the region.

This appraisal estimates market value of the fee simple interest of the subje.ct property. As agreed, this is a Restricted AppraisalReport, intended to comptywith the reporting requirements of the Code of Ethics and Standards of Professional Appraisal Practice, which include Uniform Standards of Professional Appraisal Practice (USPAP) of the Appraisal tnstitute. The vatue conclusions herein are given sul:>ject to the specific assumptions and limiting conditions stated following this transmittal tetter, .as wet! as others identified in the report.

Based on our investigation and analysis of aH relevant data, it tsour opinion that the market value of the subject property as of Juty 30, 2018, is:

ONE MILUON THREE HUNDRED SEVENTYTHOUSAND DOLLARS ($1,310,000)

If you have further questions not answered in the accompanying report, please do not hesitate to call.

Respectfully submitted, VAlBRIPGE PROPERTYADVISORS I PUGETSOUND

�� ?,� RobertJ. Macaulay, MAI Ashley K. Zacharia, Assodate Appraiser WA State Certified-Gene"'! .Appraiser No. 1100517 WA State Certifi�d - GeneralAppraiser No.1102-461

I '

Va1bridge Property Advisors I Puget sound lB·OJ 98 Lowell Farmfand.dpcx --C<>P)'i'ight2018 e

.•) I

Page 59 LOWEU FARMLAND Val bridge TABLE OF CONTENTS PROPERTY ADVISORS PUget Soll1d TABLEOF CONTENTS

Table .of Co.ntents ········�·········�········••!t•••,..... _..•...... • � .....•...... •.••..•...... •...•. �.'i!· ···········•... t!••-••••••• i Patt I!"'!""Introduction , ..••••....•...... � ..•... ,... , .._., ...... •••••...... •.....•...... • � ...... ,.�··-·······�····· l

Legal Desc:rtptfOli••••••• ,...... 'i! ••• l!l!'••••••••••••••••••••••••••·•�,··•••2 Asse·ssed ·Value and Taxes ••••••••••• -•••••••••....••••.•••.•••••••••• �········�··················-······-·······!·····�·············�·�·····3 Hlstory•••••••••••...•••••••••••••• •••••••••.•.•••..•.••••••••••.••••••••...••••••.•.••.••••••••••••••••••••••••••••••••••••.•..•••••••••••••••••• 3 ScOpe of ASslinfflent••••••••.••...... ••.•.....•....••...... •.....•.••..••••••••••...••...••...... ••.....••.. , ..•••••.•••• 3 E>

Vicinity Map•.••••••• 111!••••••••• , ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• , •••••••••••••••••••••.••••••••••••••••••••• 7 Aerial Photograph...... 8 Su�Jet;tPro perty Photographs ...... ,. �······�·········,············ .. ········�·· ...... 9 Highest Qnd 8�$t Use...... •...... !t••··�···�····!l·······················�-·!"•••••••••••!'••··············-···········•·····!13

111111. 11!•••II•••• I Ill I•I I I•• •!II.II l1'1•11ae !ii !t ,,11I ••••• •••.• it•tia11•.I lal !"•111•11• ·· ••••I• 1.•i,1 111111•,1• ••I I Jtlii•••••• I ...... • ·valµ�tion � . � � . 14 Cott Approach tc;,Va lue ...... -. •• _ •••••••••••••••••••••••• ,,.!�···ll!·······•······,··································· ······•,14

Sales C_omparlson Approa.ch to Value ...... i., ..... ,,...... 14 land Value - .DirectComparlson ..•.....•...•.•..•••••••••••••.••..••••...... ••••...•••••.•••••••.•.•....•.••....•••.•.•••••..•• 14 Comparable Land Sales Map ...... 1.6 Value Conclusion •••••••••••••••••••••••••••..••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••.•••••••••21 RecoiJclliotlOn and FIIJal·Estimate of Vtilue...... 23 General Assumptions and Limiting Conditions...... 24 Certlflc(!tlan -.Rob�rt ,I� IVl.,;,,tau,ay, MAi.... , ...... ,.!'••·••····· �·�···-·�···· .. •�·· ...... 3J Cf!.rtl/lcat/,;m-Ashle y«. Zatharlo, Assotlate Appraiser ...... 33

l!'•• . Addend� ..., •••••.•• .,•• �...... , •••••• ••. , ••••••••••••••••••• i ...... , •••••••••.•••••••••• .-...... 35

G lossaty�.�...... •I!...... , ••••••. •i •• , •••••••••••••••••.•.• 36 Q�aliflcatfOn.s of RobertJ . .-Macau-lay, MAI ••••• , ...... �··-··•· .. ···�··············,.···········�··...... � .... 43

Vi'llbridgePrpperty AcM$OTSf Puget Sound 18-0198 Low�II Farmland.docx - -'-Copyright©2018

Page 60 �OWELl FARMLAND Val bridge PART HNTROOUCTION PROPERTY ADVISORS PugotSGund

PART I - INTRODUCTION

This is a RestrictedAppraisal Report, intended to comply with the reporting requirements set forth under Standards Rule 2-2(b) of the Uniform Standards of Professional Appraisal Practice(USPAP). The intended use; of the report is restricted to the client. The format presents nominal discussion of the data, reasoning, and analyses that were used in the appraisal process to develop the appraisers' opinion of value. Supportingdocumentation concerningthe data, reasoning, and analysesls retained in the appraisers'file. The depth of discussion contained in this report is specific to the needs of the client and for the intended use previously stated. The appraisers are not responsible for unauthorized use of this report.

Client: The client isthe City of Everett.

Apprqiser. Robert J. Macaulay,. MAt Valbtidge PropertyAdvisors I Puget Sound

AppraisedReal Estate: The property consists of 171.37 acres of agricultural land w•th a history of rotating crops and is currentty owned by the City of Everett. It is 1T1c1de !AP of seven tax parcels bounded by Lowell­ Snohomish fUver road to the north and east and the rail road tracks to the southwe$t. Onfy one tax parcel has a mailing address; 4426 Lowell-Snohomish River Road, Everett, WA. The propertyis zoned Agriculture by the City ·Of Everett and is entirety within the floodplain, floodway and density fringe area of the Snohomish River.

Purpose of the Appra:isat: The purpose of this appraisat is to provide an opinion of the market value of the subject property as of July 30, 2018. The deftnltk>nof Market Vat.uE!•s as follows:

Market value is defined as: 1

Th� mo1t probable price, as of a specifieddote, in CO$h, or in terms eq1Jivatent to cash, orin other p.recisetyreve.ated terms, for wh.lch the $pecified property rights should sell after reasonable exposure in a competitive market under all conditions requites to a fair sate1 with the buyer and seller both a,ting prudently, knowledgeably, and for self-interest, and assuming that neither is underundue dute$s.

J from The Appraisalof Real Estate, FourteenthEdition, 2013, AppraisalInstitute, page 58.

Valbridge PropertyAdvisors I Puget Sc:>und P�ge 1 18-0198 lowell Farmland.docx• -Copyright© 2018

Page 61 LOWELl FARMLAND Val bridge PART I-INTRODUCTION PROPERTY ADVISORS

PropertyRights Appraised: This appraisal sets forthan opinion regarding a fee simple interest (subjectto existing easements and encumbrances).

Fee simple interest is defined as:2 Absolute ownership unencumbered by any otherinterest or estate, subject only to the limitations imposed by the governmentalpowers of taxation, eminent domain, police power,and escheat.

Intended Use: The Intended use of this report is to provide an opinion of fair market value.

Intended UsJ,r: The intended uset is the City of Everett.

Dote of Inspection: Juty 30, 2018

Date of Valuation: August3, 2018

Date of Report: August 10, 2018

EstimatedMarket Value: $1,370,000

Fite ID: 18-0198

Competency Provision: Robert J. Macaulay, MAI, and Ashley K. Zacharia, Associate Appraiser have previously appraised similar properties and have the training and experience needed to competentlycqmplete this assignment.

Legal Description The property is briefly described as a portion of property lying within Sections 4, 5, 8 and 9, Tc>wnship28 North, Range S East, City of Everett, Washington. The full tegal description isretained in the appraisers' files.

2 from The Appraisalof Real Estate, ThirteenthEdition, 2007,Appraisaf tnstitute, page 114.

Va1bridge Property Advisorsl Puget Sound Page2 18-0198 Lowell faiTmarid.docx- -Copyrighte> 2018

Page 62 LOWELL FARMLAND Val bridge PART I-INTRODUCTION PROPERTY ADVISORS PugelSound

Assessed Value and Taxes The taxable vatues on the property are based Oilva1uation on its current use as agricultural landwith tax exemptions as Government Property.The subject property is assessed and taxed as follows:

2018 Assessed Value Parcel No. Land Improvements Total current Use Value 280504002�00 $140,300 $0 $140,300 $0 28050400201400 $8�,700 $0 ssa,1-00 $0 28050400201600 $21,800 $0 $21,800 $0 2@50400300100 $221;800 $0 $221,800 $0 28050400300200 $111,200 $0 $111,200 $0 2�50400300400* $128,700 $0 $128,700 $() 28050400400100 $70,500 $0 $70,500 $0 T01'Ai. $778.000 $0 $778,000 $0 •on{y 11.S9acres o.fthe total 31A5 acres of this tax parcel ore included in.the subject propertyof thisreport

History Based on review of Snohomish County public records, the property ts owned by the Cityof Everett and there are no sale transactions in the past ten years. The property is not currently tistedfor sale.

Scope of Assignment This appraisal fulfiHs the requirements of the Untform Standards of Professional Appraisal Practice (USPAP) of the Appraisal Foundation and the Code of Professional Ethics of the Appraisal tnstitute. The appra:lsaf assignme{lt included on-site in-spection of the subject parcel; evaluation of loca1 and regionat economic conditions; analysis of market supply and demand; deterrninattonof highest and best use; and preparation of value estimates by the relevant approaches to value. The scope of this appr�isa1 involves the Sates Comparison. The tncome and Cost Approaches are not relevant in valuing landonty.

Theclient providedthe appraisers with relevant subject propertyinformation. Additional information was .obtained from county records and on ..site inspections. In appraising the subject property, the appraisers performedt� following:

• Inspected the subject .property. • Anatyzed historical and current information from the subject neighborhood and competitive neighborhoods. • Researched Ce>Star, MetrpScan, Commerdal MLS, Northwest Multiple Listing Service and Snohomish County databases. • Reseal"(:hedthe VAL8R1DGE PROPERTY ADV1SORS f PUGET SOUND proprietary database. • Confirmedan cornparabtesales and feases with buyers, sellers, brokers, and/or publicrecords.

ValbridgeProperty AcMsors I Pll9etSound 18·019� Lowell Farmland.docx- -Copyright Cl 2018

Page 63 LOWELL FARMLAND Val bridge PART HNTRODUCTION PROPERTY ADVISORS Pug•ISound

• tnspected all comparable sales. • R�viewed all documents as cited throughout this report.

The format of this appraisal is a Restricted Appraisal Report.

Extrc1ordinary Assumptions/Hypothetical Conditions - ExtraordinaryAssumptions This term is defined as an assumption, directlyrelated to a spedfk assignment, as of the effective date of the assignment results, which, if found to be false, could alter the appraisers' opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the int�grity of data used in an analysis. No extraordinaryassumptions are noted.

Hypothetical Conditions This term is defined as a condition, directly related to a specific assignment, which is contraryto what is known by the appraisersto exist on the effective date of the assignment r�solts but is used for the purpose of analysts. Hypotheticaf conditions are contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis. No hypothetical conditions are noted.

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Page 64 lOWEll FARMLAND Valbridge PART I-INTRODUCTION PROPERTY ADVISORS PugotSaund

Summary ()fProperty Characteristic:s Pertinentinformation regarding thesubject is summarized as follows:

Location: The property consists of 171.37 acres of agricultural land currently owned by the City of Everett It is made up of seven tax parcels bounded by Lowetl-Snohomish River road to the north and east and the rail roadtracks to the southwest. Onfyone tax parce1 has a mailing address; 4426 towell-Snohomish Rtver Road, Everett, WA.

Site: The subject property consists of an irregular sh�ped area including 171.37 acres.

Access: The subject property has multiple gravel access roads off Lowell­ Snohomish River Road.

Topography: The subjectproperty is agriculturat marshland and is generally level and below grade of surrounding roads.

Soil: Puget day silty clay loam; prime farmland if protected from floe>dingand drained.

Utilities: No public sewer or water is available. Electricity is in the street.

Easements/Encumbrances: A title report was not prpvided by the client. The property inspection and review of public records did no� indicate the presence of any easements or encumbrances which would adversely influence the property. There are noted easements to Marshall Flood Control Districtthat are typical of similar propertyin the area.

Sensitive Areas: The subject propertyis entirely within- the floodplain, floodwayand density fringe area Qf the Snohom1sh River. According to the Federal Emergency Management Agency (FEMA) Map No. 53061C, Panel No. 1035f, ctated.S�ptetnber 16, 2005, the svbjett is in Zone AE, an area determinedto be inside the 100-yearfloodptain.

Zoniog/ Legal Characteristics: Zoning is A-1, Agriculture, by the City of Everett as well as a rural floodfringe district (RFFD). Permitteduses induded a9riculture and openspace with devetopment strictlylimited.

Site Improvements: There are no siteimprovements on the subje� prc;,perty.

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Page 65 LOWELL FARMLAND Valbridge PART I-INTRODUCTION PROPERTY ADVISORS PU

Marketing/ExposureTime An exposure time (or period} is the estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal. Marketingtime is the time it takes a propertyto sell on the market subsequent to the date of an appraisal. A primary differencebetween "exposure time" and "marketing time" is that an exposure period is historicar - ft rs the estimated length of time the property has been offered on the market prior to a hypothetical sale at market value as of the effective appraisal date -while marketing time is a future event.

Considering the exposure periods for the comparable sales, together with discussions with brokers and investors knowledgeable of this property type, the exposure and marketing period for ptoperty similar to the subject in most attributes, including size, is estimated at three to six months at market value.

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Page 66 LOWELL FARMLAND Val bridge VICINITYMAP PROPERTY ADVISORS Puge1Sound

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Page 67 LOWELL FARMLAND Val bridge AERIAL PHOTOGRAPH PROPERTY ADVISORS Pu

Valbridge Property AdvisorstPuget Sound Pages 18-0198 LowellFarililand.dooc -- Copyrighte 2018

Page 68 LOWELL FARMLAND Val bridge HIGHEST AND BEST USE PROPERTY ADVISORS PugelSound SUBJECT PROPERTYPHOTOGRAPHS

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2. View of the subjectproperty facing westfrom .lowerl�SnohotnishRiver Ro.ad.

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Page 69 LOWELL FARMLAND Val bridge HIGHEST AND BEST USE PROPERTY ADVl�ORS P119&1Sound

AREA/MARKET/NEIGHBORHOOD DESCRIPTIONS A piece of property is an in}egral part of its neighborhood. An �ppraisal must consider the environmental, governmental, social and ec;onomic forces currently influencing the distrkt to ascertain probable trends and the neighborhood'sinfluence on the subject property.

Boundaries The subject market area is known as the Lowefl Neighborhood within the City of Everett. 1 51 Neighborhood boundaries are 41 ' Street to the North, Snohomish River to the East, 71 Street to the South and Interstate 5 to the west.

Access, Traffic Flow and Exposure Accessto the subjectneighf:>orhood is good. All streets and avenues in -the neighborhoodconform to a grid system and run either north-south or east-west, Major north-sotJth circulation ts provided by Broadway, Colby Avenue and Rucker Avenue while majqr east-west arterials 1nclude Everett, Hewitt and Pacific avenues. Broadway provides access to 1.,5 ten blocks south of the C60; At the north end of town, Broadway becomes State Route 529, providing direct access to the City of Marysvme. tnterstate Highway 5 is accessible less than three miles northwest 'Of the subject property.

land Use The Cityof Everett is located on the eastern shore ofPossession Sound in Snohomish County. North Everett (where the subject is situ�ted) ls on a peninsula separate(#. from the mainland to the north and east by the Snohomi� River valley. The valley, consisting e>f agricultural tands, stretches east to the Cascade Mountains. To the west lie Port Gardner Bay and Possession Sound, beyond which are the Olympic Peninsula and the Olympic mountainrange. There are excellent west-facing marine and mountain views from Everett's waterfront.

Everett is the commercial and financial center of Snohomish County, serving rural .areas to the north and east as welt as more urb�n residential communities to the south. It is the county seat of Snohomish CQUnty; the cou.rthQuse/adrrtini$fration b1.1llqing compfe)( is located between Pacific Avenue andWall Street in the central bllsinessdi�trkt al')d Everett's City Hall is directlywest of the courthouse. Many additionalcity offkes are h90sed across the streetto the north jnthe Wall Street Building, a ten-storystructure that is the second tati est commercial building tn Everett.The highest fs the Everett Mutual ToWer, a 14-story office building located atong Colby Avenue, the main north­ south street.

The 65-acre PertGarqner Wharf rnjxed use project (now known as Waterfront Piace) was shelvedbut ,spermitted for 1.5 million square foot of space, to include up to 660 cfwelling units, 447,500 SF of office/commerciatspace, 180 hotel rooms, 6�,000 of retail and five waterfront restaurants.

In May 2008, San Dieso-based Oliver McMiHan purchased 185 acres from the City of Everett and was planning a majorrrlixed-use development; the tractis located along the riverfront east of 41st Street i'tndthe development pJan included 900,-000SF of office and com-merdal space c1nd 1.400dwelling units. tn 2013., the site wa$ sofd to Polygon Northwest. Which intends to continue the developmentin �ccordance With the timelines. negotiated wif.hthe city. The first pha$e (175 townhomes}is underway. ValbridgeProperty Advisors I Puget Sound Page 10 18-0198 LowellfJrmll'ind.docx -- Copyrighto ioui

Page 70 LOWELl FARMLAND Val bridge HIGHEST AND BEST USE P�OPERTY ADVISORS PugetSolind

tn downtown, several mutti-family buildings have been completed, including a 108-unit apartment project with street-level commercial space (Potc1la Village) and 200-unit library PJace (with HomeStreet Bank pccupying street-level commercial bays). In 2012, construction began on Pagoda Village, located on the corner of Wall Street and W Marine View Drive, to include a 60,000SF year­ round indoor farmers market, 220 apartment units and 120-room Hampton Inn hotel. A 100-:unit apartment building with street-level commerciat space (known as Aero) is nearing completion on the southeast cornerof ,Rucker and Hewitt avenues.

Out�idethe downtown core are three medical fc1dliti�s (EverettClink, Providence Health & serv�es on Padfic Avenue and Prc;,vj<;fence Regional Medical (:enter on Colby Avenue). A major hospttal expansion was completed at Providence Regionat Medical Center (1300 block of Colby Avenue) in fall 2011, consisting of a 12-story, 680,000 Sf structure. In mid-2007, a 1Q0;000 SF medical office structurewas built acrossthe street to the northof Providence. The Boeing Company has virtually no presenc¢ in northEverett.

A variety of tecreadonal opportunities are availal>fe with1n the Everett area. The city owns .and operates 32 parks tot�ting l,3()0± acres featuring pknic shelters, barbecve grills, playground equipment, tennis courts and play fields. There are afso numerous outdoor trails, two saltw�ter access areas and one freshwater latce with supervised swimming as weU as equipment rental and instruction$ in boating, sailing and canoeing. There are two riverfront parks along the Shohomish River with boat launch factlities, watkir,g/blkingtrails and picnic areas.

The Everett Parks Department organizes a nvmber of speci.a1 events throughoutttle year for all ages and tnterests including Art in the Park, Goblin Splash and the Fourth of July tnclependence Oay celebration. locallysponsored activities include organized Jeague sports;outdoor recreation such as hiking, kayaking, fishing and boating trips and tours; and specialized programs for the handicapped with activitiessuch as photography, potteryand painting. Everett is home to the AquaSox, a Class A minor Jeague team associated with the SeattJe Mariners. Comcast Arena, formerly known as the Everett Events <::enter, c:1penedtell yE!ars ago and seats 10,000. The fadlitY is home to the Ever�tt Silvertips, a Western Hockey league franchise,the Nattonal Lacrosse league Ch�mpions, the WashingtonSttaltn, the Northw�t'sonly baoke

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Page 71 LOWELL FARMLAND Val bridge HIGHEST AND BEST USE PROPERTY ADVISORS P.. tSound

Agri(ulture The subject property is subject to the Marshland Subarea Plan that was adopted by the City of Everett in 2011. The subarea ptan identifies the 1,065± acre area adjacent to the Snohomish River that is suitable for agriculture, habitat restoration and passive recreation. Of the 1,065 acres, aPProximately 795 acres were used asagriculture to produce crops or tivestock operations In 2011 with the remaining area as Wildlife preservation, infr�n,tcture and recreation uses. The subject propertyis noted as agricultural u�e and a fish and wildliferestor ation area.

According the USDA,Washington State is ranked 1st in the nation for production of apples, hops. and blueberries. Top commodities include apples, milk, potatoes, cattle and wheat and the top trading partner is Canada. 94% of Washington farms are smaU farms that sell less than $250,000 in productper years.

Puget sound contains more than 570,000 acres of farmtand that grow over 300 varieties of crops. Prices of agrl!:ulturatland have been steadily rising since 2011 with high demand for hobby farms as well as a push from btueberryfarmers spreading down from the north. Current marketing times for agricultural tand in Skagit and Snohomish counties has dropped significantly to fess than three months with demand far outweighing supply.

Conclusion hi c;ondusion, the supject is fQcatedin a desirabte area and the region's relatively stabte economy, COL!pledwith the city'simproving infrastructureand Iocatton in Everett,the CountySeat, will continue to support a favorable trend ih population growth and propertyvalues whHe offering an affordabte alternative to higher real estate prices in the Seattle/Bellevue metropolitan areas.

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Page 72 LOWELL FARMLAND Valbridge HIGHEST AND BEST USE PROPERTY ADVISORS PugetSound HIGHEST AND BEST USE

Highest and best use is defined as: 3

The reasonably probable use of property that results in the highest value...... To be reasonably probable, a use must meet certain conditions.

As Vacant: Consideringthe subject's physical features, tand use and iocation,highest and best use as vacant is agriculture. There is strong rnarket demand for both smatler"hobby famt tracts as well as Largercommerciijl agriculture uses.

8 from The Appraisalof Real Estate, Fourteenth Edition, 2013,Appraisal Institute, page 332

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