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1998-11-02-S SPECIAL TOWN BOARD MEETING NOVEMBER 2, 1998 5:30 P.M. MTG#56 BOARD MEMBERS PRESENT SUPERVISOR FRED CHAMPAGNE COUNCILMAN RICHARD MERRILL COUNCILMAN THEODORE TURNER COUNCILMAN DOUGLAS IRISH COUNCILMAN PLINEY TUCKER TOWN COUNSEL ROBERT HAFNER MOREAU WATER ATTORNEY HAFNER-The purpose of this is to go over the Intermunicipal Agreement with the Town of Moreau dealing with water. We have gotten the latest contract which says Draft 10/15/98 and the purpose is to go over our comments. Overall for once we have no real substantial comments this is a fairly, all the big issues that we've have been I think successfully resolved. There are some issues though, I've outlined them in the memo that you all should have received. You have received a copy of the contract in case you didn't have yours with you to make sure we're talking about the same ones there have been so many variations. I'm going to briefly go through what they are and some of them are just things to point out for the Town Board that this is what the contract provides because we've seen so many different variations I think you need to say, oh yea that is what we finally settled on or this is what we agreed too. The first item in on Page 4, Section 2B (3). I just wanted to note that Moreau has agreed to pay two twenty thirds of the cost of those two low left pump motors we've had the discussion back and forth how much of it they would pay they agreed to pay two twenty thirds which is what we had asked. Page 6, Section 4A. This is one we're going to need I think Ralph's input on, but first let me talk about those legal issues that are involved. This is one of the things I think maybe is more of a question our last agreement had said that we would make the upgrades to our water system in order to provide one million gallons per day at the connection point. They changed it to be two million which is what the total contract would be if they exercised their right to purchase the second one million. The reason why the Town Board has limited it to one million before is that they had gotten some cost estimates of what the cost would be to increase the flow and they had received if we spend this much it will cost this much to increase it to one million and to increase it above that it will cost X amount more. They agreed to pay the first amount, you Town Board at one time had agreed to pay that first amount and had found that it was in the interest of the Town to do so to increase the hydraulic pressure or hydraulics of the system to benefit people that are in that area of the town. Going to two million is fine if the Town Board wants to as long as you have analyzed how much it will cost and said that the cost makes sense given the benefits to town and to the people in the water district in the area. That as I warned you about earlier that is something that I would think you would be asking him for some feedback on so you could make that determination. WATER SUPERINTENDENT, MR. VANDUSEN-What we had talked about before was the initial connection that would need to be done right away before a drop of water can go over there would cost in the range of a hundred and forty thousand dollars. That's going to be roughly two thousand feet of pipe on Big Boom Road and then another approximately two thousand feet to get from Big Boom Road to the waters edge that's what we had talked about right in the very beginning. That would allow us to produce or to supply between eight hundred thousand and a million gallons a day to Moreau at the pressure that they need to supply their system. Phase II of that was to connect Big Bay and Big Boom Road that would be an additional two hundred and thirty thousand five hundred dollars spent to do that. That would be a twelve inch line connecting the two and that will supply up to one and a half million gallons a day at the pressure they need. It will supply more water than that but the pressure that they need to supply their customers is high enough that they would require a booster pump on their end to build up the pressure to be able to fill their storage tanks. That's really the same thing we've been discussing all along it is just they've changed the wording in the contract to say that we will supply, they talked about in one place of the contract a million and a half we guarantee the pressure of a million and a half. We can supply two million but they will have to booster pump it. It's in the contract they will have to be financially responsible for that. COUNCILMAN TUCKER-Wouldn't the simple thing be to change it back to one million because that's all they are buying right now. SUPERVISOR CHAMPAGNE-But they are asking for a guarantee of two. ATTORNEY HAFNER-What they are asking for I think is they are asking us to guarantee that if they do come and buy two that we will be able to get two million gallons of water to the connection point. My recommendation is that at the very least the contract should add language to say that we don't need to make the improvements to go up to two until you bought it and you need it because we don't want to have. . . . the way the contract is written we would have to spend that money right now and that's not how anyone envisions it. COUNCILMAN TUCKER-You are saying the same thing I said only you are being a lawyer about it okay. ATTORNEY HAFNER-Is that acceptable to the board? TOWN BOARD-Yea. COUNCILMAN MERRILL-But, then don't you have to add some language "if' they do..... SUPERVISOR CHAMPAGNE-Yea. To provide one million a day, I think that's what Pliney said. Then as another add on there you are going to say, Queensbury shall at sole cost is that what I hear us say provide an additional one million when and if that's not the right language, but when and if it's necessary to provide additional whatever the number may be. COUNCILMAN TUCKER-Now there is only one thing. The second million is it that they are buying in fifty thousand gallon increments. WATER SUPERINTENDENT, MR. VAN DUSEN-So if they buy a million fifty thousand capacity the potential may exist to have to do that. SUPERVISOR CHAMPAGNE-By that time there will be new twenty four inch mains coming down for the City of Glens Falls. By then Wilton will have purchased what they want. WATER SUPERINTENDENT, MR. VAN DUSEN-I have a memo which sums up what I just said. COUNCILMAN TUCKER-What's the line on Big Boom Road I thought it was an eight inch line. WATER SUPERINTENDENT, MR. VAN DUSEN-Eight inch. Big Bay and Big Boom are both eight inch we will connect it with a twelve. COUNCILMAN MERRILL-So Bob you are going to change.... ATTORNEY HAFNER-We will revise it so we don't have to pay for it until its needed. If it cost us the entire two thirty to increase from one million to one million fifty thousand I mean you guys have to agree that's the triggering event even though they might not buy the other nine hundred and fifty I have no idea how much the cost will be. When we get to a point where our infrastructure cannot support the water that they purchased we'll have to agree to make the improvements necessary to get the water to the connecting point. WATER SUPERINTENDENT, MR. VANDUSEN-In all honestly we don't know that it is exactly at, we know we can do a million there and maybe a million one we're still doing fine tuning on the model to know that. They are confident to say we can do a million. ATTORNEY HAFNER-That sounds good. COUNCILMAN TUCKER-I realize that part. What I meant going from eight to twelve why the bigger pipe because you are not going to have a bigger pipe coming from..... WATER SUPERINTENDENT, MR. VAN DUSEN-Stillless friction loss. The flows that we are talking about doing is less friction loss. ATTORNEY HAFNER-Page 7, 4 (D) this is the second sentence I recommend that we change it to just add the word Town before taxes, fees, or assessments. COUNCILMAN TURNER-Where are you? ATTORNEY HAFNER-Page 7, Paragraph 4 (D), it says no other charges. The second sentence it says Queensbury agrees to pay any, I think it should we should be town taxes and the next line it should be any town taxing authority. We can't agree to know what the County, School, or State may do that's not our thing. That is what the intention was that it needs to be further clarified it's a small point. COUNCILMAN TUCKER-No idea what we might be taxed on that line, huh? WATER SUPERINTENDENT, MR. VAN DUSEN-Under current policy zero. ATTORNEY HAFNER-We wouldn't put it in the district. WATER SUPERINTENDENT, MR. VAN DUSEN-Currently we're not taxing Glens Falls anything on their water lines nor is anyone else taxing us for our water lines so unless something changes the tax would be zero. ATTORNEY HAFNER-I don't envision that would be controversial that's just saying what we had intended. The next paragraph they once again deleted our beginning based on Queensbury's engineering statements, we guarantee a full capacity. That just matters on if our engineers are wrong the language there says that we're guaranteeing that the engineers expect that. It depends how much, we pay them we can rely on their statements. I think we should make it clear that we're only making that representation based on our engineers telling us. WATER SUPERINTENDENT, MR. VAN DUSEN-We can certainly make the data available of our hydraulic models. SUPERVISOR CHAMPAGNE-That would be the answer right there so both engineers have to agree to that. ATTORNEY HAFNER-We suggested that they looked at it. WATER SUPERINTENDENT, MR. VAN DUSEN-Actually two engineers have looked at it. O'Brien and Gere took the initial look and e. T. Male is currently doing a hydraulic model of our entire system. They both came to the same conclusion by the way which is reassuring. I got a call today from them they finished the calibration on that section of the model. They have one last thing to do up at Hiland Park and then it's all set to go. SUPERVISOR CHAMP AGNE- Their reading is a million to a million something? WATER SUPERINTENDENT, MR. VAN DUSEN-In the range of a million with just the first stage. ATTORNEY HAFNER-The next issue, issue five is on pages 7 to 8 at the bottom. This deals with the meters just to remind you, again we've gone through different variations. We're going to have a meter they are going to have a meter from what they've said they are not planning using their meter except to periodically to check to see if we're accurate. If they check and find out that theirs is different than ours in their favor they have the right to come in and say, charge us based on the average of the two readings. That is something that I think we agreed to in the past, but again things come in and go out I just want you to remember that's in there and that's what the deal is. If they don't have a meter reading then our meter controls. SUPERVISOR CHAMPAGNE-That's fine. COUNCILMAN TURNER-They should check their meter twice a year and compare it with ours. ATTORNEY HAFNER-You need to see how it works. WATER SUPERINTENDENT, MR. VAN DUSEN-Ifwe're going to compare them they got to be read over the same time period. COUNCILMAN TURNER-I don't understand the one half sum of the two meter readings. WATER SUPERINTENDENT, MR. VAN DUSEN-It's the average that's all. SUPERVISOR CHAMPAGNE-Take ours, take theirs, divide it by two that's what they pay for. ATTORNEY HAFNER-If ours says a hundred and fifty thousand and theirs says a hundred and forty thousand you add them up to two ninety, divide by two, you end up with one forty five the average of the two. SUPERVISOR CHAMP AGNE- That's the gentlemen way of doing it I think. COUNCILMAN MERRILL-I don't think there has been any controversy. ATTORNEY HAFNER-Again some of these plans are merely to remind you how things are done. Section 8 (A) Page 10. This.. ..that they will pay us two hundred and twenty thousand dollars up front. The last time I saw this it was five hundred and thirty, but they decreased the two twenty up front and they are effectively going to borrow the other eight forty. They are going to borrow that eight forty at the same interest rate that Henry refinanced our loan with EFC. They are going to pay us based on the term of our loan and they are going to pay us in equal semi-annual installments which from a legal point of view that is perfectly fine if the town is willingly to let them borrow. Legally it doesn't make a difference to us whether they pay us all up front or they pay us as long as we get paid for sure and we get a fair interest rate. CONTROLLER, MR. HESS-The only question I have is on the equal semi-annual installments that's principal interest or are we going to divide the principal by the number of payments and add interest to that is it the way we pay our bond? TOWN BOARD-That's the way we should do it. CONTROLLER, MR. HESS-It's not equal payments we're going to advertise the principal equally and add the interest. ATTORNEY HAFNER-That is not what this says. CONTROLLER, MR. HESS-I know it's not that's what I'm asking. COUNCILMAN TUCKER-You want to do it the way we're doing it don't you. CONTROLLER, MR. HESS-We can do it either way. ATTORNEY HAFNER-It should be equal principal payments. SUPERVISOR CHAMPAGNE-Would that lag them behind in getting started the first five years? CONTROLLER, MR. HESS-It makes their payment higher at the beginning like it does ours their payment would decline over time but that's the way ours is. ATTORNEY HAFNER-From a legal point of view..... CONTROLLER, MR. HESS-I don't care which way I just think we should make sure we understand which way. COUNCILMAN TUCKER-Which would be easier for them? ATTORNEY HAFNER-The way its written. CONTROLLER, MR. HESS-I think it would be. COUNCILMAN TUCKER-If you start making their payments higher at the beginning we're going to have a problem with them you know that. CONTROLLER, MR. HESS-You can leave it. SUPERVISOR CHAMPAGNE-Let's say they tie in, in February we're not going to get our first payment until October 1 st? COUNCILMAN TUCKER-It says in here somewhere that you get the first payment... ... COUNCILMAN TURNER-You get one in April. ATTORNEY HAFNER-It is every six months. The longest it could be would be eleven months if they waited to April 2nd, five months the longest it could be is five months is that okay. I recommend two changes as you see. I recommend first that at the end of paragraph (A) 1, it says that Queensbury shall not make improvements to the Big Boom Road water system until such sum is paid in full. This is what we had provided before and that is to sort of skip ahead there are contingencies in the contract that while we may have a signed contract if certain things don't happen they don't have to go forward. It seems to me that the Town of Queensbury should not be paying a hundred and forty thousand dollars to make improvements to this water system until such time they show us that they are serious about going forward with it which is the time we get paid the two twenty that is what our last version had said. COUNCILMAN MERRILL-Until such sum and that the two twenty you are talking about? ATTORNEY HAFNER-Yes. It would go right at the end of this. COUNCILMAN MERRILL-I think it should say two twenty so it doesn't imply that it's two twenty plus the total, plus the additional eight forty. COUNCILMAN TUCKER-Queensbury shall not deliver any water to Moreau or make any needed improvements to the Queensbury Transmission System until the aforesaid sum of two hundred and twenty thousand dollars is paid in full that's what it says. WATER SUPERINTENDENT, MR. VAN DUSEN-So why do you need to add anything? COUNCILMAN TUCKER-You don't need anything. At two hundred and twenty that's committing themselves I think don't you? ATTORNEY HAFNER-Okay, .....redundant let's try the second one. CONTROLLER, MR. HESS-Does this imply that this contract will be signed ahead of that time right? ATTORNEY HAFNER-Yes. CONTROLLER, MR. HESS-We're not going to accept two hundred and twenty thousand dollars prior to the signing of the contract in order to get the work started. ATTORNEY HAFNER-Until the contract is signed there is no deal. The earliest they would pay the money is at the day of signing. They don't need to on this, in fact this contract talks about not paying until the contingencies are met because their GE contract their water district being formed. COUNCILMAN TUCKER-I mean they can sign the contract and we don't have to spend a dime until they pay the two hundred and twenty if it's five years or ten years or whatever I don't see any problem with that. ATTORNEY HAFNER-A2. Will continue to acure on late payments. This is something Henry had suggested before and put in the last version. CONTROLLER, MR. HESS-I think that language should be changed to semi- annual equal installments of principal and interest calculated at three point five five, striking the words bearing interest at three point five five. ATTORNEY HAFNER-Equal installments...... CONTROLLER, MR. HESS-Principal interest calculated at three point five five. ATTORNEY HAFNER-Fine not a problem. Page 11. This is a note and I know that you all notice this but I want to point out to you that they did agree to the five cent transmission charge and the two and half cent transmission charge when they cross the million gallon threshold. Page 11, B2. They added language about appropriate portions, legally that is fine, but I wanted to get input from Ralph and Henry to make sure that works with how the budget is put together. These were specific line items that we went through to make sure that they included all of the costs that are included in the production of water. CONTROLLER, MR. HESS-I would think appropriate portion would need a definition where if you said, proportion share. . ... ATTORNEY HAFNER-They define it down below. Appropriate portion shall mean that portion directly related to the production of water. COUNCILMAN MERRILL-I think they are trying to clarify it to make sure we don't load the budget items up with non-production items they are trying to protect themselves. ATTORNEY HAFNER-I just want the people that deal with the budget and know its ins and outs had a chance to say that's fine. SUPERVISOR CHAMPAGNE-What do you think Ralph? WATER SUPERINTENDENT, MR. VANDUSEN-It depends who determines what that appropriate proportion is. As long as Queensbury has the right to determine it then that's fine. COUNCILMAN TUCKER-And we have, don't we, in the agreement. SUPERVISOR CHAMPAGNE-To me he is just defining line item number... ..... WATER SUPERINTENDENT, MR. VAN DUSEN-But, he is saying the appropriate proportion. If you look at the formula sometimes it is a hundred percent, sometimes it is fifty percent that line item is being multiplied by a percentage. SUPERVISOR CHAMPAGNE-The line items remain the same he is not messing with the line items. WATER SUPERINTENDENT, MR. VANDUSEN-That's correct. SUPERVISOR CHAMPAGNE-Tell me what's the worse scenario here with that language in there? WATER SUPERINTENDENT, MR. VAN DUSEN-Worse scenario is that Harry Guthiel determines that he wants a say in what, should it be fifty percent, or fifty one percent of that line. COUNCILMAN TUCKER-We don't want him doing that. WATER SUPERINDENT, MR. VAN DUSEN-I don't. SUPERVISOR CHAMPAGNE-We ought to take that out of there. COUNCILMAN MERRILL-What are you taking out here? ATTORNEY HAFNER-Take out their added language here. COUNCILMAN MERRILL-What they are saying it is not the full line item. WATER SUPERINTENDENT, MR. VAN DUSEN-It might only ten percent, it might be a hundred percent. COUNCILMAN MERRILL-I think that is all they are saying there. ATTORNEY HAFNER-We could add that the determination is made by the Queensbury Water Department. COUNCILMAN MERRILL-They are saying their not going to pay the full line item at the appropriate portion of it. COUNCILMAN TUCKER-To be determined by the Town of Queensbury. CONTROLLER, MR. HESS-Why don't we say the pre-agreement. SUPERVISOR CHAMPAGNE-There you go. ATTORNEY HAFNER-In operation you are going to have the right to change that over years depending on how the usage is. You've got to have some flexibility here. COUNCILMAN MERRILL-But it states that Queensbury may be required to change the line item numbers and so forth. WATER SUPERINTENDENT, MR. VANDUSEN-The first sentence says B, shall be calculated at by Queensbury in accordance with standard policies and practices of Queensbury does that mean that we have the right to change it? COUNCILMAN MERRILL-That's the way I read it. WATER SUPERINTENDENT, MR. VANDUSEN-Then if we do I think that answers the question. COUNCILMAN MERRILL-I think it's all right as it is. CONTROLLER, MR. HESS-The way I see the worst can happen they can disagree with it challenge us on it and we can do independent. ATTORNEY HAFNER-That's the worse. Our argument would be precisely the way I had put that first sentence in there that it is calculated by us in accordance with our standard policies. SUPERVISOR CHAMPAGNE-I think we can live with that. COUNCILMAN TUCKER-He is adding that to it? SUPERVISOR CHAMPAGNE-Leave it right in there. ATTORNEY HAFNER-That's why I put that first sentence in there they keep trying to add more and more. In practice you are the person that determines how much goes to water out of those items and how much goes to transmission or whatever the other. SUPERVISOR CHAMPAGNE-Just put that statement there, B shall be calculated by Queensbury according to standard practices and policies and shall include the cost of Queensbury.... . operation. COUNCILMAN MERRILL-That's in there. SUPERVISOR CHAMPAGNE-I'm okay with that. ATTORNEY HAFNER-Page 12, B (3) this is billings. This is just a note that they are going to be billed quarterly and Moreau has ninety days to pay. CONTROLLER, MR. HESS-Let me go back to something that I brought up before and we sort of dismissed it. We talked about dispute resolution we had said we had a dispute resolution they can go to court or they can challenge, but what about payments during a dispute? What is our obligation to continue to provide water if they quite making payments during a dispute? ATTORNEY HAFNER-We have the legal and we have the practical answer. The legal answer is that we had put in a provision in here that if they helped fulfill their terms we don't have any duties to provide water but, no court is going to let you cut off someone's water. COUNCILMAN MERRILL-They are not going to turn Moreau water off. CONTROLLER, MR. HESS-Iflet's say we disagree somewhere down the road that the meters are wrong and decide they want to withhold payment there should be some provision here (tape turned). ATTORNEY HAFNER-We don't have an obligation to provide water if they do not make their payment. CONTROLLER, MR. HESS-Unless they are sueing us over a dispute for a bill. ATTORNEY HAFNER-The State is not going to let us turn off their water supply. COUNCILMAN TUCKER-We're not talking about that. CONTROLLER, MR. HESS-What I am saying is the contract should acknowledge the fact that they owe us as long as we're providing water they owe us payment for. ATTORNEY HAFNER-That is in here. They owe us for everything that is in the contract. SUPERVISOR CHAMPAGNE-They have to keep on paying with interest. ATTORNEY HAFNER-You are saying if there is a dispute. If there is a dispute and they are wrong at the end of whatever the court case is they are going to have to pay the right amount. COUNCILMAN TUCKER-We don't want that, we want them to meet their obligations while the dispute is being settled that is what we want if they win we give it back to them. CONTROLLER, MR. HESS-At least I think there should be something in here, I mean they can still refuse to pay us but there is no language in here that says if you have a dispute you really still owe us for your water. ATTORNEY HAFNER-The contract says that they owe us for the water the contract doesn't let them get it for free. If they have a dispute about a particular amount they can go to court and at the end it will determine whether the contract gives us money or not. If they quite paying us during that time that's a breach of the contract and the court is going to tell them they have to pay us. If they don't keep paying that's a breach of the contract. Techincally the way the contract is written we could turn off the water frankly that would be. . . ..it would a hard one to enforce this to people who are. . . . . . SUPERVISOR CHAMPAGNE-Somewhere in here it spells that out that they continue to pay even though they are disagreeing with our billing procedure or the amount that is being questioned. ATTORNEY HAFNER-This says that they have a duty to pay us for water that we provide it is clearly written that they have to provide us for that. It does not go on to say that if you fight about one thing you have to be paying for the other it just says you have to pay and that goes on. COUNCILMAN TUCKER-That's all we wanted wasn't it? ATTORNEY HAFNER-Yes. Page 13. I wanted to have one last review by Ralph and Henry a reconstruction that's going to work in practice. It looks very logical from a legal point of view that we define reconstruction as those items that are more expensive than our routine maintenance part of the budget, but this is sort of our last chance to make input here and I want you guys to sign off one more time this is on Page 13, C 1. SUPERVISOR CHAMPAGNE-This is the original language no change in language in this? ATTORNEY HAFNER-Yes, this is the same language we had, in fact we drafted it originally. COUNCILMAN MERRILL-No problem Ralph? WATER SUPERINTENDENT, MR. VAN DUSEN-No problem. ATTORNEY HAFNER-We had so many changes. CONTROLLER, MR. HESS-Except the one fifteen. I feel okay about it until it gets down to the one fifteen because if during the course of this contract they owe more than one fifteen. . . . . . . ATTORNEY HAFNER-Look at the last sentence of that page. It says, however, if Queensbury expands the facility capacity or if Moreau increases it reserves capacity then the above formula will be modified accordingly. If they go to two million that says they will pay two fifteen. If they stay at one million and we increase our plant to twenty million they are going to pay one twenty that's what that says. The sentence just before that fifteenth says, Queensbury will pay for such reconstruction Moreau shall pay it's pro-rata share based on its reserve capacity compared to the facilities estimated rated capacity of fifteen million gallons per day then it goes on to say it will. . .. take one fifteen. CONTROLLER, MR. HESS-I guess, I would read this it depends what words I penciled in where it says V, total reserve capacity for Moreau being initially one million gallons a day the total being currently fifteen million gallons per day that's the way I'm looking at it. ATTORNEY HAFNER-That's exactly the way I tried to word it, but that's fine we will make it clear what we don't want is any confusion down the line. Section 8, E, Page 14. This is just to remind you that they get one million gallons free during the first year for line flushing. Next number fourteen to sixteen. This is their right of first refusal and overall it's a good right of first refusal. It and I'm going to through my list it allows them to buy up to a million gallons of capacity in fifty thousand gallons increments. It gives us the right when we get up to thirteen million gallons of usage to either force them to buy it or to give up their right so we know its there for us or whatever purpose. C is where there is a small problem it sets the price at fifty three thousand dollars per fifty thousand gallons increments plus a proportionate share of reconstruction costs. What this leaves out is the share of the low lift pump motors. The way that I originally drafted it said that we're going to use the same methods that we used before. They left it in there to use the same method but they ignored the low lift pump motor. It was... .on the first million but it doesn't have the second million. The whole plant has to pay it's share so that is something that needs, it was fine before but when they added and wanted to fix the numbers they left that out. SUPERVISOR CHAMPAGNE-How would you change it? ATTORNEY HAFNER -You divide it into two things. If we already have that low lift pump motor put in say that they will pay two twenty thirds times whatever proportionate of a million gallons of the cost you use the same formula as we used before. COUNCILMAN TUCKER-Aren't we setting up a fund? ATTORNEY HAFNER-We're setting up a fund, but we don't know now whether they are going to buy in after we do it or before. My recommendation would be that they have to pay that share at the time they come. COUNCILMAN TUCKER-I thought it said in there we're setting up a construction fund to a maximum of two hundred thousand dollars. We're paying twenty thousand and they are paying twenty thousand. ATTORNEY HAFNER-We are paying twenty one twenty thirds of twenty thousand a year. They are paying two twenty thirds of twenty thousand a year, together we're paying all of twenty thousand a year to put in a fund. SUPERVISOR CHAMPAGNE-It's on page 4 here where it talks about future updating costs. Can't we tie that in to the second... . . . ATTORNEY HAFNER-That is how language before has been. SUPERVISOR CHAMP AGNE-I remember that. ATTORNEY HAFNER-I was talking with Henry earlier I had missed it and he had found that by putting in the fifty three thousand cost for fifty....a gallon they totally ignored this future upgrade cost, I don't think it was on purpose. Plus the proportionate share of the low lift of future upgrade. . . COUNCILMAN TUCKER-We'll probably have that done by then anyway won't we? ATTORNEY HAFNER-Then we need to be reimbursed. WATER SUPERINTENDENT, MR. VANDUSEN-That is part of the buy-in cost. ATTORNEY HAFNER-It should have been and that's how we would of calculated if we had done it by the same method. When they put in a fix number they left that out of their fix number. WATER SUPERINTENDENT, MR. VAN DUSEN-We currently say its a fix number plus a proportionate share on top of improvements or any future upgrades that have been made. ATTORNEY HAFNER-Plus the proportionate share of future upgrades. D. It permits both of us additional capacity purchases by them or our upgrades for their benefit as we may agree in the future. It provides for payment in full of such capacity purchases prior to the Town's obligation to furnish additional water and provides for Moreau to pay increase operation maintenance cost and reconstruction costs based on the increase water usage and capacity. Legally this works with that change Henry pointed out earlier today. WATER SUPERINTENDENT, MR. VAN DUSEN-I have a question on Page 16 the last paragraph ofB. Where in the event Moreau has fully exercised it's right of first refusal for the additional capacity that gives them the right to buy. Somewhere I had a recollection they could buy over the two million at a fixed price am I wrong? ATTORNEY HAFNER-No. CONTROLLER, MR. HESS-They mentioned that the last we saw this contract. I was under the impression there was something in there but there wasn't. ATTORNEY HAFNER-That's not anything that I saw in there that was at a meeting that I wasn't invited, too. WATER SUPERINTENDENT, MR. VANDUSEN-The third line down. While the total capacity... to Moreau pursuant to this agreement is up to two million gallons a day nothing here shall prohibit Moreau and Queensbury for entering into a mutually acceptable agreement for Moreau to purchase capacity beyond two million a day and the cost will be..... ATTORNEY HAFNER-But that is an agreement. Under contract law an agreement to agree to something in the future is unenforceable. You can say I don't agree and if you want me to agree you have to agree to different terms. That is there to make them feel better it has no contractual. CONTROLLER, MR. HESS-I think it makes perfect sense. Remember earlier today I said we should move a sentence and that's the one. Take that sentence take it out of there and move it to the bottom of the paragraph or make a separate paragraph at the end of this paragraph and that clarifies it. Then this goes back referring to what they already agreed to sell and then additional over two million becomes an issue of its own. I believe that needs to be done while the total capacity entitlement sentence should be moved out of this paragraph and moved to a paragraph of its own, read it that way Bob and see if you agree. ATTORNEY HAFNER-That is fine. The way it's written, I mean I'll sign something saying that we can agree to something in the future that's fine that has no enforcement. CONTROLLER, MR. HESS-But it implies that we've agreed to fifty three thousand dollars that's the way I read this. If you take that sentence out it refers back to what we already agreed to sell. COUNCILMAN TUCKER-There is one thing we have to keep in mind while we're setting here. We're putting this together for a whole group of different people on down the road. ATTORNEY HAFNER-We'll move that so there is no confusion, legally. CONTROLLER, MR. HESS-Legally is fine, but so people understands. I think it needs to be as far as we can make it. ATTORNEY HAFNER-Any other comments? Page 18, Section 9. This provision should be deleted. We deleted it before frankly I don't understand why they haven't quite caught on yet. This contract provides that the Town of Moreau will pay for certain capital costs. They will pay for installation of the two lower lift pump motors or for improvements, reconstruction improvements. Those payments are we take the total amount if it cost a hundred and fifty thousand is the total improvement they pay one fifteenth if they pay ten thousand they write us a check for ten thousand. It is not financed it doesn't change if we finance our hundred and forty if we finance it, it's irrelevant to them. They have no business putting language in here that implies if we get a low interest rate they should be less that's irrelevant. They owe us one fifteen, write us a check for ten thousand, your paid, it's done. CONTROLLER, MR. HESS-I think the initial language was really geared toward this EFC financing. ATTORNEY HAFNER-We got that and that's already been done. I strongly think that should be deleted it's illogical and it implies the cost we pay for interest on our portion of the cost has... .back on them and it doesn't. WATER SUPERINTENDENT, MR. VAN DUSEN-It says it's going to be reduced what if we refinanced the higher rate to also increase the rate? ATTORNEY HAFNER-If they made us stay in there that's what we would argue about. CONTROLLER, MR. HESS-Bob is right it has no place being here, but if they won't give up on it just change the word reduce to adjusted. COUNCILMAN TURNER-Are you going to leave it in there until they scrutinize it? ATTORNEY HAFNER-We're going to delete it. SUPERVISOR CHAMPAGNE-Maybe they will come back with another EFC plan for two and a half percent ten years from now. ATTORNEY HAFNER-That has no bearing on their cost or with two low lift pump motors or any improvements. SUPERVISOR CHAMPAGNE-As I read it anything can happen... .to the debt we want them to be in at three fifty five, if we go lower they benefit, if we go higher they pay. ATTORNEY HAFNER-It doesn't say they pay. SUPERVISOR CHAMPAGNE-It does with the word adjusted. COUNCILMAN MERRILL-This was in before we got the financing. ATTORNEY HAFNER-I think they got an advantage of that low rate. COUNCILMAN MERRILL-What they are saying if we should get a lower rate. SUPERVISOR CHAMPAGNE-Is there a problem ofleaving it there that's down the road that I don't see? ATTORNEY HAFNER-It implies that their charges for capital type expenses are dependent upon an interest rate which is not the case. SUPERVISOR CHAMPAGNE-I see what you are saying it say refinancing. COUNCILMAN MERRILL-It is not capital cost it's financing costs. ATTORNEY HAFNER-It says for any purpose related to the facility or water system including reconstruction, reconstruction is irrelevant what the interest rate is they pay us when we reconstruct they pay us a dollar amount it's one fifteen it doesn't matter what interest rate we pay. The two low lift motors it doesn't matter what interest we pay for our share. COUNCILMAN MERRILL-... . any debt related to reconstruction, any debt related to the installation of the two low lift pump motors what if we financed it? ATTORNEY HAFNER-If we finance our portion it's irrelevant they write us a check. They write us a check either for one fifteen. . . .. COUNCILMAN TUCKER-What they are looking for here is two different ways to make this payment, right? SUPERVISOR CHAMPAGNE-I think they are looking to jump on our financing. COUNCILMAN TUCKER-Wait a minute. One part of our contract says they will pay one fifteen and they are signing the contract yet they are putting this in here to change that one fifteen. CONTROLLER, MR. HESS-I agree with Bob to the extent that if we go out and say refinance the two pump motors and refinance the whole bit because we can get two point five percent. They are going to pay us their share they are not going to finance their share of the low lift motors, but they want to refinance the portion that we already have lent them at the lower rate is the way I see it. They will pay us cash because that's the agreement, but if they still owe us. . . . . . ATTORNEY HAFNER-This says that the payments will be proportionally reduced if we get a lower interest rate which is ridiculous. CONTROLLER, MR. HESS-I think it should come out, too. SUPERVISOR CHAMPAGNE-Let's take it right out. ATTORNEY HAFNER-Top of Page 22. This says that Moreau shall be allowed to sell water to municipalities or users outside of the boundaries of Moreau this has had a long history. Every contract we had sent them said we're giving you water for you for Moreau, businesses, and people within, and they have kept saying that they want to sell it to other people. COUNCILMAN TUCKER-What's your answer to that you gave it to me when we set here talking about this? WATER SUPERINTENDENT, MR. VAN DUSEN-It's not mine originally, but the topic was.... . recommendation of going to Saratoga County that's fine. I think we want to avoid putting ourselves if we have to negotiate against Moreau to sell water to Hudson Falls. ATTORNEY HAFNER-That's I think stupid. COUNCILMAN TUCKER-Wait a minute. Personally, I think Queensbury is the regional water supplier. Now there may be a case in the Town of Moreau where they are going to sell water to someone for the same cost that they are buying it from us. All it should say in here is if they are going to sell water to anybody we have got to be part of the action. CONTROLLER, MR. HESS-Why can't we say they can sell to municipalities contiguous to Moreau that are not also contiguous to Queensbury? COUNCILMAN TUCKER-No, come on. ATTORNEY HAFNER-Why don't we just revise it they can sell to Saratoga County which is probably what they are concerned about and we are going to have trouble getting to any of them. SUPERVISOR CHAMPAGNE-You would have to run pipes through Moreau. COUNCILMAN TUCKER-I'm not concerned about running pipes anywhere. What I'm concerned about if they are buying it for a dollar fifteen a thousand gallons here and they are selling it for two fifteen I don't want to get stuck in my ass and that's what's their looking to do. COUNCILMAN MERRILL-But, there will be markup for their transmission charge. COUNCILMAN TUCKER-All I'm saying is if they are going to sell it outside of the Town of Moreau we ought to be able to agree that they can sell it. WATER SUPERINTENDENT, MR. VAN DUSEN-What if you said that they are allowed to sell in Saratoga County that's fine. If they want to go to Washington or Warren then it has to be approved by Queensbury. ATTORNEY HAFNER-Or just say not. SUPERVISOR CHAMPAGNE-Somewhere, somehow they are going to put a line down through there. If we become a water supplier for Wilton, Saratoga Springs, Ballston Spa, and we're going to put a forty eight inch line in that's fine even though we manufacturer the water that's the price we sell it to Moreau. If Moreau can sell it for another ten percent overhead let them do it. CONTROLLER, MR. HESS-Your exposure is limited to two million anyway. They are not going to sell more than two million because that's all they can buy from us under this contract. COUNCILMAN TUCKER-Why should they be allowed to make a profit off the water that we're selling to them why the hell should they be allowed to do that? COUNCILMAN MERRILL-The more water they sell the better it is for us. CONTROLLER, MR. HESS-If they get a customer down there that needs four million gallons the next two million we sell them we will make money. COUNCILMAN TURNER-But not only that in the Hudson Falls agreement I think it says to Hudson Falls that we agree that Hudson Falls could sell water to Fort Edward. SUPERVISOR CHAMP AGNE- They are doing it now. ATTORNEY HAFNER -. . . .negotiating point and does not cut against other people that we are either negotiating with or hoping to negotiate with. Is there something wrong that they be Saratoga County and we'll be Warren and Washington? COUNCILMAN MERRILL-I would certainly like to see prohibited to Warren and Washington County. SUPERVISOR CHAMPAGNE-I would too. COUNCILMAN TUCKER-Not me. We're going to be the regional water supplier we're going to deal with everything? COUNCILMAN MERRILL-If they sell to Wilton..... COUNCILMAN TURNER-They can't sell to Wilton if they get that two million gallons..... (TAPE TURNED) COUNCILMAN IRISH-I thought they took that out of the contract? ATTORNEY HAFNER-We had, the contract we have is the one that they just sent us back it's their contract. We have three choices we could say, yes we go back to what we did which is you can only use it inside your town. We have choice two which is their choice which is you can sell anywhere or I propose choice three that seems to me to meet both what we're looking for and probably what they are looking for which is they can sell to anyone in Saratoga County that they wish they cannot sell to anyone in Warren and Washington County. COUNCILMAN IRISH-I kind oflike that. SUPERVISOR CHAMPAGNE-They have a two million cab once they get to two million they have to come back in and talk to us again. I'll tell you there is no community that I believe in Saratoga County that would accept water from Moreau with anything less than an open top. Harry's not going to sell more than a half a million because he's got to keep one and a half and set it aside. COUNCILMAN TURNER-First of all if they push it very far then the size of the line becomes a deterrent. ATTORNEY HAFNER-My last point is Page 22, Section 17, I want to note again to everyone this has a drop dead provision so that if Moreau contingencies aren't completed by next Halloween either Town can terminate the agreement. The contingencies are settlement with GE. Moreau's creation of a new water district as well as Moreau obtaining all necessary permits to cross the river. No one has any obligations until they notify us that the contingencies been met and that we've been paid in full. COUNCILMAN IRISH-Is this the same that's been in there all along? ATTORNEY HAFNER-It's moved. That's the date I think I put in our last version. SUPERVISOR CHAMPAGNE-We took that out right? ATTORNEY HAFNER-Previously it was an earlier date we may have passed the first time. SUPERVISOR CHAMPAGNE-Why October 31, because that's a year is that what we're saying to them why do we need this? ATTORNEY HAFNER-You need a drop dead date. SUPERVISOR CHAMPAGNE-I know we do. ATTORNEY HAFNER-When we first did it I think it was a year and a quarter or a year and a half. I think they wanted some end to this. . . .. CONTROLLER, MR. HESS-That's their date it's their contract they typed it in. ATTTORNEY HAFNER-I think we had put it in before. CONTROLLER, MR. HESS-They are not disputing it. ATTORNEY HAFNER-I think it's an important date the sooner the better as long as its realistic. COUNCILMAN IRISH-What is the realistic time frame that it will take them if they signed it Monday? ATTORNEY HAFNER-They said eighteen months to pump water, but they have to satisfy their contingencies and pay us. Is this clear does anybody else have any points. CONTROLLER, MR. HESS-I want to mention one on Page 5 you and I talked about it earlier. How do we want to treat the calculation of cost? We have 0 & M, A plus B equals the dollars I have a question because part of operation and maintenance is a factor that is not related to usage its related to..... ATTORNEY HAFNER-I talked about changing that too, shall be billed by Queensbury as an additional. . . . . . CONTROLLER, MR. HESS-In addition to the 0 & M. ATTORNEY HAFNER-As addition to the operation and maintenance. CONTROLLER, MR. HESS-I talked to Harry about that and he said he didn't disagree just put it in writing. The other thing I want to make sure the contract refers to their share of two twenty thirds and it refers to our share from time to time is there anything in here that prohibits us from selling other than our share off and not somebody else? ATTORNEY HAFNER-No, in fact I thought it specifically dealt with that. It is our business how we do that or what we do with it. CONTROLLER, MR. HESS-The twenty thousand dollars a year specifically they are going to pay two twenty thirds we're going to pay twenty one twenty third, but if we sell off are we still obligated to pay the twenty one twenty thirds if we sell off part of our portion and obligate somebody else to pay a portion of it? Would that increase the twenty thousand or replace our share of it? ATTORNEY HAFNER-It would replace our share of it that's the way this is written. It says and I'm not finding it right now, but it is our business to find how it is paid, but it's our business whether or not we do it or we have someone else do it. COUNCILMAN IRISH-On the first page of this number two. It says that we agree to upgrade the water line does that mean right off the bat or when they need it? ATTORNEY HAFNER-That's exactly the point that we ended up settling on. It is going to be changed to say that we will at the start agree to buy one million and when they buy capacity that requires for their improvements we will pay for them at that time. Any other questions? Doug if you want I'll be glad to over the points. UNKNOWN-It is just assumed.... that they need extra water and we have to put in infrastructure to do it is it just assumed that's going to take some time they got to give us a little leeway there. ATTORNEY HAFNER-Their contract I thought it said six months let me find that language. The contract says in two places dealing with the increase says basically the same language. Moreau shall pay the capital costs associated with such additional capacity under the right of first refusal in full within six months of its given its written notice and prior to Queensbury's obligation to furnish additional water. SUPERVISOR CHAMPAGNE-Anything else? ATTORNEY HAFNER-Would you want a resolution? TOWN BOARD-No. SUPERVISOR CHAMPAGNE-Only want a consensus saying, no resolution because we haven't seen the final document. You are going to change this? ATTORNEY HAFNER-I have to call Martin tomorrow I will try to meet with him to see if we can hammer it out for a final time in his office. SUPERVISOR CHAMPAGNE-If we can come back with something that's identical to what we're leaving with here tonight our board meeting two weeks from tonight we ought to be able to do it is that what I hear you say? TOWN BOARD-Yes. SUPERVISOR CHAMPAGNE-Anything else for the good of the cause here? We will adjourn. On motion the meeting adjourned. Respectfully Submitted, Darleen M. Dougher Town Clerk Town of Queensbury