053-14 - C&M Golf, LLC - ContractAGREEMENT REGARDING USE OF WELL 4B WATER RIGHTS
AND RESCISSION OF ASSIGNMENT
C053-14
This Agreement Regarding Use of Well 4B Water Rights and Rescission of Assignment
(Agreement) is dated for reference purposes only April 22, 2014 and is executed by and between
the City of Port Orchard (City), a municipal corporation, and C&M Golf, LLC (C&M Golf), a
Washington corporation. Collectively the City and C&M Golf are referred to as the Parties.
RECITALS
A. Well 4B is a water well that discharges water at a rate of 400 gpm to nearby North
Lake where the water is pumped into the McCormick Woods golf course irrigation system,
which is owned and operated by C&M Golf, and
B. On September 1, 1998, the City and McCormick Water Company entered into an
agreement whereby the City purchased the assets of McCormick Water including but not limited
to Wells 1, 2, and 3 as well as pending water right applications; and
C. Pursuant to the terms of the 1998 Agreement McCormick Water retained the right
to draw from Well 4B, at no charge, up to 56.1 million gallons of water per irrigation season
until it received a permanent water right for an alternative source or December 31, 2002,
whichever came first; and
D. On November 25, 2002, the City and McCormick Land Company amended the
1998 Agreement so as to extend the date that McCormick could withdraw water from Well 4B
until not later than December 31, 2012; and
E. On April 25, 2003, the City and McCormick Woods Partners executed an
agreement whereby McCormick assigned its rights in water right application G1-26447 (Well
4B) to the City to process with the Washington Department of Ecology and the City agreed to
assign the water right for Well 4B back to McCormick upon receipt of the water right permit
(2003 Agreement); and
F. On September 3, 2003 C&M Golf purchased the assets of the McCormick Woods
golf course including but not limited to the rights and obligations held by McCormick under the
terms of the agreements entered into between the City and McCormick in 1998, 2002, and 2003;
and
G. In or around December 2005, the Washington Department of Ecology approved
four water right applications submitted by the City, including application number G1-26447
(Well 4B); and
Agreement for Use of Well 4B Water Rights
and Rescission of Assignment - Page I of 9
H. The water right issued to the City pursuant to application number G1-26447 (Well
4B Permit) allows for a maximum instantaneous withdrawal rate of 400 gpm and a maximum
annual quantity of 645 acre feet per year; provided, the total annual withdrawal from the City's
water system shall not exceed 3,528 acre feet per year; and
I. On May 5, 2008, the City and C&M Golf executed an Assignment of Application
or Permit to Appropriate or Store Water (2008 Assignment), in conformance with the 2003
Agreement between the City and C&M Golf's predecessor in interest, McCormick Woods
Partners, whereby the City assigned the water right permit for Well 4B to C&M Golf; and
J. The Parties acknowledge that the 2008 Assignment was invalid and must be
rescinded because the transfer was contrary to the Department of Ecology's approval of the Well
4B Permit and its certification of the total annual quantity of water that can be withdrawn by the
City as part of its municipal water system; and
K. The City and C&M Golf now desire to enter into an agreement restoring the
Parties to their positions prior to the 2008 Assignment as it relates to the Well 4B Permit and the
withdrawal of water for irrigation purposes, and addressing other matters relating to the City's
operation of its municipal water system and C&M Golf s operation of the irrigation system for
the McCormick Woods golf course.
NOW, THEREFORE, in consideration of the recitals set forth above, which are made a
substantive part of this Agreement, and the mutual obligations set forth below, the City and
C&M Golf agree as follows:
AGREEMENT
1. Rescission of 2008 Assignment of Well 4B Permit.
1.1. The Parties acknowledge and agree they mistakenly believed the City could transfer the
Well 4B Permit to C&M Golf without reducing the City's right, as certified by the
Department of Ecology, to withdraw 3,528 acre-feet per year from all City water
sources. As a result of this mutual mistake, the Parties agree to rescind the 2008
Assignment, a copy of which is attached as Exhibit A and incorporated by this reference,
and do hereby release each other from all obligations associated with the 2008
Assignment.
1.2. The Parties agree to cooperate with each other and to execute such documents as the
Department of Ecology may require the Parties to file to verify the rescission of the 2008
Assignment.
Agreement for Use of Well 4B Water Rights
and Rescission of Assignment - Page 2 of 9
1.3. The Parties agree that the Well 4B Permit shall be available to serve the City's municipal
water system and that, except as provided in Section 2 below, the maximum acre feet per
year of water that can be appropriated pursuant to the Well 4B water right shall be
withdrawn from City municipal wells.
2. Perpetual Water Usage by C&M Golf.
2.1. Upon execution of this Agreement and such documents as the Department of Ecology
may require, the City and C&M Golf hereby agree to the following concerning the right
to appropriate or store water from the Well 4B water right:
2.1.1. C&M Golf shall have the perpetual right to withdraw up to 225 acre feet per year
of water from Well 4B without having to pay the water rate consumption charges
set forth in Chapter 13.04 "Water and Sewers" of the Port Orchard Municipal
Code, as now or hereafter amended. A year shall mean January 1 through
December 31.
2.1.2. C&M Golf s water usage from Well 4B shall only be used to serve the McCormick
Woods golf course irrigation system.
2.1.3. C&M Golf s right to withdraw 225 acre feet per year water shall be in effect for as
long as the City holds the right to withdraw 225 acre feet per year or more of water
from Well 4B pursuant to Application/Permit Number G1-26447, as now or
hereafter amended.
2.1.4.In the event C&M Golf s annual consumption of water exceeds 225 acre feet,
C&M Golf shall pay the water rate consumption subject to the requirements of
Chapter 13.04 "Water and Sewer" of the Port Orchard Municipal Code, as now or
hereafter amended.
2.1.5. Except as otherwise provided in this Agreement, C&M Golf shall be subject to the
requirements of Chapter 13.04 "Water and Sewer" of the Port Orchard Municipal
Code, as now or hereafter amended.
3. Ownership of Well 4B Site and Equipment.
3.1. Well 413, together with all associated structures, equipment, controls, pumps, engines,
and pipes, is among the assets of the McCormick Woods golf course irrigation system,
which assets are owned by C&M Golf.
3.2. Well 4B is located on real property owned by C&M Golf.
3.3. The City has no legal or equitable interest in the McCormick Woods golf course
irrigation system or the real property on which the system is located and no such interest
is created by this Agreement.
Agreement for Use of Well 4B Water Rights
and Rescission of Assignment - Page 3 of 9
4. Operation, Maintenance, and Repair of Well 4B.
4.1. C&M Golf shall be solely responsible for the cost of operating, maintaining, and
repairing Well 413, and all associated structures, equipment, controls, valves, pumps,
engines, and pipes, including but not limited to compliance with federal, state, and local
regulations, as applicable, for their water usage of up to 225 acre feet per year.
4.2. On or before the date this Agreement is executed, C&M Golf shall install, and shall
thereafter maintain and/or repair, a measuring device for the withdrawal of water from
Well 4B in accordance with "Requirements for Measuring and Reporting Water Use,"
Chapter 173-173 WAC.
4.2.1. After twenty-four (24) hours' notice from the City (except in cases of emergency,
when no notice shall be required), C&M Golf shall permit City and its agents,
employees and contractors to access the Well 4B site for the purposes of reading
the Well 4B water meter. Provided, this section shall not impose any repair or other
obligation upon the City not expressly stated elsewhere in this Agreement.
5. Option to Purchase Well 4B. In further consideration of the obligations and responsibilities
set forth in this Agreement, C&M Golf hereby grants to City an exclusive option to purchase
Well 413, together with all associated structures, equipment, controls, pumps, engines, and
pipes, under the terms and conditions set forth below, free of encumbrances of any nature
except covenants, conditions, and restrictions of record.
5.1. This option may only be exercised if C&M Golf notifies City in writing that it no longer
requires the use of water drawn from Well 4B for the allowable purpose set forth in this
Agreement.
5.2. Upon receipt of the notice described above:
5.2.1. The City shall have 30 calendar days to exercise the option by notifying C&M Golf
in writing; and
5.2.2. The City shall have the right to access Well 4B for inspection, tests, evaluation, and
other purposes incidental to determining the feasibility of Well 4B for the City's
intended use. All such costs of inspection, tests, or evaluation shall be paid by City.
5.3. The purchase price for Well 4B shall be negotiated by the Parties at the time the option
is exercised. If the Parties cannot agree on a purchase price, the Parties shall select one
person who is knowledgeable concerning the construction, operation, and maintenance
of water wells in the state of Washington to appraise Well 4B and determine a fair
market value, which shall be binding on the Parties.
5.4. The Parties shall cooperate in the preparation, execution, and filing (if necessary) of any
documents required to effect the sale of Well 4B to the City.
Agreement for Use of Well 4B Water Rights
and Rescission of Assignment - Page 4 of 9
6. Effective Date. The effective date of this Agreement shall be January 1, 2013.
7. Assignment. C&M Golf s right to assign or transfer its rights and obligation under this
Agreement shall be limited to a third party purchaser of the golf course and the assignment or
transfer shall be subject to the City's consent, which consent shall not be unreasonably
withheld.
8. Termination. This Agreement and C&M Golf s right to withdraw up to 225 acre feet of
water per year from Well 4B shall terminate upon the occurrence of any one or more of the
following events:
8.1. Upon the written agreement of the Parties;
8.2. C&M Golf breaches the terms of this Agreement;
8.3. Upon the closing of the sale of Well 4B to the City as provided in Section 5; or
8.4. The City no longer holds the right to withdraw 225 acre feet per year or more of water
from Well 4B pursuant to Application/Permit Number G1-26447, as now or hereafter
amended; provided, however, the City will not intentionally terminate Permit Number
G1-26447 if doing so would jeopardize C&M Golf s right to withdraw 225 acre feet per
year of water from Well 4B, unless otherwise agreed by the parties.
9. Reclaimed Water. Both parties agree to work in good faith to utilize reclaimed water as a
replacement source when reclaimed water becomes available.
10. Warranties and Representations of C&M Golf. C&M Golf hereby makes the following
representations and warranties to City, which representations and warranties are made for the
express purpose of inducing City to enter into this Agreement. Unless explicitly stated
otherwise, all of the warranties and representations shall be continuing.
10.1. C&M Golf is a corporation duly organized, validly existing and in good standing
under the laws of the State of Washington and has the corporate power and authority
to own or lease its properties and to carry on its business as now being conducted.
C&M Golf has full power and authority to execute and deliver this Agreement and
consummate the transactions contemplated hereby. This Agreement is the valid and
legally binding agreement of C&M Golf.
10.2. C&M Golf is in compliance with all laws and regulations which pertain to the
operation of its business, the violation of which would have a material adverse effect
on the transfer of the Well 4B Permit.
10.3. The Well 4B Permit is free and clear of all encumbrances, security interest, liens,
charges, conditional sales agreements, or claims by any person of any kind.
Agreement for Use of Well 4B Water Rights
and Rescission of Assignment - Page 5 of 9
10.4. There are no claims or litigation against C&M Golf and/or its officers or directors,
actual, pending or threatened, from any party, including creditors, which may
materially and adversely affect the transfer of the Well 4B Permit.
11. Warranties and Representations of City. The City hereby makes the following
representations and warranties to C&M Golf, which representations and warranties are made
for the express purpose of inducing C&M Golf to enter into this Agreement. Unless
explicitly stated otherwise, all of the warranties and representations shall be continuing.
11.1. City is a municipality duly authorized, validly existing, and in good standing under
the laws of the state of Washington.
11.2. The execution and delivery of this Agreement and all agreements and documents
contemplated herein by City, and the consummation by it of the transaction
contemplated hereby, have been duly authorized by requisite municipal action.
12. Indemnification.
12.1. C&M Golf s Indemnity.
12.1.1. C&M Golf agrees to and shall indemnify, defend, and hold City, its elected
officials, employees, agents, and representatives, harmless from and against any
and all loss, damage, or expense, including attorney's fees, arising from C&M
Golf s negligence or any misrepresentation made, or breach of warranty given or
covenant made in this Agreement.
12.2. City's Indemnity.
12.2.1. City agrees to and shall indemnify, defend, and hold C&M Golf, its, employees,
agents, and representatives, harmless from and against any and all loss, damage,
or expense, including attorney's fees, arising from City's negligence or any
misrepresentation made, or breach of warranty given or covenant made in this
Agreement.
12.3. Nothing in this section shall be construed to create a liability or a right of
indemnification in any third party.
13. Notices. All notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered or if mailed, by United
States certified or registered mail, postage prepaid, to the parties or their representatives at
the following addresses.
If to C&M Golf.
Shawn Cucciardi
C&M Golf, LLC
Agreement for Use of Well 4B Water Rights
and Rescission of Assignment - Page 6 of 9
5155 McCormick Woods Drive SW
Port Orchard, WA 98366
360-895-0142
If to City:
Mayor Tim Matthes
216 Prospect Street
Port Orchard, WA 98366
360-876-4407
With a copy to:
Gregory A. Jacoby
City Attorney
McGavick Graves, P.S.
P.O. Box 1317
Tacoma, WA 98401
253-627-1181
14. Miscellaneous.
14.1. This Agreement (including all exhibits) supersedes all oral statements and prior written
agreements and contains the entire agreement among the Parties with respect to the
subject matter hereof.
14.2. No change or modification of this Agreement shall be valid unless the same is in
writing and is signed by authorized representatives of the Parties.
14.3. This Agreement shall be binding upon, and inure to the benefit of the respective legal
representatives, beneficiaries, successors, and assigns of C&M Golf and the City.
Agreement for Use of Well 413 Water Rights
and Rescission of Assignment - Page 7 of 9
14.4. This Agreement shall be construed and enforced in accordance with the laws of the
state of Washington.
14.5. This Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. Facsimile copies of this Agreement may be signed as counterpart originals.
14.6. The parties agree the venue of any suit or action between them will be in Kitsap
County Superior Court.
IN WITNESS WHEREOF, the Parties have duly executive this Agreement on the date
first written above.
CITY OF PORT ORCHARD
By: 6*—'�
.
Tim M tb S�-jor
O RT 0,9, ,
ATTEST: O
Agreement for Use of Well 413 Water Rights
and Rescission of Assignment - Page 8 of 9
C&M GOLF, LLC
By:
Shawn Cucciardi
Its: A4"�C-R
Brandy Rinearson, City Clerk
Agreement for Use of Well 413 Water Rights
and Rescission of Assignment - Page 9 of 9
Contract No. 053-14
ri
Exhibit A
STATE OF WASHINGTON
.asnEsrrr f1AlE DEPARTMENT OF ECOLOGY
iE Ilfl Yi sl Or
ECOLOGY
ASSIGNMENT OF APPLICATION OR PERMIT TO APPROPRIATE OR STORE WATER
A NON-REFUNDABLE $50.00 FEE MUST ACCOMPANY THE FILING OF THIS ASSIGNMENT.
Please read the instructions on the back of this form
1. I/We, City of Port orchard , the holder(s) of the application or permit number
G1-26447 for the appropriation of the waters of
McCormick Woods Well46 , do assign, transfer and set over to
C&M Golf, LLC all, that portion described within an attachment to
this assignment, of my right, title and interest therein.
2. This assignment is being made for the following reason(s):
Prior contractual agreement
3. This assignment relates to the following property identified as all or a portion of the place of use within
the application/ permit being assigned: County Parcel Number(s): see attachment
located within Kltsap County, Section 9 , Township 23 N., Range 1 E. W. M.
4. F91 The permit includes a development schedule. The development schedule can be met.
❑ The development schedule cannot be met and I've included a proposal for a new development
schedule.
6. Application or permit holder(s):
Hon. Larry Coppola
Mayor, City of Port Orchard
Address:
216 Prospect Street
Port Orchard, WA 98366
Phone:(360 ) 876.4407
6. Notary Signature:
Assignee(s):
Shawn Cucciardi
C&M Golf, LLC
Address:
5155 McCormick Wolds Drive SW
Port Orchard, WA 98366
Phone: 360 895-0142
State of Washington
County of rs"
I, 40 being first sworn, disposed and say that I have read the above assignment
of appileation or permit to appropriate or store water; that 1 know the contents thereof; and that the
facts therein stated are true.
IN W$EO have hereunto set my hand this day of .Z 6 in the year .2�.
Applicant(s)/Permittee(s)
Subscri ore me this S day of 1111
in the year 2
�AR:
Y i
A,orarySignanrre
G
..t ' P�g�.`�ry:�v
(jy appointment expires , 7Jl I L-
If you need t Iter nareformat, please call the Water Resources Program at 360-407-6600. Persons with
hearing loss c 11 for Washington Relay Service. Persons with a speech disability can call 877-833-6341.
ECY 040-1-61 (Rev. 8107) ASSIGNMENT