Zero. That’s how much Port Townsend Paper has paid to the City since 1985 — the past 35 years! — for approximately 400,000,000 (400 million) gallons of water monthly plus use of the water system infrastructure, according to the terms of their contract with the City dated Apil 1, 1956 and on December 31, 1983, extended through March 15, 2020.
[Dec 4, 2019 ed note: this article has been updated to better reflect the actual transactions in the Lease/contract.]
City of Port Townsend Water Lease to Port Townsend Paper. p1. 1956 lease\p25. 1983 modification
The infrastructure is about ten times what it would need to be except for the mill’s use: they use about 10-14x what the rest of the ratepayers use, combined.
According to the terms of the lease, for the 44 years from March 15, 1956 through March 15, 2000, the City charges PTPC $3.6million for “rent”. Rent includes full use of the water system (the “Olympic Gravity Water System” or OGWS) and all water except for an amount reserved by the City for all other users.
Through an accelerated payment schedule, the City allows the mill to pay off this relatively nominal amount by March 15, 1985, after which no further payments would be required:
Total 44 year “rent” = $3,627,042.17
$3,395,840.00 is paid during the first 30 years per schedule in 1956 Lease Section V.
The last payment, 1986, on the schedule is included in the Initial Payment amount, in 1956.
The City specifies that $231,201.67 of the total rent will cover the last 14 years of the lease (which would have been equivalent to about $1400/month for those years) and deems it to have been paid off in the 1928/1944 lease(s), so no further payments are required from the mill after March 1985.
In 1983, the City makes some modifications to the lease and extends the lease beyond March 15, 2000 to March 15, 2020. They raise the amount of the water the City reserves for all other users from 400,000 to 1,000,000 gallons per day (p. A-37 or p. 25). They do NOT raise the issue of charging any rent or fees to PTPC for water system usage during that timeframe.
Therefore — the bottom line?
The total paid to the City during the thirty years from 1956 through March 1985 is $3,395,840.00 (paid in semi-annual installments).
During the next 35 years from March 1985 through March 2020, Port Townsend Paper has had to pay nothing.
Even though PTPC paid semi-annually, how much of a monthly bill is that equivalent to?
From March 15, 1956 through March 15, 1985 $9,432 @ 400,000,000 gallons monthly
From March 15, 1985 to March 15, 2020 $0.00 ($Zero) @ 400,000,000 gallons monthly
We would like to compare that with what other commercial users are paying.
We know that all other ratepayers combined use about 1/10 of that much water, and all are required to pay a base fee + water usage.
The contract between the City and Port Townsend Paper which allows this boon expires on March 15, 2020.
Do we, the ratepayers, pay for treating PTPC’s monthly 400,000,000 gallons of water?
It appears that we have been subsidizing water treatment for PTPC up until the City’s new treatment plant came into service in January 2017, beyond the mill’s tie-in. They like treated water because it’s easier on their equipment. That problem seems to have been solved going forward. But ratepayers have carried 10x the treatment costs to cover PTPC up until then.
Did the mill pay for the water system?
No! In 1927 the City issued bonds for the water system, and in 1956 it issued bonds for $2.2 million for “betterments” to the system. The mill covered at least the 1927 bonds and was paid back in full. (Further reading in the contracts is needed regarding the 1956 bond.)
Doesn’t the mill maintain the system?
No! The earlier, 1956 lease spells out certain obligations to the mill, mainly the branch from the mill tie-in to the mill and certain aspects of the larger system. Other than that, the rest of maintenance was the City’s obligation even to including “normal wear and tear.”
It will take more delving into the contract and related City ordinances, and conversations with people close to the situation to sort out who should and who actually does what maintenance.
The 1983 modification puts more of the maintenance obligations onto the mill. However, as we saw a few years ago when the City upgraded the water system, the mill brought forth their lawyers to minimize that obligation.
The lease expires March 15, 2020. The City has a water specialist looking at the current lease. Earlier leases were clearly written without significant community input.
If the City chooses to continue providing water usage to the mill, we might expect that a new lease will be better than the current one, but that is truly not a given. It is up to us, the ratepayers and taxpayers, to ensure that we are not unduly carrying the burden of PTPC’s water and system usage, and that any new terms are commensurate to what the rest of the system users pay and equitably reflect PTPC’s disproportionate 10x requirements of the system.
What can I do?
Bring the specifics on this page to the City Councillors, the Mayor, the Planning Commission and the new City Manager. They may be aware that PTPC has been paying nothing for some time, but it is almost certain that many of them are not aware of how extreme the imbalance has been and how long it has been going on.
Also talk to friends and neighbors so that they understand that despite the mill’s historic role in the community, for the last 35 years, the relationship has become an extremely lopsided.
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