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LRRWMO Memo <br />February 10, 2014 <br />Page 2 <br />on how capital project costs are to be allocated among the Member Cities is binding on the Member <br />Cities or if all Member Cities must consent to the allocation of costs <br />In several parts of the agreement, there is an indication that solutions and cost sharing should be <br />handled by agreement between the Member Cities. For example, the sixth paragraph of the Preface <br />states that "It is not anticipated that the Lower Rum River Watershed will have many capital <br />improvement projects; if they do, it is hereby expressed that the intent of this Agreement is to <br />encourage that the solutions should be handled by agreements between the Cities involved." Article <br />VIII, Subdivision 3(b) states that it is expressed as a goal of the Agreement that cost sharing of <br />capital improvement costs be assigned and agreed to by Members. And Article VIII, Subdivision 5 <br />refers to apportioning capital improvements to the Members based on a negotiated agreement. <br />Obviously, if all Member Cities agree, it would be possible to pay for capital project costs in <br />accordance with that agreement. However, a procedure is laid out in the JPA to address those <br />situations where the Member Cities have not agreed to a cost sharing allocation. Article VII, <br />Subdivision 4 provides that the Commission is to hold a hearing on a capital project after notice to <br />the Members. The notice is to state the estimated cost to each Member; and after the hearing is <br />held, the Board is to adopt a resolution that allocates in percentages the cost between Members. <br />Article VII, Subdivision 6 provides that if a Member is aggrieved by the Board's cost allocation, it <br />can appeal the decision by formal arbitration. Article VIII, Subdivision 3(a) requires each Member <br />to pay its proportionate share determined under Article VII, Subdivision 4. And finally, Article <br />VIII, Subdivision 5 says that the apportionment of the cost of capital projects is based on a <br />negotiated agreement but failing that, distribution will be determined through the arbitration process <br />described in Article VII, Subdivision 6. <br />Based on these provisions of the joint powers agreement, it would seem that the intent of the JPA is <br />that the Member Cities will attempt to negotiate allocation of costs. However, if those negotiations <br />fail, the Board would decide on the allocation of costs. If a Member City disagreed with the <br />allocation, it could appeal the Board's decision to arbitration and that arbitration would result in a <br />determination of the allocation of costs. These provisions would be consistent with the idea that <br />capital project costs can be allocated by the Commission and the Cities are obligated to pay those <br />costs. <br />However, all of these procedures seem to be subject to the provision of Article VIII, Subdivision <br />3(b), which states "It is expressed as a goal of this Agreement that cost sharing of capital <br />improvements costs be assigned and agreed to by Members pursuant to Article VIII, Subdivision 5, <br />subsections (1) and (2) of this Agreement. Without such agreement, all improvements will be <br />constructed pursuant to Minnesota Statutes, Section 103B.251." (Minnesota Statutes, Section <br />103B.251 is the statute that allows a watershed management organization to certify capital project <br />costs to the county so that the county will raise money to pay project costs.) [Note there is an <br />Article VIII, Subdivision 5, but it does not have subsections (1) and (2).] <br />Therefore, as I read it, the steps in the process of allocating capital project costs among Member <br />Cities would generally be: <br />439470v1 LW105 -1 <br />