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HomeMy WebLinkAbout9028AGENDA BILL CITY OFBREK4ERT0N ^ CITY COUNCIL =~== SUBJECT: Interlocal Agreement with Kitnop Transit for Schedule 74Underground Power Conversion for the Wheaton Way Transit Center; and Related Budget Adjustment Study Session Date: COUNCIL MEETING Date: February 13 2019 February 20 2019 Presenter: Tom Knuckey Phone: (360) 473-2376 SUMMARY: As part of the development of the Wheaton VVev Transit Center, Kitaap Transit has elected to underground power along their Wheaton Way frontage to make room for a bus pull-out lane; the cost for Puget Sound Energy (PSE) to complete this work is approximately $193,000. PSE has a franchise with the City making the City eligible to enter into Schedule 74 cost share agreements tounderground power. The attached Interlocal Agreement facilitates execution of Schedule 74 agreements between the City and PGE. with Kitaap Transit maintaining responsibility for all design and construction costs. Two agreements are anticipated; one for design and asecond for construction ofthe underground power conversion. ATTACHMENTS: 1\Interlocal Agreement; 2\Schedule 74Agreement (Blank);3JSite Plan FISCAL IMPACTS (Include Budgeted Ammunt): City cost ialimited tostaff time toadminister and manage the Schedule 74agreements. Per the Schedule 74agreement terms, the City will reimburse 40% ofPSE'e costs for the conversion; this is projected at $77,000. This cost will be paid by the City, then reimbursed bvKitaapTransit and sothe net cost tothe City ia$O. This expense and revenue ionot inthe 2019 Transportation Capital Budget, and so a budget adjustment is required. STUDY SESSION AGENDA: MLimKed Presentation [I Full Presentation STUDY SESSION ACTION: XConsentAgenda El General Business El Public Hearing RECOMMENDED MOTION: Move toauthorize obudget adjustment tothe Transportation Capital Fund for the Schedule 74 Conversion and approve the Interlocal Agreement between Kitoap Transit and the City of Bremerton for Undergrounding Power on Wheaton Way; and authorize the Mayor to finalize and execute the Interlocal Agreement as well as the forthcoming Schedule 74 Design and Construction Agreements with substantially the same terms and conditions anpresented. COUNCIL ACTION: ^prove E] Deny El Table FContinue F-1NoAction Form Updated 01/02/2018 INTERLOCAL AGREEMENT BETWEEN KITSAP TRANSIT AND THE CITY OF BREMERTON FOR UNDERGROUNDING O POWER WHEATON WAY W ON THIS INTERLOCAL AGREEMENT is made and entered into pursuant to the Interlocal Cooperation Act, Chapter 39.34 of the Revised Code of Washington, by and between Kitsap Transit, a public transportation benefit area authority, and the City of Bremerton (City), a municipal corporation of the State of Washington, (the parties). WHEREAS, Revised Code of Washington Section 39.34.030 authorizes cooperative efforts between public agencies,and WHEREAS,the City encourages the undergrounding of power wherever possible, and WHEREAS, the City promotes the use of transit for improved mobility as adopted in its Comprehensive Plan, and WHEREAS, Puget Sound Energy has a Franchise with the City of Bremerton making the City eligible to enter into cost share agreements with Puget Sound Energy in accordance with Schedule 74 of their Electric Tariff G, and WHEREAS, the current transit center serving East Bremerton is on a leased parking lot at Sylvan Way and Wheaton Way with no formal park and ride and essentially no public amenities, and WHEREAS, the new Wheaton Way Transit Center to be located at 3915 Wheaton Way will be a state-of-the-art facility including a 166 stall park and ride,restrooms,bus shelters,electric car charging stations,ADA accessible features, bike racks and landscaping, and WHEREAS, the City will benefit from reduced traffic congestion in the downtown core resulting from the construction of the new park and ride, and WHEREAS, the new Transit facility will provide an important improved service to the SR-303 corridor and modernize the look and feel of the corridor for the benefit of Bremerton's residents and the region, and WHEREAS, construction of the new Transit Center requires undergrounding of power along the Wheaton Way frontage to accommodate bus pull-out lanes, and WHEREAS, it is mutually beneficial to the City and Kitsap Transit that the power along Wheaton Way be undergrounded for improved reliability, connection to future corridor improvement projects and also aesthetic reasons; NOW, THEREFORE, in consideration of their mutual covenants, conditions and Page 1 Interlocal Agreement Between Kitsap Transit and the City of Bremerton for Wheaton Way Schedule 74 Underground Conversion promises, THE PARTIES AGREE as follows: 1. PURPOSE OF AGREEMENT: The purpose of this agreement is for the City of Bretherton and Kitsap Transit to cooperate in the implementation of an electrical undergrounding project along the new Transit Center SR-303 frontage, and provide a mechanism for Kitsap Transit to reimburse the City for expenses associated with the underground conversion. 2. ADMINISTRATION OF AGREEMENT: The Capital Department of Kitsap Transit will administer this agreement for Kitsap Transit. The Bremerton Public Works Department will administer this agreement for the City of Bremerton. 3. DURATION OF AGREEMENT: This agreement shall take effect upon execution of the agreement by both Kitsap Transit and the City and shall remain in effect until final and reimbursement of all construction costs associated with the underground conversion, expected to be by December 31,2020. 4. PROJECT MANAGEMENT: S ince the Schedule 74 Agreement is a co ntractual relationship between the City of Bremerton and Puget Sound Energy, for the purposes of the Schedule 74 Agreement Kitsap Transit is managing the construction on behalf of the City. The City's role will be to coordinate and manage the Schedule 74 Agreement. 5. KITSAP TRANSIT AND CITY EMPLOYEES: Kitsap Transit employees (along with all contractors under contract to Kitsap Transit)assigned to projects pursuant to this agreement remain employees of Kitsap Transit at all times and shall perform the work requested under the sole supervision of Kitsap Transit. City employees assigned to projects pursuant to this agreement remain employees of the City at all times and shall perform the work requested under the sole supervision of the City. 6. FINANCIAL RESPONSIBILITY: Kitsap Transit shall be solely responsible for all costs associated with the underground conversion with the exception of those costs specifically identified as the responsibility of the City. The City shall be responsible only for City labor costs associated with managing the Schedule 74 underground conversion agreement, and shall not be responsible for any expenses associated with the design or construction of the underground conversion. The City will reimburse Puget Sound Energy in accordance with the Schedule 74 agreement,then invoice Kitsap Transit for reimbursement. 7. REIMBURSEMENT: Kitsap Transit shall reimburse the City for all costs as presented above. Reimbursement shall be made within thirty days of receipt of invoice from the City. 8. LEGAL/ADMINISTRATIVE ENTITY: No separate legal or administrative entity is created by or pursuant to this agreement. 9. INDEMNIFICATION: A. Each party agrees to defend, indemnify and hold harmless the other party, its officials, officers,employees and agents for all claims, liabilities,damages, suits, reasonable Page 2 Interlocal Agreement Between Kitsap Transit and the City of Bremerton for Wheaton Way Schedule 74 Underground Conversion attorney's fees and costs arising from the negligent acts and omissions of the indemnitor, its officials, officers, employees and agents. B. In cases of concurrent negligence of the parties,the above provision requiring each party to defend, indemnify and hold harmless the other party("indemnification provision") is valid and enforceable only to the extent of the negligence of the respective parties. C. Solely for purposes of the indemnification provision, each party waives its immunity under Title 51 (Industrial Insurance)of the Revised Code of Washington and acknowledges that this waiver was mutually negotiated by the parties. D. Each party agrees to notify the other party within two weekdays of any claims made related to this agreement. E. The indemnification provision shall survive the expiration or termination of this agreement. 10. COMPLIANCE WITH REGULATIONS AND LAWS: The parties shall comply with all applicable laws, rules and regulations pertaining to them in connection with the matters covered herein. 11. ASSIGNMENT: The parties shall not assign this agreement or any interest, obligation or duty herein without the express written consent of the other party. 12. ATTORNEYS'FEES: In the event of litigation to enforce any of the terms or provisions herein, each party shall pay all its own costs and attorney's fees. 13. NOTICES: All notices and payments hereunder may be delivered or mailed. If mailed, they shall be sent to the following respective addresses: To Kitsap Transit: To Bremerton: Kitsap Transit City of Bremerton 60 Washington Ave, Suite 200 345 6th Street, Suite 100 Bremerton, WA 98337 Bremerton, WA 98337 Attn: Steffani Lillie Attn: City Clerk Phone: (360)478-6931 Phone: (360)473-5290 or to such other respective addresses as either party may hereafter designate in writing.All notices and payments mailed by regular post(including first class)shall be deemed to have been given on the second business day following the date of mailing, if properly mailed and addressed. Notices and payments sent by certified or registered mail shall be deemed to have been given on the day next following the date of mailing, if properly mailed and addressed. For all types of mail, the postmark affixed by the United States Postal Service shall be conclusive evidence of the date of Page 3 Interlocal Agreement Between Kitsap Transit and the City of Bremerton for Wheaton Way Schedule 74 Underground Conversion mailing. 14. INSURANCE: Kitsap Transit shall ensure the City is named as an additional insured for the undergrounding construction. 15. FILING: This document shall be filed with the County Auditor pursuant to RCW 39.34. 16. ENTIRE AGREEMENT: This agreement constitutes the entire agreement between the parties, and the parties acknowledge that there are no other agreements,written or oral, that have not been set forth in the text of this agreement. 17. CHOICE OF LAW AND VENUE: This agreement shall be interpreted according to the laws of the State of Washington. A ny judicial action to resolve disputes arising out of this agreement shall be brought in Kitsap County Superior Court. IN WITNESS WHEREOF,the parties have signed this Agreement,effective on the date fully executed below. CITY OF BREMERTON KITSAPT'.t SIT Gre heeler,Mayor shn Clauson,Executive Director 31 V% l' Olc‘ ,22 eVZ 0/ Date Date ATTEST: AT • t.../e_S? � - f'4) 017 ,LA1 Angel.4* oods,City Clerk Jill A. ' tz,MI 2 Clerk of the Board Approved as to form: Roger A. Lubovich, City Attorney Page 4 Interlocal Agreement Between Kitsap Transit and the City of Bremerton for Wheaton Way Schedule 74 Underground Conversion SCHEDULE 74 UNDERGROUND CONVERSION Project Construction Agreement Project Name: Wheaton Way Sch 74 Project Number: 101117331 THIS Agreement, dated as of this 19 day of February, 2019, is made by and between The City of Bremerton, a Government Entity, and PUGET SOUND ENERGY, Inc., a Washington Corporation RECITALS A. The Company is a public service company engaged in the sale and distribution of electric energy, and pursuant to its franchise or other rights from the Government Entity, currently locates its electric distribution facilities within the jurisdictional boundaries of the Government Entity. B. The Government Entity has determined that it is necessary to replace the existing overhead electric distribution system within the area specified in the Project Plan (as defined below) (the "Conversion Area") with a comparable underground electric distribution system, all as more specifically described in the Project Plan (the "Conversion Project"). C. The Kitsap Transit and the Company have previously entered into a Project Design Agreement dated as of August 15, 2018, pursuant to which the parties completed certain engineering design, cost assessment, operating rights planning and other preliminary work relating to the Conversion Project and, in connection with that effort, developed the Project Plan. D. The Government Entity and the Company wish to execute this written contract in accordance with Schedule 74 of the Company's Electric Tariff G ("Schedule 74") to govern the completion of the Conversion Project, which both parties intend shall qualify as an underground conversion under the terms of Schedule 74. AGREEMENT The Government Entity and the Company therefore agree as follows: 1. Definitions. (a) Unless specifically defined otherwise herein, all terms defined in Schedule 74 shall have the same meanings when used in this Agreement, including, without limitation, the following: i) Cost of Conversion; ii) Public Thoroughfare; iii) Temporary Service; iv) Trenching and Restoration; v) Underground Distribution System; and vi) Underground Service Lines. (b) "Company-Initiated Upgrade" shall mean any feature of the Underground Distribution System which is required by the Company and is not reasonably required to make the Underground Distribution System comparable to the overhead distribution system being replaced. For purposes of the foregoing, a "comparable" system shall include, unless the Parties otherwise agree, the number of empty ducts (not to exceed four(4), typically having a diameter of 6" or less) of such diameter and number as may be specified and agreed upon in the Project Plan necessary Construction Agreement, Attachment"B" to Schedule 74, Page 1 Wheaton Way Schedule 74 to replicate the load-carrying capacity(system amperage class) of the overhead system being replaced. (c) "Estimated Reimbursable Private Conversion Costs" shall mean the Company's good faith estimate of the Reimbursable Private Conversion Costs, as specified in the Project Plan and as changed and adjusted from time to time in accordance with Section 6, below. (d) "Estimated Reimbursable Temporary Service Costs" shall mean the Company's good faith estimate of the Reimbursable Temporary Service Costs, as specified in the Project Plan and as changed and adjusted from time to time in accordance with Section 6, below. (e) "Estimated Reimbursable Upgrade Costs" shall mean the Company's good faith estimate of the Reimbursable Upgrade Costs, as specified in the Project Plan and as changed and adjusted from time to time in accordance with Section 6, below. (f) "Estimated Shared Company Costs" shall mean the Company's good faith estimate of the Shared Company Costs, as specified in the Project Plan and as changed and adjusted from time to time in accordance with Section 6, below. (g) "Estimated Shared Government Costs" shall mean the Government Entity's good faith estimate of the Shared Government Costs, as specified in the Project Plan and as changed and adjusted from time to time in accordance with Section 6, below. (h) "Government-Requested Upgrade" shall mean any feature of the Underground Distribution System which is requested by the Government Entity and is not reasonably required to make the Underground Distribution System comparable to the overhead distribution system being replaced. For purposes of the foregoing, any empty ducts installed at the request of the Government Entity shall be a Government-Requested Upgrade. (i) "Party" shall mean either the Company, the Government Entity, or both. (j) "Private Property Conversion" shall mean that portion, if any, of the Conversion Project for which the existing overhead electric distribution system is located, as of the date determined in accordance with Schedule 74, (i) outside of the Public Thoroughfare, or(ii) pursuant to rights not derived from a franchise previously granted by the Government Entity or pursuant to rights not otherwise previously granted by the Government Entity. (k) "Project Plan" shall mean the project plan developed by the Parties under the Design Agreement and attached hereto as Exhibit A, as the same may be changed and amended from time to time in accordance with Section 6, below. The Project Plan includes, among other things, (i) a detailed description of the Work that is required to be performed by each Party and any third party, (ii) the applicable requirements and specifications for the Work, (iii) a description of the Operating Rights that are required to be obtained by each Party for the Conversion Project(and the requirements and specifications with respect thereto), (iv) an itemization and summary of the Estimated Shared Company Costs, Estimated Shared Government Costs, Estimated Reimbursable Private Conversion Costs (if any), Estimated Reimbursable Temporary Service Costs (if any) and Estimated Reimbursable Upgrade Costs (if any), and (v) the Work Schedule. (I) "Operating Rights" shall mean sufficient space and legal rights for the construction, operation, repair, and maintenance of the Underground Distribution System. (m) "Reimbursable Private Conversion Costs" shall mean (i) all Costs of Conversion, if any, incurred by the Company which are attributable to a Private Property Conversion, less (ii) the distribution pole replacement costs (if any) that would be avoided by the Company on account of such Private Property Conversion, as determined consistent with the applicable Company distribution facilities replacement program, plus (iii)just compensation as provided by law for the Company's interests Construction Agreement, Attachment"B" to Schedule 74, Page 2 Wheaton Way Schedule 74 in real property on which such existing overhead distribution system was located prior to conversion; provided that the portion of the Reimbursable Private Conversion Costs attributable to the Costs of Conversion under subparagraph (i) of this paragraph shall not exceed the Estimated Reimbursable Private Conversion Costs without the prior written authorization of the Government Entity. (n) "Reimbursable Temporary Service Costs" shall mean all costs incurred by the Company which are attributable to (i) any facilities installed as part of the Conversion Project to provide Temporary Service, as provided for in Schedule 74, and (ii) the removal of any facilities installed to provide Temporary Service (less salvage value of removed equipment); provided that the Reimbursable Temporary Service Costs shall not exceed the Estimated Reimbursable Temporary Service Costs without the prior written authorization of the Government Entity. (o) "Reimbursable Upgrade Costs" shall mean all Costs of Conversion incurred by the Company which are attributable to any Government-Requested Upgrade; provided that the Reimbursable Upgrade Costs shall not exceed the Estimated Reimbursable Upgrade Costs without the prior written authorization of the Government Entity. (p) "Shared Company Costs" shall mean all Costs of Conversion (other than Reimbursable Upgrade Costs, Reimbursable Private Conversion Costs and Reimbursable Temporary Service Costs) incurred by the Company in connection with the Conversion Project; provided, however, that the Shared Company Costs shall not exceed the Estimated Shared Company Costs without the prior written authorization of the Government Entity. For the avoidance of doubt, the"Shared Company Costs"shall, as and to the extent specified in the Design Agreement, include the actual, reasonable costs to the Company for the "Design Work" performed by the Company under the Design Agreement. (q) "Shared Government Costs" shall mean all Costs of Conversion incurred by the Government Entity in connection with (i) any duct and vault installation Work which the Parties have specified in the Project Plan is to be performed by the Government Entity as part of the Government Work, and (ii)the acquisition of any Operating Rights which the Parties have, by mutual agreement, specified in the Project Plan are to be obtained by the Government Entity for the Conversion Project, but only to the extent attributable to that portion of such Operating Rights which is necessary to accommodate the facilities of the Company; provided, however, that the Shared Government Costs shall not exceed the Estimated Shared Government Costs without the prior written authorization of the Company. (r) "Total Shared Costs" shall mean the sum of the Shared Company Costs and the Shared Government Costs. For the avoidance of doubt, the Total Shared Costs shall not include, without limitation, (i) costs to the Government Entity for Trenching and Restoration, or(ii) costs associated with any joint use of trenches by other utilities as permitted under Section 3(b). (s) "Work" shall mean all work to be performed in connection with the Conversion Project, as more specifically described in the Project Plan, including, without limitation, the Company Work (as defined in Section 2(a), below) and the Government Work (as defined in Section 3(a), below). (t) "Work Schedule" shall mean the schedule specified in the Project Plan which sets forth the milestones for completing the Work, as the same may be changed and amended from time to time in accordance with Section 6, below. 2. Obligations of the Company. (a) Subject to the terms and conditions of this Agreement, the Company shall do the following as specified in, and in accordance with the design and construction specifications and other requirements set forth in, the Project Plan (the"Company Work"): Construction Agreement, Attachment"B" to Schedule 74, Page 3 Wheaton Way Schedule 74 i) furnish and install an Underground Distribution System within the Conversion Area (excluding any duct and vault installation or other Work which the Parties have specified in the Project Plan is to be performed by the Government Entity); ii) provide a Company inspector on-site at the times specified in the Work Schedule to inspect the performance of any duct and vault installation Work which the Parties have specified in the Project Plan is to be performed by the Government Entity; and iii) upon connection of those persons or entities to be served by the Underground Distribution System and removal of facilities of any other utilities that are connected to the poles of the overhead system, remove the existing overhead system (including associated wires and Company-owned poles) of 15,000 volts or less within the Conversion Area except for Temporary Services. (b) Upon request of the Government Entity, the Company shall provide periodic reports of the progress of the Company Work identifying (i) the Company Work completed to date, (ii) the Company Work yet to be completed, and (iii) an estimate regarding whether the Conversion Project is on target with respect to the Estimated Shared Company Costs, the Estimated Reimbursable Private Conversion Costs(if any), the Estimated Reimbursable Temporary Service Costs (if any), the Estimated Reimbursable Upgrade Costs (if any) and the Work Schedule. (c) Except as otherwise provided in the Company's Electric Tariff G, the Company shall own, operate and maintain all electrical facilities installed pursuant to this Agreement including, but not limited to, the Underground Distribution System and Underground Service Lines. (d) Subject to the terms and conditions of this Agreement, the Company shall perform all Company Work in accordance with the Project Plan, the Work Schedule and this Agreement. 3. Obligations of the Government Entity. (a) Subject to the terms and conditions of this Agreement, the Government Entity shall do the following as specified in, and in accordance with the design and construction specifications and other requirements set forth in, the Project Plan (the"Government Work"): i) provide the Trenching and Restoration; ii) perform the surveying for alignment and grades for ducts and vaults; and iii) perform any duct and vault installation and other Work which the Parties have specified in the Project Plan is to be performed by the Government Entity. (b) Other utilities may be permitted by the Government Entity to use the trenches provided by the Government Entity for the installation of their facilities so long as such facilities or the installation thereof do not interfere (as determined pursuant to the Company's electrical standards)with the Underground Distribution System or the installation or maintenance thereof. Any such use of the trenches by other utilities shall be done subject to and in accordance with the joint trench design specifications and installation drawings set forth or otherwise identified in the Project Plan, and the Government Entity shall be responsible for the coordination of the design and installation of the facilities of the other utilities to ensure compliance with such specifications and drawings. (c) Upon request of the Company, the Government Entity shall provide periodic reports of the progress of the Government Work identifying (i) the Government Work completed to date, (ii) the Government Work yet to be completed, and (iii) an estimate regarding whether the Conversion Project is on target with respect to the Estimated Shared Government Costs and the Work Schedule. (d) The Government Entity shall be responsible for coordinating all work to be performed in connection with the street improvement program within the Conversion Area. Construction Agreement, Attachment"B" to Schedule 74, Page 4 Wheaton Way Schedule 74 (e) Subject to the terms and conditions of this Agreement, the Government Entity shall perform all Government Work in accordance with the Project Plan, the Work Schedule and this Agreement. 4. Work Schedule. (a) The Government Entity and the Company have agreed upon the Work Schedule as set forth in the Project Plan. Changes to the Work Schedule shall be made only in accordance with Section 6, below. (b) Promptly following the execution of this Agreement, and upon completion by the Government Entity of any necessary preliminary work, the Government Entity shall hold a pre-construction meeting involving all participants in the Conversion Project to review project design, coordination requirements, work sequencing and related pre-mobilization requirements. Following the pre- construction meeting, the Government Entity shall give the Company written notice to proceed with the Work at least ten (10) business days prior to the commencement date specified in the Work Schedule. (c) Subject to the terms and conditions of this Agreement, each Party shall perform the Work assigned to it under this Agreement in accordance with the Work Schedule. So long as the Company performs the Company Work in accordance with the Work Schedule, the Company shall not be liable to the Government Entity(or its agents, servants, employees, contractors, subcontractors, or representatives) for any claims, actions, damages, or liability asserted or arising out of delays in the Work Schedule. 5. Location of Facilities. All facilities of the Company installed within the Conversion Area pursuant to this Agreement shall be located, and all related Operating Rights shall be obtained, in the manner set forth in the applicable provisions of Schedule 74, as specified by the Parties in the Project Plan. 6. Changes. (a) Either Party may, at any time, by written notice thereof to the other Party, request changes in the Work within the general scope of this Agreement(a "Request for Change"), including, but not limited to: (i) changes in, substitutions for, additions to or deletions of any Work; (ii) changes in the specifications, drawings and other requirements in the Project Plan, (iii) changes in the Work Schedule, and (iv) changes in the location, alignment, dimensions or design of items included in the Work. No Request for Change shall be effective and binding upon the Parties unless signed by an authorized representative of each Party. (b) If any change included in an approved Request for Change would cause a change in the cost of, or the time required for, the performance of any part of the Work, an equitable adjustment shall be made in the Estimated Shared Company Costs, the Estimated Shared Government Costs, the Estimated Reimbursable Private Conversion Costs (if any), the Estimated Reimbursable Temporary Service Costs (if any), the Estimated Reimbursable Upgrade Costs (if any) and/or the Work Schedule to reflect such change. The Parties shall negotiate in good faith with the objective of agreeing in writing on a mutually acceptable equitable adjustment. If the Parties are unable to agree upon the terms of the equitable adjustment, either Party may submit the matter for resolution pursuant to the dispute resolution provisions in Section 10, below. (c) The Work Schedule, the Estimated Shared Company Costs, the Estimated Shared Government Costs, the Estimated Reimbursable Private Conversion Costs, the Estimated Reimbursable Temporary Service Costs and/or the Estimated Reimbursable Upgrade Costs shall be further equitably adjusted from time to time to reflect any change in the costs or time required to perform the Work to the extent such change is caused by: (i) any Force Majeure Event under Section 11, below, (ii) the discovery of any condition within the Conversion Area which affects the scope, cost, Construction Agreement, Attachment"B"to Schedule 74, Page 5 Wheaton Way Schedule 74 schedule or other aspect of the Work and was not known by or disclosed to the affected Party prior to the date of this Agreement, or(iii) any change or inaccuracy in any assumptions regarding the scope, cost, schedule or other aspect of the Work which are expressly identified by the Parties in the Project Plan. Upon the request of either Party, the Parties will negotiate in good faith with the objective of agreeing in writing on a mutually acceptable equitable adjustment. If, at any time thereafter, the Parties are unable to agree upon the terms of the equitable adjustment, either Party may submit the matter for resolution pursuant to the dispute resolution provisions in Section 10, below. (d) Notwithstanding any dispute or delay in reaching agreement or arriving at a mutually acceptable equitable adjustment, each Party shall, if requested by the other Party, proceed with the Work in accordance with any approved Request for Change. Any request to proceed hereunder must be accompanied by a written statement setting forth the requesting Party's reasons for rejecting the proposed equitable adjustment of the other Party. 7. Compensation and Payment. (a) Subject to and in accordance with the terms and conditions of this Agreement(including, without limitation, the payment procedures set forth in this Section 7), payment in connection with the Conversion Project and this Agreement shall be as follows: i) The Total Shared Costs shall be allocated to the Parties in the following percentages: (A) sixty percent (60%) to the Company, and (B) forty percent (40%) to the Government Entity. ii) The Government Entity shall pay one hundred percent (100%) of all Reimbursable Private Conversion Costs, if any. iii) The Government Entity shall pay one hundred percent (100%) of all Reimbursable Upgrade Costs, if any. iv) The Government Entity shall pay one hundred percent (100%) of all Reimbursable Temporary Service Costs, if any. v) The Government Entity shall pay one hundred percent (100%) of the costs it incurs to perform that portion of the Government Work specified in Section 3(a)(i) and (ii) (i.e., Trenching and Restoration and surveying). vi) The Company shall pay one hundred percent (100%) of the costs it incurs to design, provide and construct any Company-Initiated Upgrade. vii) The Company shall pay one hundred percent (100%) of the costs it incurs to obtain Operating Rights outside the Public Thoroughfare. (b) Based on the allocation of responsibilities set forth in Section 7(a), above, the Parties shall determine the net amount payable by the Government Entity or the Company, as applicable, to the other Party under this Agreement (the "Net Amount"). The Net Amount shall be determined by using the amount of the Total Shared Costs allocated to the Government Entity under Section 7(a)(i), and adjusting such amount as follows: i) Subtracting (as a credit to the Government Entity) the amount of the Shared Government Costs. ii) Adding (as a credit to the Company) the amount of all Reimbursable Private Conversion Costs, Reimbursable Upgrade Costs and Reimbursable Temporary Service Costs. iii) Subtracting (as a credit to the Government Entity) any payments previously made to the Company by the Government Entity under the Design Agreement which, under the terms of the Design Agreement, are to be credited to the Government Entity under this Agreement. The Net Amount, as so calculated, (A)will be an amount payable to the Company if it is a positive number, and (B) shall be an amount payable to the Government Entity if it is a negative number. Construction Agreement, Attachment"B" to Schedule 74, Page 6 Wheaton Way Schedule 74 (c) Within sixty(60) business days of completion of the Conversion Project, the Government Entity shall provide the Company with an itemization of the Shared Government Costs (the"Government Itemization"), together with such documentation and information as the Company may reasonably request to verify the Government Itemization. The Government Itemization shall, at a minimum, break down the Shared Government Costs by the following categories, as applicable: (i) property and related costs incurred and/or paid by the Government Entity, including any costs of obtaining Operating Rights, and (ii) construction costs incurred and/or paid by the Government Entity, including and listing separately inspection, labor, materials and equipment, overhead and all costs charged by any agent, contractor or subcontractor of the Government Entity. (d) Within thirty (30) business days after the Company's receipt of the Government Itemization and requested documentation and information, the Company shall provide the Government Entity a written statement(the"Company Statement") showing (i) an itemization of the Shared Company Costs, (ii) the Parties' relative share of the Total Shared Costs based on the Company's itemization of the Shared Company Costs and the Government Entity's itemization of the Shared Government Costs set forth in the Government Itemization, (iii) any Reimbursable Private Conversion Costs, (iv) any Reimbursable Upgrade Costs, (v) any Reimbursable Temporary Service Costs, (vi) any credits to the Government Entity for payments previously made to the Company by the Government Entity under the Design Agreement which, under the terms of the Design Agreement, are to be credited to the Government Entity under this Agreement, and (vii) the Net Amount, as determined in accordance with Section 7(b), above, together with such documentation and information as the Government Entity may reasonably request to verify the Company Statement. The itemization of the Shared Company Costs included in the Company Statement shall, at a minimum, break down the Shared Company Costs by the following categories, as applicable: (i) design and engineering costs, and (ii) construction costs, including and listing separately inspection, labor, materials and equipment, overhead and all costs charged by any agent, contractor or subcontractor of the Company. (e) Within thirty (30) business days after the Government Entity's receipt of the Company Statement and requested documentation and information, the Net Amount shall be paid by the owing Party to the other Party, as specified in the Company Statement. 8. Indemnification. (a) The Government Entity releases and shall defend, indemnify and hold the Company harmless from all claims, losses, harm, liabilities, damages, costs and expenses (including, but not limited to, reasonable attorneys' fees) caused by or arising out of any negligent act or omission or willful misconduct of the Government Entity in its performance under this Agreement. During the performance of such activities the Government Entity's employees or contractors shall at all times remain employees or contractors, respectively, of the Government Entity. (b) The Company releases and shall defend, indemnify and hold the Government Entity harmless from all claims, losses, harm, liabilities, damages, costs and expenses (including, but not limited to, reasonable attorneys' fees) caused by or arising out of any negligent act or omission or willful misconduct of the Company in its performance under this Agreement. During the performance of such activities the Company's employees or contractors shall at all times remain employees or contractors, respectively, of the Company. (c) Solely for purposes of enforcing the indemnification obligations of a Party under this Section 8, each Party expressly waives its immunity under Title 51 of the Revised Code of Washington, the Industrial Insurance Act, and agrees that the obligation to indemnify, defend and hold harmless provided for in this Section 8 extends to any such claim brought against the indemnified Party by or on behalf of any employee of the indemnifying Party. The foregoing waiver shall not in any way preclude the indemnifying Party from raising such immunity as a defense against any claim brought against the indemnifying Party by any of its employees. Construction Agreement, Attachment"B" to Schedule 74, Page 7 Wheaton Way Schedule 74 9. Conversion of Service to Customers within Conversion Area. (a) Upon commencement of the Work, the Government Entity shall notify all persons and entities within the Conversion Area that service lines to such customers must be converted from overhead to underground service within the applicable statutory period following written notice from the Government Entity that service from underground facilities are available in accordance with RCW 35.96.050. Upon the request of any customer, other than a single family residential customer, within the Conversion Area, the Company shall remove the overhead system and connect such persons' and entities' Underground Service Lines to the Underground Distribution System. (b) The Parties acknowledge that single family residences within the Conversion Area must (i) provide a service trench and conduit, in accordance with the Company's specifications, from the underground meter base to the point of service provided during the conversion, and (ii) pay for the secondary service conductors as defined in Schedule 85 of the Company's Electric Tariff G. The Government Entity shall exercise its authority to order disconnection and removal of overhead facilities with respect to owners failing to convert service lines from overhead to underground within the timelines provided in RCW 35.96.050. 10. Dispute Resolution. (a) Any dispute, disagreement or claim arising out of or concerning this Agreement must first be presented to and considered by the Parties. A Party who wishes dispute resolution shall notify the other Party in writing as to the nature of the dispute. Each Party shall appoint a representative who shall be responsible for representing the Party's interests. The representatives shall exercise good faith efforts to resolve the dispute. Any dispute that is not resolved within ten (10) business days of the date the disagreement was first raised by written notice shall be referred by the Parties' representatives in writing to the senior management of the Parties for resolution. In the event the senior management are unable to resolve the dispute within twenty (20) business days (or such other period as the Parties may agree upon), each Party may pursue resolution of the dispute through other legal means consistent with the terms of this Agreement. All negotiations pursuant to these procedures for the resolution of disputes shall be confidential and shall be treated as compromise and settlement negotiations for purposes of the state and federal rules of evidence. (b) Any claim or dispute arising hereunder which relates to any Request for Change or any equitable adjustment under Section 6, above, or the compensation payable by or to either Party under Section 7, above, and which is not resolved by senior management within the time permitted under Section 10(a), above, shall be resolved by arbitration in Seattle, Washington, under the Construction Industry Arbitration Rules of the American Arbitration Association then in effect. The decision(s) of the arbitrator(s) shall be final, conclusive and binding upon the Parties. All other disputes shall be resolved by litigation in any court or governmental agency, as applicable, having jurisdiction over the Parties and the dispute. (c) In connection with any arbitration under this Section 10, costs of the arbitrator(s), hearing rooms and other common costs shall be divided equally among the Parties. Each Party shall bear the cost and expense of preparing and presenting its own case (including, but not limited to, its own attorneys' fees); provided, that, in any arbitration, the arbitrator(s) may require, as part of his or her decision, reimbursement of all or a portion of the prevailing Party's costs and expenses (including, but not limited to, reasonable attorneys' fees) by the other Party. (d) Unless otherwise agreed by the Parties in writing, the Parties shall continue to perform their respective obligations under this Agreement during the pendency of any dispute. Construction Agreement, Attachment"B" to Schedule 74, Page 8 Wheaton Way Schedule 74 11. Uncontrollable Forces. In the event that either Party is prevented or delayed in the performance of any of its obligations under this Agreement by reason beyond its reasonable control (a "Force Majeure Event"), then that Party's performance shall be excused during the Force Majeure Event. Force Majeure Events shall include, without limitation, war; civil disturbance; flood, earthquake or other Act of God; storm, earthquake or other condition which necessitates the mobilization of the personnel of a Party or its contractors to restore utility service to customers; laws, regulations, rules or orders of any governmental agency; sabotage; strikes or similar labor disputes involving personnel of a Party, its contractors or a third party; or any failure or delay in the performance by the other Party, or a third party who is not an employee, agent or contractor of the Party claiming a Force Majeure Event, in connection with the Work or this Agreement. Upon removal or termination of the Force Majeure Event, the Party claiming a Force Majeure Event shall promptly perform the affected obligations in an orderly and expedited manner under this Agreement or procure a substitute for such obligation. The Parties shall use all commercially reasonable efforts to eliminate or minimize any delay caused by a Force Majeure Event. 12. Insurance. (a) PSE shall, and shall require each of its contractors to, secure and maintain in force throughout the duration of the Conversion Project(or, if sooner, until termination of this Agreement) comprehensive general liability insurances, with a minimum coverage of$1,000,000 per occurrence and $2,000,000 aggregate for personal injury; and $1,000,000 per occurrence/ aggregate for property damages, and professional liability insurance in the amount of$2,000,000 as applicable. (b) The Government Entity shall ensure that each of its contractors performing any Government Work secures and maintains in force throughout the duration of the Conversion Project(or, if sooner, until termination of this Agreement) insurance policies having the same coverage, amounts and limits as specified Section 12(a), above. (c) In lieu of the insurance requirements set forth in Section 12(a), above, the Company may self- insure against such risks in such amounts as are consistent with good utility practice. Upon the Government Entity's request, the Company shall provide the Government Entity with reasonable written evidence that the Company is maintaining such self-insurance. 13. Other. (a) Agreement Subject To Tariff. This Agreement is subject to the General Rules and Provisions set forth in Tariff Schedule 80 of the Company's electrical Tariff G and to Schedule 74 of such Tariff as approved by the Washington Utilities and Transportation Commission and in effect as of the date of this Agreement. (b) Termination. The Government Entity reserves the right to terminate the Conversion Project and this Agreement upon written notice to the Company. In the event that the Government Entity terminates the Conversion Project and this Agreement, the Government Entity shall reimburse the Company for all costs reasonably incurred by the Company in connection with the Work performed prior to the effective date of termination. In such event, the costs reimbursable to the Company (i) shall not be reduced by any Shared Government Costs or other costs incurred by the Government Entity, and (ii) shall be paid within thirty(30) days after the receipt of the Company's invoice therefor. Sections 1, 5, 7, 8, 9, 10, 11 and 13 shall survive any termination of the Conversion Project and/or this Agreement. (c) Facilities Greater Than 15,000 Volts. Nothing in this Agreement shall in any way affect the rights or obligations of the Company under any previous agreements pertaining to the existing or future facilities of greater than 15,000 Volts within the Conversion Area. Construction Agreement, Attachment"B" to Schedule 74, Page 9 Wheaton Way Schedule 74 (d) Compliance With Law. The Parties shall, in performing the Work under this Agreement, comply with all applicable federal, state, and local laws, ordinances, and regulations. (e) No Discrimination. The Company, with regard to the Work performed by the Company under this Agreement, shall comply with all applicable laws relating to discrimination on the basis race, color, national origin, religion, creed, age, sex, or the presence of any physical or sensory handicap in the selection and retention of employees or procurement of materials or supplies. (f) Independent Contractor. The Company and the Government Entity agree that the Company is an independent contractor with respect to the Work and this Agreement. The Company is acting to preserve and protect its facilities and is not acting for the Government Entity in performing the Work. Nothing in this Agreement shall be considered to create the relationship of employer and employee between the Parties. Neither the Company nor any employee of the Company shall be entitled to any benefits accorded employees of the Government Entity by virtue of the Work or this Agreement. The Government Entity shall not be responsible for withholding or otherwise deducting federal income tax or social security or contributing to the State Industrial Insurance Program, or otherwise assuming the duties of an employer with respect to the Company, or any employee of the Company. (g) Nonwaiver of Rights or Remedies. No failure or delay of either Party to insist upon or enforce strict performance by the other Party of any provision of this Agreement or to exercise any other right under this Agreement, and no course of dealing or performance with respect thereto, shall, except to the extent provided in this Agreement, be construed as a waiver or, or choice of, or relinquishment of any right under any provision of this Agreement or any right at law or equity not otherwise provided for herein. The express waiver by either Party of any right or remedy under this Agreement or at law or equity in a particular instance or circumstance shall not constitute a waiver thereof in any other instance or circumstance. (h) No Third Party Beneficiaries. There are no third-party beneficiaries of this Agreement. Nothing contained in this Agreement is intended to confer any right or interest on anyone other than the Parties, their respective successors, assigns and legal representatives. (i) Governmental Authority. This Agreement is subject to the rules, regulations, orders and other requirements, now or hereafter in effect, of all governmental regulatory authorities and courts having jurisdiction over this Agreement, the Parties or either of them. All laws, ordinances, rules, regulations, orders and other requirements, now or hereafter in effect, of governmental regulatory authorities and courts that are required to be incorporated into agreements of this character are by this reference incorporated in this Agreement. (j) No Partnership. This Agreement shall not be interpreted or construed to create an association, joint venture or partnership between the Parties or to impose any partnership obligations or liability upon either Party. Further, neither Party shall have any right, power or authority to enter into any agreement or undertaking for or on behalf of, to act as or be an agent or representative of, or to otherwise bind the other Party. (k) Severability. In the event that any provision of this Agreement or the application of any such provision shall be held invalid as to either Party or any circumstance by any court having jurisdiction, such provision shall remain in force and effect to the maximum extent provided by law, and all other provisions of this Agreement and their application shall not be affected thereby but shall remain in force and effect unless a court or arbitrator holds they are not severable from the invalid provisions. Construction Agreement, Attachment"B" to Schedule 74, Page 10 Wheaton Way Schedule 74 (I) Notice. Any notice under this Agreement shall be in writing and shall be faxed (with a copy followed by mail or hand delivery), delivered in person, or mailed, properly addressed and stamped with the required postage, to the intended recipient as follows: If to the Government Entity: City of Bremerton 345 6th Street Suite100 Bremerton, WA 98337 Attn: Tom Knuckey Fax: 360-473-5398 If to the Company: Puget Sound Energy, Inc. 6522 Kitsap Way Bremerton, WA 98312 Attn: Jeremy Paz Fax: 360-475-7063 Any Party may change its address specified in this Section 13(1) by giving the other Party notice of such change in accordance with this Section 13(1). (m)Applicable Law. This Agreement shall in all respects be interpreted, construed and enforced in accordance with the laws of the State of Washington (without reference to rules governing conflict of laws), except to the extent such laws may be preempted by the laws of the United States of America. (n) Entire Agreement. This Agreement constitutes the entire agreement of the Parties with respect to the subject matter hereof and all other agreements and understandings of the Parties, whether written or oral, with respect to the subject matter of this Agreement are hereby superseded in their entireties; provided, however, that except as expressly set forth in this Agreement, nothing herein is intended to or shall alter, amend or supersede the Design Agreement and the same shall remain in full force and effect in accordance with its terms. (o) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the respective successors, assigns, purchasers, and transferees of the Parties, including but not limited to, any entity to which the rights or obligations of a Party are assigned, delegated, or transferred in any corporate reorganization, change of organization, or purchase or transfer of assets by or to another corporation, partnership, association, or other business organization or division thereof. Government Entity: Company: CITY OF BREMERTON PUGET SOUND ENERGY, INC. BY W BY ITS IA r ITS filo.) Date Signed I/ 3 t Z2 / 2.01 °% Date Signed 3/2 /Z.0/9" Approved.- to form: - Construction Agreement, Attachment"B" to Schedule 74, Page 11 Wheaton Way Schedule 74