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2002-174-Minutes for Meeting March 11,2002 Recorded 3/20/2002j 1130 N.W. Harriman St., Bend, Oregon 97701-1947 (541) 388-6570 • Fax (541) 388-4752 www.deschutes.org Tom De Wolf Dennis R. Luke MINUTES OF ADMINISTRATIVE LIAISON Mike Daly DESCHUTES COUNTY BOARD OF COMMISSIONERS MONDAY, MARCH 11, 2002 Present were Commissioners Tom De Wolf, Dennis R. Luke and Michael M. Daly. Also present were Susan Mayea Ross and Jenny Scanlon, Commissioners' Office; Rick Isham, County Legal Counsel; Tammy Credicott, Property Management; and Steve Scott, County Broker of Record. Also in attendance were Representatives of the Humane Society of Central Oregon; Representatives of Programa de Ayuda; Media Representatives Mike Cronin of the Bulletin and Barney Lerten of bendnet.com; and approximately thirty citizens. Chair Tom De Wolf opened the meeting at 1: 30 p.m. 1. Before the Board was a Presentation Given by Representatives of the Humane Society of Central Oregon. Jim Schell, President of the Humane Society, gave a presentation regarding the Humane Society's plans for a new shelter. He explained that the issues that happened during the summer of 2000 are behind them, and there is now a strong organization and a great staff. He gave an overview of the financial status of the organization, and said that they have had a positive cash flow this year, and have a strong balance sheet. Volunteers, donations and thrift store revenue have helped the Humane Society get to where it is today. He then explained the services that the organization has provided to thousands of animals, families, patients of hospitals and residents of nursing homes; as well as providing financial assistance to individuals who need help with the cost of pet spay and neuter and pet food. Minutes of Administrative Liaison Page 1 of 7 Pages Monday, March 11, 2002 Quality Services Performed with Pride He said that the problem the Society has now is that it badly needs a new shelter. The present shelter is too small, does not have a quarantine/isolation area, suffers from an inadequate air system, is hard to clean and maintain, and is out of date. It was built 23 years ago by volunteer labor. There is no training or education space, and it has inadequate office space. The current number of kennels is 15; the new building would provide 48. There are 17 spaces in the cattery; this would go to 40. The new building would have an isolation area, a "get acquainted" area for pets to meet potential new families, and an adoption room. There would be on-site veterinary services so that surgery, such as spay and neuter, could be provided there. There would also be a lunchroom for the volunteers and staff, a laundry room, a food preparation area, storage space, office space and restrooms. The structure would be built so as to allow expansion in the future as needed. Mr. Schell then gave an overview of the estimated costs of the new facility and data regarding fund raising goals. The building would be approximately 12,000 square feet, roughly estimated at $150 per square foot, totaling approximately $1,800,000. Other costs would be approximately $200,000, for landscaping, SDC's, the parking lot, and so on. The whole project would roughly total $2 million. Proposed sources of the funding are $300,000 from the City of Bend, $300,000 from the County, $400,000 generated internally, and a capital campaign of $1 million. If the County could not provide $300,000 at one time, perhaps it would be possible for the County to provide $60,000 per year for five years. Because of the potential tax flow, a local bank has approved financing between these payments. He said that the Humane Society is an effective partner, providing services at a lower cost per unit that the County could provide. He explained that he feels this request is appropriate, since 72% of the services provided are for the City of Bend and the County. They are only asking for a 30% commitment. Further, he said that this is a twenty-year asset, and has expansion potential. It would be located at the site of the current facility. Commissioner Luke asked if the organization is eligible for tax bonds. Rick Isham explained that it is not. Minutes of Administrative Liaison Page 2 of 7 Pages Monday, March 11, 2002 Commissioner Daly asked how this building would compare with the new Redmond Humane Society facility. Mr. Schell said that new building is approximately 8,000 square feet. Jan Griffin added that the Bend facility handles many more animals, and is currently at about 5,000 square feet. DEWOLF: The Board appreciates the leadership Mr. Schell is providing. The last few years have been rough for the agency and for the relationship between the County and the agency. These positive changes have been just recent history; I would like to see several issues addressed prior to the County dealing with a funding request. One is, I would like to see a plan and a timeline regarding merger talks with the Redmond agency, rather than saying, "we're not going to deal with this; we'll deal with it at a later date". The reason for that is when I was on the Board and Redmond was in trouble, Bend would say, "No, we don't want to deal with those folks". Now when Bend is in trouble and Redmond is doing fine, the talks broke apart. The County paid to bring in the American Humane Association to do a study of this. Their recommendation was for a merger, but they recognized that the difficulties that the Bend group was going through made it difficult at that time. The second thing is that I want to really believe that this is a true partnership between Deschutes County and the Humane Society. In the past, these relationships have been difficult. There have been some outrageous fee requests. Prior to Dennis and I getting here, the County had upped the fees from $6 to $10, with $4 going to both Redmond and Bend societies. That 40% of those license fees was specifically targeted to increase licensing. That hasn't really happened with either organization the way it was intended. Also, during merger discussions, you were without a director, which was a perfect time to look at the potential for a merger. However, we didn't even get a phone call. We read in the newspaper that the talks were off. What I would hope to see is a better working relationship, and that we're communicating better, and things aren't happening unilaterally without our involvement. It could be perceived that we'd be good partners when the Humane Society needs money, but not at other times. We really want to be a good partner all the time. Minutes of Administrative Liaison Page 3 of 7 Pages Monday, March 11, 2002 DEWOLF: Finally, for Redmond and Bend, Deschutes County has provided land. Redmond is building their facility without any funds from Deschutes County for the structure itself. What I would need to understand is why we should be favoring the Bend facility over the Redmond facility. Those are my concerns and questions. Jim Schell said he'd like to discuss all of these further when more time is available. A brief discussion occurred regarding setting up a separate meeting for further consideration of these issues. 2. Before the Board was a Presentation on the Programa de Ayuda. Mario Huerta gave a brief overview of this program, which assists members of the Hispanic community in a variety of ways. He explained that it is a community program directed at making Hispanic people more self-sufficient, and providing a better understanding of the Hispanic culture. He said that Father Mike of St. Francis started with a hotline for local Hispanic persons about eight years ago; there were about 2,500 Hispanic families in the area then. The last census showed 4,356 Hispanics in Deschutes County. Programa de Ayuda started about three years ago, and is located in the Community Justice building. Some members initially were afraid to come to the building, possibly due to immigration issues. Working with Deschutes County has been a good experience, and members of the Hispanic community are now more accepting of going there. Mr. Huerta said that his agency works with Community Justice in providing a bridge between them and Hispanic persons. He said it is very important to know the Hispanic culture, which is not just a language. In three years his agency has served 1,700 cases, which are sometimes referrals for interpretation services at medical clinics, court and so on. He explained some Anglos call when they want to learn more about the Hispanic culture; some businesses call looking for workers. He said that as a rule Hispanics are very happy to be here, and feel the community has received them with open arms. He thanked the County for funding that has been provided. He said, however, that he is the only full-time person, and it is hard to find a bilingual volunteer. He stated that Manuel Lopez is their treasurer, and is writing grants; it is a struggle between giving service and going after funding. Minutes of Administrative Liaison Page 4 of 7 Pages Monday, March 11, 2002 He asked the County for additional help at this time. Programa de Ayuda would like to see long-term commitments and more time to do their job in the field. He stated that his agency knows the community and its needs, and would be able to save the County money over the cost of contracting with someone from the outside. His agency would like to provide more interpretation and translation services, training, and round -table cultural discussions. He asked for an additional $13,000 annual commitment. Commissioner Luke explained he did a research paper on this a year ago. He said that Programa de Ayuda does a great service and is highly respected. The County could not afford these services any other way. Manuel Lopez said that they were fortunate to find Mario. He explained that finding translators in this area has been a problem. The $13,000 cost is less than paying for these services would any other way. Father Mike stated that they want to work with schools and law enforcement to proactively prevent gang violence in t his area. He hopes to pursue grants for these services. Mike Funkey, a Bend resident, said he worked with the Human Dignity Coalition last summer, and helped with the Fiesta Latina in Bend. He explained that he feels Programa de Ayuda does a lot more than he's seen other organizations do even in larger cities. The phone number for Programa de Ayuda, 382-4366, was given to the audience at this time. 3. Before the Board was a Discussion of a Proposal from Duke Energy Company regarding an Option to Purchase of County -owned Property. Commissioner DeWolf explained that this is not a public hearing, and is not a time for gathering public testimony. The Board is gathering information and this is not a decision that will be made today. It is a presentation of a proposal from Duke Energy of an option to purchase County -owned property, to be explained by the County's Real Estate Broker of Record, Steve Scott. Steve Scott gave an overview of the issue. He said he was contacted in mid- January by representatives of Duke Energy. They had already identified this site, which is a 125 -acre parcel located east of Redmond, inside the City of Redmond Urban Growth Boundary but outside the Redmond city limits. Minutes of Administrative Liaison Page 5 of 7 Pages Monday, March 11, 2002 Mr. Scott said Duke Energy has presented a proposed option agreement. (A copy is attached as Exhibit A.) He said over the past few weeks he has also shared with the Board who Duke Energy is, in terms of their financial statements and company reports. The question today is which path the Board of Commissioners would choose to pursue this. This is an unsigned option proposal, as they would prefer to massage the agreement prior to ratification instead of dealing with counter-offers. That is, each party's legal counsel would work on the document in order to reach agreement. He explained that this property needs to be appraised. A portion of it was appraised approximately three years ago; and the value proposed today is based on the sale to the City of Redmond about four or five months ago. He said he is comfortable that the land would appraise for what is proposed in the offer. The next step is for the Board of Commissioners to decide which direction to go, and whether to negotiate this option agreement. Commissioner Luke pointed out that this option is years out, and the value of the land could change over those years. He asked if the value would be fixed today, or renegotiated at the end of the years. Mr. Scott said the purpose of the option, which is $60,000 per year, would be to fix the value at today's value. He said no one is sure this is the right parcel, or if the permit process would go through. Duke Energy would probably spend up to $3 million just to get through the administrative process to determine the feasibility. Commissioner Luke asked about extensions of the option; Mr. Scott said these are proposed at $30,000 per year. He said the land is zoned M-2, which is heavy industrial. Weyerhauser is located on the southern 40 acres on a ground lease with the County. One piece was sold to the City of Redmond. Commissioner DeWolf indicated he had a list of questions. (A copy of all of his concerns about this issue is attached as Exhibit B.) 1) Once the Board of County Commissioners signed the option, is this it -- is it out of the County's hands in the future? Is this is the only bite of the apple for the County; and is the County is not involved in any position of authority at that point? Minutes of Administrative Liaison Page 6 of 7 Pages Monday, March 11, 2002 2) The Board has to determine whether this sale is in the public's best interest. If the Board determines it is not, can the Board choose not to sell to this company? It is not an issue of having to sell because they bring money to the table. Because of that, and wanting to understand the ramifications, there are a bunch of questions. 3) He said his sense is that he'd like to visit one of these things. He said he is certainly not ready to make any decision. He'd like to see one that is in operation, and talk with the local government and citizens about any impacts or other issues related to the power plant. Commissioners Luke and Daly agreed that they, too, would like to visit a town that currently has a similar plant in operation. Commissioner Daly asked how big this plant would be when compared to the proposed Cogentrix facility. Mr. Scott said the Duke Energy plant would be 600 megawatts, and the Cogentrix one would be over 900 megawatts. Susan Ross asked if Duke Energy is looking at other sites; Mr. Scott replied that to the best of his knowledge they aren't looking at any other sites in this general vicinity. Being no further discussion, Chair De Wolf adjourned the meeting at 2:20 p.m. DATED this 111h Day of March 2002 for the Deschutes County Board of Commissioners. ATTEST: Recording Secretary Tom DeWolf, Chair ennis R. Luke, Commissioner l Mi1rhk1 M. Daly, Co issioner Minutes of Administrative Liaison Page 7 of 7 Pages Monday, March 11, 2002 THIS OPTION AGREEMENT is made and entered into as of this _ day of March, 2002, by and between The County of Deschutes, Oregon (referred to as "Seller") and Duke Energy North America, LLC (referred to as"Purchaser"). In consideration of the sum of $60,000.00 in cash paid by Purchaser to Seller (the "Option Fee"), and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller grants to Purchaser, its successors and assigns, on the terms and conditions set forth below, the exclusive right and option (the "Option") to purchase that certain real property consisting of approximately 125 acres located in DeSchutes County, Oregon (the "Property"), and more fully described on Exhibit "A" attached hereto and made a part hereof for all purposes. The exact boundaries and acreage of the Property shall be established by the survey (the "Survey") referenced in Paragraph 6, and a legal description of the Property taken from the Survey shall be used in the General Warranty Deed from Seller to Purchaser. The Property includes all underground water rights, or surface rights, easements and any and all other rights of Seller that are in any way associated with the Property, including all buildings, structures, fences and other permanent improvements to the Property. The Property does not include any personal property of any kind, such as cattle, livestock, removable (unattached) equipment, household goods or furniture, which Seller shall remove before Seller is required to relinquish possession of the Property. The Option is granted on the following terms and conditions: 1. Purchase Prine. The purchase price of the Property (the "Purchase Price") shall be calculated by multiplying the Net Acreage (as hereinafter defined) of the Property as determined by the Survey by $17860.00 per acre. The Purchase Price shall be payable in certified funds or by wire transfer at the Closing. The Option Fee shall be credited against the Purchase Price at the Closing, only in the event Purchaser shall have exercised its Option prior to the Option Expiration Date or the Extended Option Expiration Date, as set forth in paragraph 2 below. Any real estate taxes or assessments applicable to the Property (other than rollback taxes), and any income or rents from the Property, for the year in which the Closing occurs shall be prorated as of the date of the Closing. Purchaser shall indemnify and hold Seller harmless from any rollback real estate taxes assessed against the Property as a result of the purchase by Purchaser of the Property from Seller and the subsequent change of use to the Property from agricultural uses. This indemnity shall survive the Closing. Deschutesoptionagmtrev 1 a 03/04/02 Page 1 2. Term. Purchaser shall have the right to exercise the Option by giving Seller written notice of exercise at any time on or before 11:59 p.m., on'the date that is three (3) years from the Effective Date hereof (the "Option Expiration Date"). In addition, Purchaser shall thereafter have the right to extend the Option Expiration Date for two (2) successive one year periods, each commencing upon the expiration of the prior Option period, by tendering to Seller an additional amount of $30,000.00 on or before the expiration date of the then current Option term (the "Additional Option Fees"). In the event that Purchaser exercises the Option to purchase the Property, any Additional Option Fees paid by Purchaser to Seller shall be credited against the Purchase Price at the Closing. If Purchaser does not exercise the Option to purchase the Property, the Additional Option Fees shall be nonrefundable to Purchaser. 3. Warranty of Title. Seller represents and warrants to Purchaser that Seller has good, marketable and indefeasible fee simple title to the Property, free and clear of all liens and encumbrances other than the lien for real estate taxes not yet due and payable, those liens that will be released at or before Closing, and the Permitted Encumbrances (as hereinafter defined). Seller further represents and warrants that (a) Seller has full right, power and authority to execute and deliver this Agreement and to consummate the purchase and sale transactions provided for herein without obtaining any further consents or approvals from, or the taking of any other actions with respect to, any third parties; and (b) at the Closing, Seller will be able to convey to the Purchaser good, marketable and indefeasible fee simple title to the Property, free and clear of all liens and encumbrances, subject only to taxes for the current year (not yet due and payable) and any other reservations, easements, discrepancies in boundaries, encroachments, restrictions, or exceptions previously approved or deemed accepted by Purchaser in accordance with paragraph 4 below (the "Permitted Encumbrances"). 4. Title Examination. Within ninety (90) days of the Effective Date (as hereinafter defined), Purchaser shall obtain a title commitment from Chicago Title Insurance Company (the "Title Company"), setting forth the status of title to the Property and showing all liens, claims, encumbrances, reservations, restrictions and other matters, if any, relating to the Property and together with a legible copy of all documents referred to in the title commitment. At Closing, Seller shall bear the cost of the title examination or search fees. During the. term of this Option, Purchaser shall examine the title to the Property, and Purchaser shall advise Seller in writing of any title objections prior to the Option Expiration Date. Seller shall use reasonable efforts to remedy those objections to the reasonable satisfaction of Purchaser within thirty (30) days after Purchaser's notice. If the objections are not so cured or remedied, or satisfactory provision made therefor, prior to the Option Expiration Date, then Purchaser, at its election, shall have the right to either: (a) accept title to the Property subject to the objections; or (b) terminate this Agreement, in which event Seller shall refund Purchaser's Option Fee and any Additional Option Fees previously paid, and thereafter neither party shall have any further liability to the other except as otherwise expressly set forth in this Agreement. Notwithstanding the foregoing, Seller, at its sole cost, shall be obligated to cure or remove at or before Closing (or apply a portion of the Purchase Price to satisfy such obligations at closing) all mortgages, deeds of trust, judgment liens, mechanics and materialmen's liens, and other liens against the Property (unless caused by the actions or inspections of Purchaser), whether or not Purchaser objects thereto. In addition, Seller shall not allow any encumbrances or easements to be placed on or granted with respect to the Property, other than those existing as of the Effective Date, without the prior written consent of Deschutesoptionagmtrevla Page 2 03/04/02 Purchaser. If any such encumbrances or easements arise prior to the Closing and Purchaser objects, Seller shall, at its sole expense, cure the objections. 5. Risk of Toss, Eminent Domain. Risk of damage or destruction to the Property by fire or otherwise shall remain with Seller until title and possession of the Property have been conveyed and transferred to Purchaser. If, prior to the Closing, all or any part of the Property is taken by eminent domain or if condemnation proceedings are commenced, Purchaser may terminate this Agreement by delivery of written notice to Seller, in which event Seller shall refund Purchaser's Option Fee and any Additional Option Fees if paid, and thereafter neither party shall have any further liability to the other except as otherwise expressly set forth in this Agreement. If Purchaser does not elect to terminate this Agreement, and subsequently exercises the Option, then there should be credited to the Purchase Price all proceeds received by Seller prior to Closing and Seller shall assign, transfer and set over to Purchaser at the Closing all of Seller's right, title and interest in and to any awards that may be made for such taking. 6. Inspections and Survey. During the term of this Option, Purchaser and its agents shall have, and Seller hereby grants to Purchaser, the right of ingress and egress on, over, through, across, to and from the Property and Seller's other adjoining property, if any, for the purpose of making any inspections, explorations, tests (including environmental inspections, samplings, drilling, and tests) and surveys of the Property as Purchaser may desire, or engaging in any other property evaluation and assessment activities which Purchaser deems appropriate. In particular, Purchaser may elect to cause a licensed surveyor or engineer to prepare an accurate Survey of the Property, establishing the boundaries of the Property and showing the location of all easements or encroachments, if any, affecting the Property. The Survey shall certify the acreage of the Property, to the nearest 1/1000th of an acre, excluding any portion of the Property within a public right-of-way or exclusive easement (the "Net Acreage"). Purchaser reserves the right to make written objections to title based upon the Survey as provided in paragraph 4. Once the Survey has been prepared, a legal description of the Property prepared from the Survey shall be used in the General Warranty Deed from Seller to Purchaser. By entering the Property for this or any other purpose, Purchaser: (a) accepts the risk of any damage it may cause to the Property or Seller's personal property on the Property, (b) agrees, in the event Purchaser does not exercise its Option and purchase the Property, to repair any damage caused by Purchaser to the Property, including gates and fences, and to pay for damage to Seller's crops, timber and equipment, if any, caused by Purchaser's activities on the Property during the term of this Option, and (c) agrees to indemnify Seller against and hold Seller harmless from all liability caused by Purchaser's negligence or other misconduct in connection with Purchaser's activities on the Property during the term of this Option. 7. Exercise. If Purchaser elects to exercise this Option, it shall do so by sending a written notice to that effect, addressed to Seller at the address set forth in the notice provisions of Deschutesoptionagm trevl a Page 3 03/04/02 this Agreement, and deposited in the United States mail or overnight delivery service prior to the Option Expiration Date, as may be extended by Purchaser pursuant to paragraph 2 hereof, or by hand delivering such written notice to Seller on or before the Option Expiration Date. Purchaser's notice shall specify the date and time that the closing of the purchase and sale of the Property (the "Closing") will take place, which shall be no later than sixty (60) days after the Option Expiration Date, and the location at which the Closing will take place. If the notice of exercise is mailed via the U.S. Postal Service or a national overnight delivery service, the notice shall be deemed to have been delivered when mailed, if sent with prepaid postage by certified or registered mail, or when deposited with such national overnight delivery service. 8. Closing. At the Closing: (a) Seller shall execute and deliver release(s) of liens, if any, from all lienholders holding liens affecting the Property. (b) Seller shall execute and deliver to the Purchaser a General Warranty Deed covering the Property, conveying good and indefeasible fee simple title to the Property, free and clear of all liens and encumbrances other than Permitted Encumbrances and such other encumbrances as may be accepted by Purchaser, in form and substance satisfactory to Purchaser. (c) Seller shall execute and deliver to Purchaser or its title insurer: (1) a vendor's affidavit in form satisfactory to purchaser and the title insurance company,(2) an affidavit in the form required by Section 1445 of the Internal Revenue Code of 1986 to establish that the Seller is not a foreign person, and (3) such other affidavits or certifications required by the Title Company to issue the Title Policy. (d) Seller, at Seller's sole cost and expense shall cause to be delivered to Purchaser an ALTA Form Owner Policy of Title Insurance (the "Title Policy") issued by Title Company in the amount of the Purchase Price, naming Purchaser as the insured, subject only to the Permitted Encumbrances and current taxes not yet due and payable, together with such title endorsements necessary to cure Purchaser's title objections and those required by Purchaser, to the extent available. (e) Seller and Purchaser shall each execute such other instruments as are customarily executed in Deschutes County, Oregon to effectuate the conveyance and acceptance of property similar to the Property, including any transfers of water rights associated with the Property, with the effect that, after the Closing, Purchaser will have succeeded to all of the rights, titles and interests of Seller related to the Property and Seller will no longer have any right, title or interest in and to the Property. (f) Purchaser shall tender to Seller the balance payable of the Purchase Price, subject to any credits or adjustments to the Purchase Price set forth in this Agreement. Deschutesoptionagmtrev I a Page 4 03/04/02 9. Possession. Seller shall deliver exclusive possession of the Property to Purchaser at the Closing, in the same condition as on the Effective Date, ordinary wear and tear excepted, free and clear of all tenants, occupants, or parties in possession. 1-0: Bnakem. Each of Sellm and Purcfmser rqxesents mid vywiants to the oflier that it ba not hired, engaged ox constflted vvidi wiy broket or agent to vvhich the other pw ty tms or vviff imve any obligation; mid agrees to indminffy the other fiom mid against wTy cost 01. Xg fioni sumf pw ty's faffil to pay air oi fee payabtc to its imp-CA-AIIN-C broker or agents. Each of Sell party's failure to pay miy commmsiorror fec payabic to its respective brokers or agents. 9Ffic provi i . 10. Agency Disclosure Seller and Buyer acknowledge that Steve Scott of Steve Scott & Co., Realtors represents the Seller in this transaction. Seller shall be solely liable for the payment of any and all real estate conunissions and other similar fees owing to its agent pursuant to any listing agreement between Seller and its agent. Purchaser shall have no liability for any costs or expenses arising from any failure by Seller to make any such payments. 11. r lasingExp nse . Seller shall be responsible for the cost of preparing and recording the General Warranty Deed and any other instruments required to be executed by Seller, the cost of the title search, the cost of the Title Policy in the amount of the Purchase Price, and the payment of any transfer taxes or deed stamps. Purchaser shall be responsible for the cost of investigating the Property, including the cost of the Survey. Each party shall be responsible for its own attorneys' fees. 12. Govemmental Approvals. In the event that the approval of any governmental entity, including but not limited to subdivision approval, rezoning, special permits, environmental permits or variances, is required for Purchaser's intended use of the Property, Seller agrees to promptly execute any forms and applications related thereto that Purchaser reasonably requests, but the burden of obtaining such approval shall be borne by Purchaser at its expense. Seller shall cooperate with Purchaser in pursuing the foregoing. 13. Representations and Warranties. Seller represents and warrants that, as of the Effective Date (a) the Property is in compliance with all federal, state and other environmental and other laws, rules and regulations, (b) there are no pending, and to Seller's knowledge threatened, claims, lawsuits, administrative proceedings, enforcement actions or investigations concerning the Property, nor has Seller received notice of any such activities, (c) Seller has not received any notice of any judicial or administrative consent orders or other provisions calling for compliance with any legal requirement or for correction of any violation, (d) the Property has not been the site of any activity that would violate any past or present environmental law or regulation of any governmental body or agency having jurisdiction over the Property, and that there are not now and have never been any solid or hazardous wastes or substances, or oil or other dangerous or toxic substances, all as defined in the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§9601 et seq. ("CERCLM), the Resource Conservation and Recovery Act, 42 U.S.C. §§6901 et seq. ("RCRA"), the Hazardous Material Transportation Act, 49 U.S.C. §§1801 et seq., the Clean Water Act, 33 U.S.C. §§ 1251 et seq., or the Toxic Substance Control Act, 15 U.S.C. §§2600 et seq., or any other applicable federal, state or local law, rule or regulation, stored, placed, treated, released or disposed of anywhere DeschutesoptionagmtrevIa Page 5 03/04/02 on the Property, (e) the Property is not identified on any current or proposed (i) National Priorities List under 40 CFR Part 300, (u) CERCLA Information Systems List, or (iii) state environmental or other regulatory agency list based on a statute similar to CERCLA or RCRA, and (f) the Property has not been used for any purpose other than agricultural farming. 14. Delhult. If Purchaser defaults under this Agreement and such default continues for 5 days after receipt of written notice, except for a breach of its obligations under paragraph 6 or paragraph 10 (in which event Seller may pursue a claim for indemnity), the sole remedy of Seller shall be to retain the Option Fee (and the Additional Option Fees, if applicable) as liquidated damages for that breach Except as expressly provided in paragraphs 4 and 5, if Seller defaults under this Agreement and such default continues for 5 days after receipt of written notice, Purchaser may, at its election: (a) prosecute an action for specific performance of this Agreement, (b) terminate this Agreement and receive an immediate refund of all Option Fees previously paid by it, and be reimbursed by Seller for its expenses incurred in investigating the Property, or (c) pursue any other remedies available to it at law or in equity for Seller's breach 15. Confidentiality. Seller shall not disclose to anyone, at any time or in any manner, other than to Seller's counsel or Seller's agents or independent contractors associated with the Property, who must agree to maintain the information in the strictest confidence, or in a judicially or administratively ordered proceeding where the disclosure is required by law, the Option Fee or Purchase Price payable by Purchaser under this Agreement, unless Purchaser consents in writing to the disclosure. 16. Memorandum of C)ntion Seller shall execute a Memorandum of Option in substantially the form of F.xhihit "R" attached hereto, in recordable form, which Purchaser may record at Purchaser's expense at the applicable Registry of Deeds or similar office. In the event the Option is not timely exercised, Purchaser shall, upon Seller's written request, promptly execute a release of any Memorandum of Option in recordable form. 17. Other Contracts. During the term of this Option, Seller shall not enter into any other agreement for the sale or lease of the Property, and Seller shall not enter into any contract with respect to the Property which would survive the Closing or otherwise affect the use, operation or enjoyment of the Property after the Closing . 18. Assignment. Purchaser shall have the right to assign its rights under this Agreement to any affiliate or subsidiary, without the consent of Seller, by delivering written notice of the assignment to Seller at any time prior to the Closing. Additionally, Purchaser shall have the right to assign its rights under this Agreement without the consent of Seller in the event of merger, acquisition or consolidation. 19. Time of the Essen .e. Time shall be of the essence in the performance of all obligations under this Agreement. If the time period by which any right, option or election provided under this Agreement must be exercised, or by which any act required under this Agreement must be performed, or by which Closing must be held, expires on a Saturday, Sunday or a holiday, then such time period shall be automatically extended to the next business day. Deschutesoptionagmtrevla Page 6 03/04/02 20. Controlling L.9 . This Agreement has been entered into under, and shall be interpreted and construed according to, the laws of the State of Oregon. 21. F,ntire A_=ernent, Modification This Agreement and all exhibits attached hereto constitutes the entire and complete agreement between the parties hereto and supersedes any prior oral or written agreements between the parties with respect to the Property. Seller and Purchaser expressly agree that there are no oral or written understandings or agreements between them that in any way change the terms, covenants and conditions set forth in this Agreement, and that no modification of this Agreement, and no waiver of any of its terms or conditions, shall be effective unless made in writing and duly executed by both parties. 22. Notices. All notices provided or permitted to be given under this agreement must be in writing and may be served by depositing same in the United States mail or overnight delivery service, or be hand delivering the same to such person. For purposes of notice, the addresses of the parties shall be as follows: If to Purchaser: Duke Energy North America, LLC 5400 Westheimer Court Houston, Texas 77056 Attn: Jim P. Rexroad With a copy to: Duke Energy North America, LLC 5400 Westheimer Court Houston, Texas 77056 Attn: General Counsel If to Seller: The County of Deschutes, Oregon With a copy to: 23. Fffective Tate. The "Effective Date" of the Agreement shall be the date of execution of this Agreement by the last to sign of the Purchaser and the Seller. 24. Additional Agreements of S ll r. Seller hereby agrees that during the term of this Agreement, as may be extended by Purchaser pursuant to the terms of paragraph 2 hereof, and following any exercise of the Option by Purchaser, Seller shall cooperate with, and assist, Purchaser in the following respects: (a) Seller shall grant to Purchaser or its assignee, at no additional charge or cost to Purchaser and on terms reasonably acceptable to Purchaser, such additional easements Deschutesoptionagmtrev I a Page 7 03/04/02 and rights-of-way as Purchaser deems necessary or desirable, with the rights of ingress and egress, on, over, under, across and through any real property adjoining or connecting to the Property, or such other real property, as may be owned by Seller, for ingress and egress to the Property and for the installation, construction, operation, maintenance, repair, removal and replacement of above ground and underground utilities of any type whatsoever including, but not limited to, water pipelines, gas pipelines, and electric and communication transmission lines and all associated appurtenances, control cables and other equipment, structures and facilities associated. therewith or related thereto; (b) Seller shall provide to Purchaser, in connection with Purchaser's use of the Property, such utility and other county services required by Purchaser, including, but not limited to water and sewer services, and associated facilities, on terms and conditions negotiated and agreed upon by Purchaser and Seller, each acting reasonably and in good faith; (c) Seller shall cooperate with Purchaser, or any assignee of Purchaser, in obtaining an Enterprise Zone exception with respect to the Property for the maximum term permitted by applicable law, and shall, upon the request of Purchaser following the exercise of the Option, agree to not assess or levy any type of utility tax, assessment or similar charge against the Property, and/or any improvements constructed by Purchaser on the Property, attributable to the business of Purchaser or Purchaser's use of the Property as the site of a gas-fired electric generating facility; (d) As reasonably requested by Purchaser or its assignee, Seller shall cooperate with and assist Purchaser in connection with any permit applications, filings, tax abatements, business incentives or other governmental or regulatory submittals or actions that are to be made or taken, as the case may be, in connection with the proposed use of the Property by Purchaser as the site of a gas-fired electric generating facility; and (e) Seller shall take all other reasonable actions and execute any additional documents, instruments, amendments or other contracts that may be necessary or helpful to accomplish the purposes of this Agreement. (f) Purchaser acknowledges that approximately 40 acres of the Property, which fronts on Antler Avenue, is currently subject to a ground lease between Seller and Weyerhaeuser Timber Company, for a term that is year-to-year. Seller agrees that it will, at Purchaser's request, terminate said lease upon Purchaser's written notice that the Purchaser will exercise the option to purchase the Property. However, Purchaser acknowledges that depending upon the timing of Purchaser's notice to exercise its option to purchase the Property, the timing of the effectiveness of may affect the Purchaser's possession of that portion of the Property covered by said ground lease for some amount of time following the Closing. Desebutesoptionagmtrevla Page 8 03/04/02 IN WITNESS WHEREOF, Seller and Purchaser have executed this Agreement under seal as of the Effective Date. SELLER: THE COUNTY OF DESCHUTES, OREGON By: _ Name: Title: Date: PURCHASER: DUKE ENERGY NORTH AMERICA, LLC By: _ Name: Title: Date: Deschutesoptionagmtrev I a Page 9 03/04/02 EXHIBIT "A" Deschutesoptionagmtrev I a Page 10 03/04/02 EXHIBIT "B" This MEMORANDUM OF OPTION is executed this day of by and between having an address of (referred to collectively (if more than one) and individually as "Seller"), and having an address of (referred to as "Purchaser") Seller and Purchaser have executed an Option Agreement dated 1999 (the "Agreement"), pursuant to which Seller has granted to Purchaser the exclusive right and option (the "Option") to buy certain real property situated mi County, and more particularly described in F.xhihit "A" attached hereto (the "Property"), at the price and under terms and conditions described in the Agreement. The Option may be exercised at any time. on or before 11:59 p.m., , and may be extended by Purchaser through by tendering notice of such intent and payment of an additional amount specified in the Agreement prior to the expiration of the initial term. Unless exercised prior to the expiration of the initial term, or, if extended, prior to the expiration of the extended term, Purchaser shall have no further interest in the Property pursuant to the Agreement. The terms and conditions of the Agreement are incorporated herein by reference. It is understood that the purpose of this Memorandum is to give notice of the Agreement and the Option, and that all rights, titles and obligations of the parties are to be governed by the terms of the Agreement. SELLER: Signature of Seller Signature of Seller PURCHASER: By: Its: Deschutesoptionagmtrevla Page 11 03/04/02 STATE OF ) SS: COUNTY OF ) Before me, a Notary Public in and for said County and State, personally appeared who acknowledged the execution of the foregoing Memorandum of Option, and who, having been duly sworn, stated that any representations contained therein are true. Witness my hand and Notarial Seal this day of -19 Resident of County, Signature: My Commission Expires: Printed: STATE OF ) SS: COUNTY OF ) Before me, a Notary Public in and for said County and State, personally appeared the of who acknowledged the execution of the foregoing and on behalf of such sworn, stated that any representations contained therein are true. Witness my hand and Notarial Seal this day of_ Resident of County, Signature: My Commission Expires: Printed: , before and who, having been duly 19 Deschutesoptionagmtrev I a Page 12 03/04/02 This instrument prepared by: Deschutesoptionagmtrev I a Page 13 03/04/02 EXHIBIT "A" Deschutesoptionagmtrevla Page 14 03/04/02 11111111111111 11/11 MINIMUM -lI■..�■■�� � _:I- .11 ■. ' Mm Arc View Quick Map ut,e �¢.� 4rwy �•�rw�� 921 0 921 1842 Feet 1:22109 Map printed 11/1612001 N Questioms wncerning Duke Energy March 10, 2002 Tom DeWoK Deschutes -County Cor *ssioner 1130 NW Ibitimsh Send, -0R ,9'741 Before molding a,decision about whets to int an option to purchase Deschutes County Ia nd to Duke Energy, I would like answers to the following questions: 1) How Many gallons of water will be needed per day to operate :the plant? a. -How tnuch-of this willbeeiituent fromRedmond's sewage treatment ply? b. How much effluent 4oes Redmond,currently Dave tvailable? 2) What would be -dome to mitigate water Usage, as r "ired by Oregon law? 3) What would be -the impact -on surface water -due -tothe rise ofground water? 4) What would be the impact on the aquifer if both Cogentrix �4.5 million gallons per -day) and Duke Eft-,rgy operated power plants in centrad Oregon? 5) What are the environmental impacts firs. the econmic benefits? a. 'Vater -quality? Al quality? Noise pollution? °Impact on elands? Scenic impacts? Land use and land value? -b. What is the proposed height-Of—exhaust stacks{Vogentrix=175'j? What wilt be the height -of the plunge {Cegentrix=279')? s) Would the property be located in an Enterprise Zone? a. World Duke energy be seeking any tax benefits/reductions? 7) Who -benefits frons -the production of new electricity? a. We rely mostly ,on hydroelectric power and don't seem to need the ~electricity that would be -produced. b. If the electricity is needed elsewhere, why not locate closer to the need �,alifor°nia)? -8) Wham are the potential property tax benefits to all local jurisdictions? a. What will be the benefits -to local taxpayers? Will property taxes be rt-duced? 9) What percentage -of constrt ion ernployees gill -tic -load? a. What percentage o£permmnent operational employees will be local? 10) What additional benefits will be realized in central Oregon if Duke Energy -builds a powerplant here?