PORT TOWNSEND — The city and the Port Townsend Paper Corp. have reached a six-month extension on an operational lease of the city’s Olympic Gravity Water System, avoiding the expiration of a contract that has been in place for more than 60 years.
The extension will provide additional time for continued negotiations on a new long-term deal.
The expiring agreement, which has been in effect since 1956, now runs through Sept. 15.
City Manager John Mauro announced the extension during Monday’s City Council meeting and said a second six-month extension could be added if the parties mutually agree.
“A fair and future-focused approach to maintaining water quality and quantity is of paramount importance for the city, our residents and businesses like PTPC,” Mauro said.
Kevin C. Scott, the general manager for the mill, said negotiations are being handled in a cooperative, well-reasoned process.
“The relationship between the city and the mill has been effective for over 90 years, and I’m confident we’ll work to a solution that meets all the critical needs of the parties,” Scott said.
Retired City Manager David Timmons wrote a letter to Scott last March that said the city would not renew the lease.
“What was allowed 50 years ago is not allowed today,” Timmons said at the time. “We have to update the program and then transition from the old agreement to the new agreement.”
The lease allows the mill to use the water system that starts at the Big and Little Quilcene rivers through City Lake and Lords Lake to the city’s wastewater treatment plant.
The mill can use all the water except for what the city needs for drinking requirements, according to the lease.
Scott previously stated the lease has provided reliable supply and operations since the mill’s inception.
Last year, Timmons cited a need to comply with state law, saying there would be a need for a rate and fee structure for both the city and the mill to share the cost and maintenance of the system.
He said if the city were to give the use of the water to the mill as a gift, it would need to demonstrate equal value received.
“You really can’t make that assessment in the current lease,” Timmons said last March. “There are uniformity standards; you can’t sell water for less than it costs.”
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Jefferson County Managing Editor Brian McLean can be reached at 360-385-2335, ext. 6, or at bmclean@peninsuladailynews.com.
