BYLAWS

OF

THE DOE BAY WATER USERS ASSOCIATION

Originally adopted on: 12/28/89

AMENDED: 8/31/97

3/28/99

6/23/01

This Table of Contents must be revised manually.

TABLE OF CONTENTS

Note: Page numbers which follow each table of contents entry are from original document and do not apply to this web page version. If you wish an original, printed copy of the bylaws, please contact the DBWUA office.

Article I. Purpose of the Association 1

Section 1. General Purpose and Intent 1

Section 2. Water Use Standards 1

Section 3. Water Limited to Domestic Use 1

Section 4. Dwelling Defined 2

Section 5. Water Restrictions 2

Section 6. Water Service Limited to Members 2

Section 7. Service Area 2

Section 8. Membership Site Fixed 3

Section 9. Repurchase of Memberships by the Association 3

Section 10. Additional Fire Hydrants 3

Section 11. Commercial, Industrial, and Public Operations 4

Article II. Membership in the Association 4

Section 1. Eligibility for Membership 4

Section 2. Membership Classes 4

Section 3. Acceptance of New Members 5

Section 4. Unavailability of Memberships 5

Section 5. Member Addresses 7

Section 6. Membership Certificates 7

Section 7. Transfer of Membership 7

Section 8. Termination of Membership 7

Article III. Membership Meetings 8

Section 1. Annual Membership Meeting 8

Section 2. Special Membership Meetings 8

Section 3. Notice of Meetings 8

Section 4. Voting 8

Section 5. Quorum 9

Section 6. Proxies 9

Article IV. Directors 9

Section 1. Duties of the Directors 9

Section 2. Selection of Directors 9

Section 3. Nominations for Director Positions 9

Section 4. Vacancies 10

Section 5. Regularly Scheduled Board Meetings 10

Section 6. Special Board Meetings 10

Section 7. Board Meeting Notice 10

Section 8. Quorum 10

Section 9. Election of Officers 10

Section 10. Director Compensation 11

Section 11. Removal of a Director 11

Section 12. Indemnification of Officers and Directors 11

Section 13. Action by Directors Without a Meeting 13

Article V. Officers, Employees and Committees 13

Section 1. Officers of the Association 13

Section 2. Duties of the President 13

Section 3. Duties of the Vice President 13

Section 4. Duties of the Secretary 13

Section 5. Duties of the Treasurer 14

Section 6. Duties of the General Manager 15

Section 7. Dual Incumbency 15

Section 8. Term of Office 15

Section 9. Finance Committee 15

Section 10. Membership Committee 15

Section 11. Management Committee 16

Section 12. Long Range Planning Committee 16

Article VI. Fees, Charges, and Finances 16

Section 1. Membership Fees 16

Section 2. Special Use Fees 16

Section 3. Annual Fees 16

Section 4. Authority to Assign and Modify Fees 17

Section 5. Fee Schedule 17

Section 6. Meters 17

Section 7. Sale, Barter, or Gift of Water 17

Section 8. Fiscal Year 17

Section 9. Surplus Funds 17

Section 10. Membership Transfer Fee 18

Article VII. Property and Equipment 18

Section 1. Main and Extension Lines 18

Section 2. Exact Routes and Facility Locations Recorded 18

Section 3. Easements 18

Section 4. Costs of Member Installation 19

Section 5. Service Connection Ownership 19

Section 6. Individual Service Design Costs 19

Section 7. Inspection of Association Service Routes 19

Article VIII. Associate Memberships 20

Section 1. Need for Associate Membership Groups 20

Section 2. Associate Member Construction Cost Refunds 20

Section 3. Associate Member Groups 21

Section 4. CHPOA/DBWUA Membership Agreements 21

Article IX. Miscellaneous 22

Section 1. Inspection of Association Documents 22

Section 2. Modification of the Bylaws 22

Section 3. Distributions and Dissolution 23

Section 4. Association's Remedies 23

Addendum No. 1. Associate Member Groups 24

Section 1. Buoy Bay Road Associate Member Group 24

Section 2. Culver Farmhouse Associate Group 24

Section 3. Obstruction Pass Associate Group 24

Section 4. Point Lawrence Associate Group 24

Section 5. Rainwater Associate Group 24

Section 6. Sunterra-Roehl's Beach Group 25

Section 7. Sunterra-Roehl's Hill Group 25

Section 8. Sunterra-Pioneer Hill Group 25

Section 9. Cow Hill Property Owners Association 25

Addendum No. 2. Fee Schedule 26

BYLAWS

OF

THE DOE BAY WATER USERS ASSOCIATION

ARTICLE I.

PURPOSE OF THE ASSOCIATION

SECTION 1. GENERAL PURPOSE AND INTENT.

The purpose of the Doe Bay Water Users Association ("DBWUA" or "the Association") is to provide domestic water for its members and for public necessity, such as the Orcas Island Fire Department. Accordingly, the Association shall not provide water for industrial, commercial or public operations, except on a limited basis as determined by the Board of Directors (the "Board") in its sole discretion.

SECTION 2. WATER USE STANDARDS AND METERING.

DBWUA has been developed using the planning principle that each domestic membership shall be considered a potential user of 450 gpd, maximum. Usage is calculated using methodologies consistent with goals and objectives expected of water systems, conservation goals, and/or industry standards adopted or hereafter amended by the Board.

This planning principle is intended to conform the system to controlling law, regulations, water availability and to water conservation goals and may be reviewed and modified by the Board with the objectives of insuring an equitable distribution of water and costs to the members consistent with DBWUA’s ability to measure water usage.

The Board has the discretion to require metering of individual services or private lines for the purposes of monitoring water usage and for the purpose of billing.

SECTION 3. WATER LIMITED TO DOMESTIC USE.

The purchase of a membership and payment of all fees and assessments shall entitle a member in good standing to water for the ordinary domestic use of a single family dwelling in an amount not to exceed any water limitations set by the Board of Directors. Such use may include limited garden and lawn watering, watering of family stock, and supplying water to visitors and guests in the home, all in accordance with these Bylaws, the rules, regulations, and the conservation standards of the Association in effect or which may in the future be adopted. Conduct of a limited water intensive in-home business is permitted in the Board's sole discretion, only if prior approval by the Board is obtained.

SECTION 4. DWELLING DEFINED.

A dwelling is defined as any structure which includes both bathroom and kitchen or other cooking or eating facility. A single, closely-coupled additional structure on the same county tax lot may be connected to the water system as part of a single dwelling if the structure is designed and used only as a "supplementary living or working space" and does not contain a kitchen or other cooking or eating facility. Any additional structure which is rented, leased or otherwise provided to others which has a kitchen or other cooking or eating facility is a separate dwelling and requires an additional membership.

SECTION 5. WATER RESTRICTIONS.

The Board may limit the quantity of water to be used, the hours of use, or impose other restrictions consistent with reasonable conservation standards in order to provide for the equitable distribution of water to all members.

SECTION 6. LIMITATION OF WATER SERVICE TO MEMBERS FOR AUTHORIZED PURPOSES.

Water service shall only be utilized by members on the tax parcel to which membership is attached for the purposes authorized by these Bylaws as they now exist or as they may hereafter be amended. Additional uses for campers, trailers, and for other similar purposes shall be limited to extraordinary circumstances, which circumstances must be specifically approved by the President or the Board if any such use is to continue for greater than fourteen (14) days.

SECTION 7. SERVICE AREA.

The service area of the Association is in the Southeast quadrant of Orcas Island, around and about Doe Bay and extending from the Point Lawrence area, south through Obstruction Pass ("service area"). Properties within the below listed areas may be served by the Association consistent with the availability of water, the Bylaws of the Association, necessary infrastructure, and the reasonable conservation rules and regulations which the Association may adopt from time to time.

The below-listed sections of Township 36N, Range 1 W.W.M.:

All of partial Sections 1, 2, and 3;

The E 1/2 of the SE 1/4 of partial Section 9;

All of partial Sections 10 and 15;

The E 1/2 of the NE 1/4 of partial Section 16;

The S 1/2 of the partial Section 16;

SECTION 8. MEMBERSHIP SITE FIXED.

Once a member initially identifies the land on which the membership will be used, except as provided below, the membership remains attached to that property. The DBWUA will maintain a record of the legal description of the land associated with each membership. Upon transfer of the property to a new owner by the original owner in accordance with DBWUA policies and procedures, the records will be noted to reflect the assignment of the membership. It is the original owner's responsibility to insure that DBWUA membership is properly transferred and noted.

Upon request of a member and at the Board's sole discretion, a membership may be transferred between properties owned by the same member. Transfer of a membership will be allowed only in exceptional circumstances and only with the approval of the Board. The land to which the membership is transferred shall be treated as if the membership had always been attached. The land from which the membership is removed shall be treated as if no membership had ever been attached.

SECTION 9. REPURCHASE OF MEMBERSHIPS BY THE ASSOCIATION

If connection is not made to the system or the dwelling is destroyed, the Board shall approve repurchase of memberships from members at the purchase price originally paid to the Association for the membership. If a dwelling exists on the property, repurchase of a membership will be allowed only in exceptional circumstances and only with the approval of the Board. In all events, repurchase shall not be approved if the financial stability of the Association is thereby threatened.

SECTION 10. ADDITIONAL FIRE HYDRANTS

In July, 1983, the Board of County Commissioners granted the Association a variance to San Juan County Code Section 15.12, based on conditions outlined in a letter to the Commissioners from the San Juan County Fire Protection District No. 2 dated July 25, 1983. This variance modified the obligation to provide fire hydrants on the approved water mains system in conformance with Section 15.12 of the San Juan County Code, such that underdeveloped sites were not required to have a fire hydrant, provided that each lot owner of an underdeveloped parcel install a fire hydrant prior to the commencement of residential construction. This variance specified that any Site Covenants and these Bylaws include a provision that the owner of each site not protected by a fire hydrant install a hydrant in conformance with the San Juan County Code Section 15.12.170 prior to the issuance of a Building Permit for residential construction.

All such construction and placement of hydrants will be done by the Association, but at the expense of the benefited members at the time of installation.

SECTION 11. COMMERCIAL, INDUSTRIAL, AND PUBLIC OPERATIONS

The Board shall consider all facts and circumstances in determining whether DBWUA may provide water for commercial, industrial, or public operations. Such service may be authorized at the sole discretion of the Board. Factors to be considered by the Board shall include, but not be limited to, the following:

ARTICLE II.

MEMBERSHIP IN THE ASSOCIATION

SECTION 1. ELIGIBILITY FOR MEMBERSHIP.

A person may become eligible for membership by acquiring land in the service Area, which land (a) currently has a dwelling on it, (b) has a dwelling under construction, or (c) is qualified for construction of a dwelling in accordance with the ordinances of San Juan County. Acceptance for membership shall be based on the criteria set forth in Article II, Section 3.

SECTION 2. MEMBERSHIP CLASSES.

There shall be two classes of membership as follows:

SECTION 3. ACCEPTANCE OF NEW MEMBERS.

Persons requesting membership (the "Applicant") shall provide a letter of request to the President. Whether the Applicant is accepted will be determined by the Board or its Membership Committee, subject to Board review, upon satisfaction of the following requirements:

SECTION 4. UNAVAILABILITY OF MEMBERSHIPS.

The number of available memberships is determined solely by: (a) water availability, (b) the service area limits, (c) treatment delivery capacity, (d) state and county regulation, and (e) the DBWUA policies and procedures in effect, and as set forth in Article I, Section 2 and in the Board's sole discretion. If all available memberships are subscribed, the Board may elect to apply for additional water rights or take other steps to make additional memberships available. When memberships are not available, the following steps will be taken to insure an equitable distribution of any new memberships which may become available.

SECTION 5. MEMBER'S ADDRESS.

Each member shall keep on file with DBWUA his or her official mailing address and phone number(s), and all notices from DBWUA to the member are considered to be properly delivered when sent by ordinary mail to the current address on file. If any member fails to file such address or change of address, such member shall be deemed to have waived any notice requirements.

SECTION 6. MEMBERSHIP CERTIFICATE.

Membership certificates shall be issued to General Members. Each certificate shall state on its face the following:

The certificate shall be signed by the President or by a person designated by the President, or by the Vice President and Secretary.

SECTION 7. TRANSFER OF MEMBERSHIP.

A General Membership and appended Associate Membership may be transferred, assigned, or devised by a current member to the transferee of the real estate benefitted by the membership, but only with the approval of the Board or the Membership Committee, based on all requirements of these Bylaws, as amended. To effect this transfer, within thirty (30) days of sale the current member must notify the Association in writing and set forth the prospective member's name and address. Before the prospective member can be accepted as a member of the Association, the prospective member must meet the requirements of these Bylaws.

In the event that the real estate benefitted by the membership is sold or transferred by the member without notification to the Association within thirty (30) days of sale, a penalty fee will be due, as defined in the fee schedule, and must be paid before the prospective member will be accepted as a member. Until acceptance of the prospective member, the current member is responsible for all charges or actions required of the membership.

In the event of any membership dispute, the Association's membership records are presumptively assumed to be correct.

SECTION 8. TERMINATION OF MEMBERSHIP.

After sixty (60) days notice by ordinary mail, a member who (a) fails to make any required payment, including, but not limited to, water charges and connection fees, or (b) violates any of the provisions of the Association, including, but not limited to, the Articles, Bylaws, rules, regulations and conservation standards of the Association shall be immediately terminated. Any member so terminated shall forfeit all rights of every kind, including, but not limited to, any capital or water connection refund.

ARTICLE III.

MEMBERSHIP MEETINGS

SECTION 1. ANNUAL MEMBERSHIP MEETING.

The annual meeting of the membership shall be held each year at 9:30 a.m. on the Sunday preceding the first Monday in September at the Doe Bay Community Hall or at such other time or place as the Board may direct. Attendance is limited to the membership of the Association and to those whose attendance has been recommended by a member and approved by the President.

SECTION 2. SPECIAL MEMBERSHIP MEETINGS.

Special meetings of the membership may be called by the President or by a majority of the Board. Special meetings of the membership may also be called by fifty percent (50%) of the membership. The request for a special meeting shall be filed with the President in care of the mailing address of the Association. Attendance at a special meeting is limited to the membership and to those whose attendance has been recommended by a member and approved by the President.

SECTION 3. NOTICE OF MEETINGS.

Written notice stating the place, day, and hour of any annual or special meeting shall be delivered not less than ten (10) nor more than fifty (50) days before the date of the meeting, either personally or by mail, to each individual entitled to vote at such meeting. If mailed, such notice shall be deemed delivered when deposited in the United States mail, addressed to the member at his/her address as it appears on the records of the Association, with postage prepaid. In the case of a special meeting, the purpose or purposes for which the meeting is called shall be stated.

SECTION 4. VOTING.

Each General Member, regardless of the number of memberships owned, shall be entitled to one vote only. Furthermore, to be eligible to vote, a General Member's annual fees and other required charges must be paid in full for the past fiscal year.

If a dispute arises as to who is entitled to vote, the dispute shall be settled by the Membership Committee, which committee shall have final authority. If a person is both disputing the right to vote and serving on the Membership Committee, that person shall not be allowed to cast a Membership Committee vote on the issue.

SECTION 5. QUORUM.

At annual meetings of the membership, the presence of twenty percent (20%) of the members, in person or by proxy, shall constitute a quorum. At any special meeting, the presence of thirty-five percent (35%) of the members, in person or by proxy, shall constitute a quorum. A majority of the quorum may act on all matters properly placed before it, except that at any membership meeting in which the Bylaws are amended, and as provided by Article IX, Section 2, sixty six percent (66%) of the members must be present, in person or by proxy and vote in favor of the proposed amendment(s).

SECTION 6. PROXIES.

A member may vote by proxy executed by the member or the member's duly authorized attorney-in-fact. The proxy is to be presented to the Secretary prior to the meeting. Unless otherwise specified in the proxy, no proxy shall be valid for more than eleven (11) months from the date of its execution.

ARTICLE IV.

DIRECTORS

SECTION 1. DUTIES OF THE DIRECTORS.

The business of the Association shall be conducted by a Board of at least seven (7) regular Directors who shall be members of the Association in good standing. The Board shall manage the Association and exercise all power and authority of every kind and nature not herein specifically denied or restricted. It may borrow money on the credit of the Association and may mortgage, pledge, and assign all or any Association property and assets as security for loans or advancements and execute or authorize the execution of all papers and instruments useful for those purposes.

SECTION 2. SELECTION OF DIRECTORS.

Directors shall be elected by the membership at the annual meeting for five year terms. Director positions are staggered, and no more than three (3) regular Directors are elected in any given year. The current Directors and their terms of office are identified on the current "Directors/Officers/Staff Address List" available from the DBWUA, upon request.

SECTION 3. NOMINATIONS FOR DIRECTOR POSITIONS.

The Board shall nominate candidates for all Director positions open for election at the annual meeting. Any member may also nominate candidates for a position by providing the name of the candidate(s) to the President prior to July 5. The Board may extend this date if circumstances require.

In its letter to the membership which is sent prior to the annual meeting, the Board shall provide members with a) a list of candidates, b) the position the candidate is running for, and c) a written statement of two hundred fifty (250) words or less from the candidate, provided such statement is received by the President prior to July 5. The Board may extend this date if circumstances require.

SECTION 4. VACANCIES.

Any vacancy on the Board between annual meetings shall be filled at the discretion of the remaining Directors by appointment. Such appointment shall continue until the next annual meeting of the membership, at which time the membership shall elect a Director to fill the vacancy for the remainder of the unexpired term.

SECTION 5. REGULARLY SCHEDULED BOARD MEETINGS.

The Board shall hold at least three regularly scheduled meetings. One meeting shall be held at 9:30 a.m. on the Saturday immediately preceding Labor Day; another shall be held immediately following the annual meeting. The third meeting shall be held in the Spring, as scheduled by the President. The Board may also hold such other regular meetings or change this schedule, as it deems necessary.

SECTION 6. SPECIAL BOARD MEETINGS.

Special meetings of the Board may be called by the President or by any two (2) of the Directors.

SECTION 7. BOARD MEETING NOTICE.

Notice of regularly scheduled Board meetings is deemed given by these Bylaws. The Secretary or President shall give seven (7) days notice of all special meetings by mail, computed from the time of mailing, to all Directors. Attendance of a Director at any meeting shall constitute a waiver of notice of such meeting, except where a Director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted nor the purpose of the meeting need be specified on the notice or waiver of notice of such meeting.

SECTION 8. QUORUM.

At any regular or special meeting of the Board, five (5) Directors shall constitute a quorum.

SECTION 9. ELECTION OF OFFICERS.

At its first meeting immediately following the annual membership meeting, the Board shall elect the officers of the Association. The Board may also select a person, who will ordinarily not be an officer, to act as General Manager of the Association. The General Manager shall serve at the will of the Board. The Board shall fix the compensation for all persons employed by the Association.

SECTION 10. DIRECTOR COMPENSATION.

Directors shall receive no compensation for their services, but may be repaid out-of-pocket expenses incurred in transacting Association business.

SECTION 11. REMOVAL OF A DIRECTOR

A Director may be removed from office by unanimous vote of all remaining Directors, but only for good cause, stated in written charges filed with the Secretary, and after not less than thirty (30) days notice has been given to the Director involved.

SECTION 12. INDEMNIFICATION OF OFFICERS AND DIRECTORS.

Each person who was or is made a party or is threatened to be made a party to or is involved (including, without limitation, as a witness) in any actual or threatened action, suit or proceeding, whether civil, criminal, administrative or investigative (whether brought by or in the right of the corporation or otherwise), by reason of that fact that he or she is or was a director or officer of the Association, or being or having been such a director or officer, he or she is or was serving at the request of the Association as a director, officer, employee, trustee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee, agent, trustee or in any other capacity, shall be indemnified and held harmless by the Association, except as provided below, against all expense, liability and loss (including, without limitation, attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts to be paid in settlement) actually or reasonably incurred or suffered by such proceeding. Such indemnification shall continue as to a person who has ceased to be a director, officer, employee, agent, or trustee and shall inure to the benefit of his or her heirs, executors, and administrators.

a. Limitation of Indemnity. The Association shall not indemnify any director or officer from or on account of acts or omissions finally adjudged to be intentional misconduct or a knowing violation of law or from or on account of any transaction with respect to which it was finally adjudged that such director or officer personally received a benefit in money, property or services to which he or she was not legally entitled.

b. Payment of Expenses Before Final Disposition. The right to indemnification conferred upon directors and officers in the Articles of Incorporation shall include the right to be paid by the Association the expenses incurred in connection with any such proceeding in advance of its final disposition; provided, however, that the payment of such expenses in advance of the final disposition of a proceeding shall be made to or on behalf of a director or officer only upon delivery to the Association of (a) a written undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified, which undertaking shall be unsecured and shall be accepted without reference to financial ability to make repayment, and (b) a written affirmation by the director or officer of his or her good faith belief that he or she believed his or her conduct to be in the Association's best interest and that his or her conduct did not preclude indemnification as defined above.

c. Indemnification a Contract Right. The right to indemnification conferred upon directors and officers, including the right to be paid expenses prior to the final disposition of an action, suit or proceeding, shall be a contract right and shall not require authorization in a specific case by the Board. No amendment of these Bylaws shall have the effect of limiting or eliminating such right as to conduct or transactions that occurred prior to the amendment, even if the action, suit, or proceeding occurs after the amendment.

d. Nonexclusive Right. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Articles of Incorporation, Bylaws, agreement, vote of disinterested directors or otherwise.

e. Indemnification of Other Persons. The Board may, at any time, approve indemnification of any other person which the Association has the power to indemnify under the Washington Nonprofit Miscellaneous and Mutual Corporations Act.

f. Notice to Board of Directors. Any indemnification of a director, including any payment or reimbursement of expenses, shall be reported to the Board at the next regularly scheduled meeting or prior thereto in a written report containing a brief description of the proceedings involving the director being indemnified and the nature and extent of such indemnification.

g. Insurance. The Association shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Association, or is or was serving at the request of the Association as an officer, employee or agent of another corporation, partnership, joint venture, trust, other enterprise or employee benefit plan, against any inability asserted against him or her incurred by him or her in any such capacity or arising out of such status, whether or not the Association would have the power to indemnify the person against such liability under the provisions of the Articles of Incorporation, these Bylaws, or the Washington Miscellaneous and Mutual Corporations Act.

SECTION 13. ACTION BY DIRECTORS WITHOUT A MEETING.

Any action of directors that is required to be taken at a meeting or that may be taken at a meeting may be taken without a meeting, if a consent in writing setting forth the action so taken shall be signed by all of those entitled to vote on the matter.

ARTICLE V.

OFFICERS, EMPLOYEES AND COMMITTEES

SECTION 1. OFFICERS OF THE ASSOCIATION.

The officers of the Association shall consist of a President, Vice President, Secretary and Treasurer.

SECTION 2. DUTIES OF THE PRESIDENT.

The President shall be the chief executive officer of the Association and the Board, whose principle duties shall include, but not be limited to the following:

(a) Coordinate activities of the Board, i.e. appointments of committees, preparation of the meeting agenda, etc.;

(b) Preside at all meetings of the Board and the membership;

(c) Communicate to the membership through the Annual Report and other communications as deemed appropriate;

(d) Chair a committee to prepare an annual performance evaluation and compensation recommendations for the Board for all employees;

(e) Communicate directly and regularly with the General Manager.

The President shall have such other duties as these Bylaws may require or the Board may prescribe.

SECTION 3. DUTIES OF THE VICE PRESIDENT.

The Vice President shall perform such duties as may be assigned by the Board. In the case of the death, disability or absence of the President, the Vice President shall perform and be vested with all the duties and powers of the President.

SECTION 4. DUTIES OF THE SECRETARY.

The Secretary's duties shall include, but shall not be limited to:

SECTION 5. DUTIES OF THE TREASURER.

Duties may include, but not be limited to:

The Treasurer of the Association shall be the financial officer and shall cause all debts and obligations of the Association to be paid. The Treasurer shall arrange that correct and complete records are kept showing accurately at all times the financial condition of the Association. He or she shall be the legal custodian of all receipts which may from time to time come into possession of the Association and shall immediately deposit such receipt in some reliable bank or other depository to be designated by the Board and shall keep such bank accounts in the name of the Association. He or she shall furnish, at meetings of the Board, or whenever requested by the Board, a statement of the financial condition of the Association, shall present an annual statement of all receipts and disbursements of the Association, and shall perform such other duties as these Bylaws may require or the Board may prescribe.

SECTION 6. DUTIES OF THE GENERAL MANAGER.

The duties of the General Manager, who shall report directly to the President, shall be established by the Board through an approved job description. The General Manager will ordinarily not be an officer.

SECTION 7. DUAL INCUMBENCY.

Any two or more offices may be held by the same person, except that the President may not also hold the office of Vice-President, Secretary, or Treasurer.

SECTION 8. TERM OF OFFICE.

All officers shall hold office at the pleasure of the Board and may be removed only for good cause and by unanimous vote of all remaining directors. Any vacancy in office shall be filled by majority vote of the Board.

All employees and committee members hold office at the pleasure of the Board.

SECTION 9. FINANCE COMMITTEE.

A standing Finance Committee is to be formed by the Board. The Board shall appoint two (2) Directors to serve on the Committee together with at least one other General Member (who may also be a Director). One Director Member shall be the Treasurer. The Board shall select as Chair one of the Directors.

The Finance Committee is responsible for the preparation of the Association's (a) Annual Budget; (b) in conjunction with the planning committee, the Long-Range Capital Plan; and (c) annual update of the Long Range Capital Plan. The Chair will distribute draft copies of the Budget and Capital Plan, together with a suitable narrative, to the Board not later than May 15th of each year. The Chair will also include a copy of the April financial statement with the mailing. The Chair will work with the President to insure that the Annual Budget and the Capital Plan are approved by the Board prior to the deadline for mailing the annual letter to the membership.

At the annual membership meeting, the Chair or General Manager will present to the membership a summary of the financial status and the past year's financial performance of the Association, together with a review of its budget for the ensuing year.

SECTION 10. MEMBERSHIP COMMITTEE.

The Membership Committee is to be formed by the Board, which shall appoint two (2) Directors to serve, one of whom shall serve as Chair. Membership on the committee shall be determined by the Board. The Membership Committee will be responsible for performing all membership tasks set forth in these Bylaws, such as acceptance, transfer, voting rights, and recommending termination of membership to the Board.

SECTION 11. MANAGEMENT COMMITTEE.

A Management Committee may be appointed by the Board to (a) assist the President; (b) recommend the duties and compensation of the General Manager; and (c) to otherwise assist in the management of the Association as the Board shall direct.

SECTION 12. LONG RANGE PLANNING COMMITTEE.

A Long Range Planning Committee shall be formed by the Board which shall appoint at least one director and at least two other members of the Association to serve for three year terms. The Long Range Planning Committee shall be responsible for (a) recommending planning activities of the Association; (b) submittal of the Long Range Capital Budget Plans to the Board for approval; (c) oversight management of all construction activity following Board authorization of a project; and (d) maintenance of selected Policy and Management Instructions.

ARTICLE VI.

FEES, CHARGES, AND FINANCES

SECTION 1. MEMBERSHIP FEES.

Before becoming a member, each Applicant shall pay to the Association the membership fees and charges provided by these Bylaws, as amended. The same membership fee shall be required whether a dwelling unit exists or not, and if it exists, is occupied by the member, his family, guests, or is used as a rental unit. If after becoming a member and paying the original fee, the member creates an additional dwelling unit where service is desired, the member must request an additional membership before service commences. A single membership shall not serve more than one dwelling unit.

SECTION 2. SPECIAL USE FEES.

If any special use of water is authorized for any purpose, the Board shall fix the connection fee and the annual service fee. The Board may also fix special rates for any property requiring service greater than for a normal single family dwelling.

SECTION 3. ANNUAL FEES.

Each year the Board shall fix a sum to be paid annually by each member, which sum shall be reasonably calculated to meet the operating, capital improvements, reserves, and other requirements of the Association, as the Board sees fit.

SECTION 4. AUTHORITY TO ASSIGN AND MODIFY FEES.

All matters connected with fixing applicable connection fees, assessments or water rates, and the status of properties under any Schedule of Fees and rates shall be referred to the Board, and the decision of the Board shall be final. The right is reserved to the Board to modify fees or rates at any time necessary for the successful operation of the Association.

SECTION 5. FEE SCHEDULE.

A fee schedule which defines all fees, assessments, and charges made by the Association will be maintained as Addendum # 2 to these Bylaws. The Board will cause a revision to be made to the Fee Schedule whenever changes are required, with effective dates noted thereon. Fee Schedules will be sequentially numbered, and a historical record of these records will be maintained by the Secretary.

SECTION 6. METERS.

At any time, the Board may require the installation of water meters and the payment for water according to meter readings. The Board may adopt rules and regulations regarding the purchase and installation of meters.

SECTION 7. SALE, BARTER, OR GIFT OF WATER.

No member or other person shah be allowed to sell, barter, or gift water to other persons not holding valid memberships, and water shall be furnished only for the use of the member, the member's family, guests, or tenants as provided in these Bylaws. Any member who allows an unauthorized dwelling to be connected to a service connection or other unauthorized usage without prior approval of the Board shall be subject to the penalties provided for by these Bylaws. Nothing herein shall prohibit the sale of water by the Board to generate revenue for the Association.

SECTION 8. FISCAL YEAR.

The fiscal year of the Association shall run from September 1 to August 31 of the following calendar year.

SECTION 9. SURPLUS FUNDS.

Any funds arising from the operations of the Association shall be considered surplus only after the payment of all obligations, expenses of construction, maintenance, repair, provision for depreciation, provision for new construction, and all other costs or expenses, according to conservative accounting and prudent utility practice. Any surplus shall be disposed of in the following order:

SECTION 10. MEMBERSHIP TRANSFER FEE.

A transfer fee, as defined on the fee schedule (Addendum #2), will be charged the current member for transfer of a membership to a new member. A separate fee applies to the transfer of both the general and the associate memberships.

ARTICLE VII.

PROPERTY AND EQUIPMENT

SECTION 1. MAIN AND EXTENSION LINES.

The location and characteristics of the waterworks facilities of the Association are to be recorded in the engineering and operating records of the Association and are to be revised as necessary to reflect the actual configuration of the system.

SECTION 2. ROUTES AND FACILITY LOCATIONS.

The Association endeavors to record the location of all underground facilities including member-owned facilities. The Association will, with adequate notification, mark out known underground facilities in accordance with the availability of records, but members, prospective members, and excavators are responsible for determining exact locations, dimensions, materials, and conditions and to protect all facilities from damage. Any damage that occurs as a result of member activities, whether directly or as a result of the member's agent shall be the responsibility of the member. Damage shall be repaired promptly, in accordance with Association standards, and shall not cause risk or further harm to the water system. The Association reserves the option to make such repairs and to charge the member for all direct and indirect costs associated with the repair.

SECTION 3. EASEMENTS.

The Board is authorized and required to obtain easements and all other rights necessary to the construction and operation of the Association's water system. No person shall be accepted or remain as a member unless he or she conveys to the Association, without cost, an easement in form fixed by the Board for any of the Association's lines which may cross any member's property. The exact location of the Association's facilities will be determined by mutual agreement between the member and the Association and shall not interfere with any existing or proposed dwelling or appurtenance.

SECTION 4. COSTS OF MEMBER INSTALLATION.

Each member desiring service shall, in addition to all other charges, fees, and rates, pay all costs of installing connections to his or her property, such connections to be constructed and installed only in accordance with the requirements, regulations, or orders of DBWUA.

SECTION 5. SERVICE CONNECTION OWNERSHIP.

The member owns and is responsible for maintenance, repair, and upgrading the service connection between the main and the dwelling with the exception of the water meter. Said maintenance, repair and upgrading of the service connection shall be in accordance with DBWUA standards, policies and procedures. Control and operation of member owned materials before the meter is reserved to DBWUA. No unmetered water may be provided to a property other than for fire protection, for those properties that have meters, or which may in the future have meters installed.

Where multiple members own a service line, responsibility for repair will be in accordance with any agreement among the multiple members, but in no case will the Association permit delay in the repair of such equipment. The Association reserves the option to make repairs and charge all benefiting members an equal share of the repair.

SECTION 6. INDIVIDUAL SERVICE DESIGN COSTS.

When any application for a service is made, the applicant must pay such sum as the Board fixes to defray the engineering work required in determining the desirability and feasibility of the proposed service, and such payment shall not be returned, even if the service is not installed. Applicants are responsible for determining what improvements are necessary to provide adequate water service to the property in conformance with DBWUA Bylaws and standards and Department of Health standards.

SECTION 7. INSPECTION OF ASSOCIATION SERVICE ROUTES.

Duly authorized designees of the Association have the right at any time to access, inspect, maintain, and repair all Association infrastructure and any member-owned infrastructure for the purpose of insuring the normal supply of water. The Association shall have the right to use equipment typical for the accomplishment of water system tasks. The Association shall have the right to maintain all Association-owned infrastructure routes and easements in a grassy state adequate to allow for the accomplishment of water system tasks. The Board, or any person designated by the Board, shall have the right at any reasonable time to inspect the property benefited by the membership and all water installations on that property, including the right to take water samples from all water fixtures on said property.

Except in emergencies, permission to enter any dwelling or property on which a member's own service equipment is located will first be sought. Entrance without permission into a dwelling or onto property where a member's own service equipment is located is permitted in the event of an emergency or a well-founded suspicion that the entrance is necessary to carry out the purposes of these Bylaws.

ARTICLE VIII.

ASSOCIATE MEMBERSHIPS

SECTION 1. NEED FOR ASSOCIATE MEMBERSHIP GROUPS.

General Members and prospective members of the Association who own property in unserved portions of the Service Area may work with the Board to supply water to their property by expanding the Association's service facilities. The Association may expand its facilities to service unserved portions of the Service Area, provided that a) memberships are available, b) prospective members purchase General Memberships in the Association, and c) both prospective members and unserved General Members pay all costs of the expansion. The Board shall designate the portion of the unserved Service Area which is to be newly serviced, and the members serviced within this new area shall form an Associate Member Group. The decisions of the Board will be final and binding on all matters related to areas to be served, fees charged new and latecomer members, refunds paid, and the terms of new service agreements.

SECTION 2. ASSOCIATE MEMBER CONSTRUCTION COST REFUNDS.

The Board may make arrangements with Associate Member Groups to collect funds from additional members who join an Associate Member Area, and in turn, to refund these funds to the original members of the Associate Group. The sum to be collected from each new member who joins an Associate Member Group will consist of a new member's pro rata share of the initial construction cost, together with a "latecomer's" fee which has been agreed to between the Associate Members of the Associate Member Group and the Board.

Associate Member refunds to the five Associate Member Groups as identified on Fee Schedule #19 will cease after September 1, 1997.

SECTION 3. ASSOCIATE MEMBER GROUPS.

The current Associate Member Groups of the Association are identified in Addendum 1, along with the service and geographic area of each group. When a new Associate Member Group is formed, the service and geographical area descriptions of the group shall be added to Addendum 1. Addendum 1 is for informational purposes only and may be modified from time to time to reflect any additional changes, and such a change shall not be considered an amendment to the Bylaws, requiring a vote of the Board.

SECTION 4. COW HILL PROPERTY OWNERS ASSOCIATION/DBWUA MEMBERSHIP AGREEMENTS.

4.1 CHPOA/DBWUA Membership Requirements.

The respective undertakings of the Doe Bay Water Users Association ("DBWUA") and the Cow Hill Property Owners Association ("CHPOA"), with regard to the Cow Hill water system extension, are set forth in that certain Memorandum of Understanding between the Cow Hill Property Owners Association and the Doe Bay Water Users Association dated July 15, 1996. Pursuant to said agreement, the Doe Bay Water Users Association hereby adopts the following amendment to its Bylaws regarding membership requirements in the Cow Hill Property Owners Association.

4.2 Emergency Services - Cow Hill Property Owners Association/Cow Hill Extension. The Cow Hill Property Owners Association (CHPOA) is an Associate Member Group of the Doe Bay Water Users Association (DBWUA) and has built an extension known as the Cow Hill Extension ("Extension"). The Extension cannot be serviced by gravity due to its elevation and is therefore a pumped system.

As a condition of DBWUA accepting CHPOA as an Associate Member Group and providing service to the Extension; the following has been understood and agreed by CHPOA:

ARTICLE IX.

MISCELLANEOUS

SECTION 1. INSPECTION OF ASSOCIATION DOCUMENTS.

The Articles of Incorporation, the Bylaws, and the financial records of the Association may be inspected at the Association's offices by a member or applicant for membership at any reasonable time.

SECTION 2. MODIFICATION OF THE BYLAWS.

These Bylaws may be amended or repealed at any time by the Board, subject to the right of the membership by a sixty-six percent (66%) vote to amend or repeal these Bylaws.

SECTION 3. DISTRIBUTIONS AND DISSOLUTION.

Upon dissolution, the Association's net assets or the proceeds thereof shall be distributed pro rata to all persons who were members of the Association during the period in which such assets were owned, based on the ratio of each member's assessments, fees, and charges paid to total assessments, fees, and charges paid during the ownership period, insofar as practicable. Previous sale of a membership shall include the sale of the rights to the distribution.

SECTION 4. ASSOCIATION'S REMEDIES.

In any action by the DBWUA to enforce any provision of these Bylaws, or any rule, regulation or conservation policy duly adopted by the Board, the DBWUA shall be entitled to its attorneys fees and costs if it is the prevailing party in said action.

In the interest of providing its services to all of its members at reasonable and equitable rates, the DBWUA shall be entitled to terminate the water service and to cancel the membership of any member who unreasonably fails to abide by the terms of these Bylaws, and any rules, regulations, and reasonable conservation procedures of the DBWUA.

These Bylaws are contractual in nature and are a condition of membership. They define the rights and duties of DBWUA and its members. The Association and the members agree to be bound by these Bylaws.

Adopted by resolution of the corporation's Board of Directors on August 31, 1997.

____________________________________

STUART STEPHENS, President

ADDENDUM NO. 1 TO THE DBWUA BYLAWS

ASSOCIATE MEMBER GROUPS

Article VIII Of these Bylaws defines the need for Associate Member Groups. The following sections identify the geographic area of each Associate Member Group, situated in San Juan County, Washington.

SECTION 1. BUOY BAY ROAD ASSOCIATE MEMBER GROUP.

The Buoy Bay Road Associate Group Service Area is defined as being all properties which can most effectively be served by the Buoy Bay Road Extension and which lie generally in the area of the SE 1/4 of Section 9, Township 36 North, Range 1 West of the W.M.

SECTION 2. CULVER FARMHOUSE ASSOCIATE GROUP.

The Culver Farmhouse Associate Group Service Area is defined as being all properties which can most effectively be served by the Culver Farmhouse Associate extension and which lie generally in the W 1/2 of Section 36, Township 37 North, Range 1 West of the W.M.

SECTION 3. OBSTRUCTION PASS ASSOCIATE GROUP.

The Obstruction Pass Associate Group Service Area is defined as being all properties which can most effectively be served by the Obstruction Pass extension, which extends south from Buoy Bay Creek in portions of Sections 10, 15, 16 and 21, Township 36 North, Range 1 West of the W.M., along Obstruction Pass and southeast to Deer Point.

SECTION 4. POINT LAWRENCE ASSOCIATE GROUP.

The Point Lawrence Associate Group Service Area is defined as being all properties which can most effectively be served by the Point Lawrence extension and which lie in the NE 1/4 of Section 36, Township 37 North, Range 1 West of the W.M.

SECTION 5. RAINWATER ASSOCIATE GROUP.

The Rainwater Associate Group includes the seven properties listed below in the Kangaroo Point area south of Sea Acres: Tax Parcel Numbers 1736-42003, 1736-42005, 1736-42006, 1736-42007, 1736-420068, 1736-42009, and 1736-42010.

SECTION 6. SUNTERRA-ROEHL'S BEACH GROUP.

The Sunterra-Roehl's Beach Group Service Area is defined as those properties most effectively served by the Sunterra extension main, which starts at the Association's north service main and extends to the pumphouse located in the NE corner of the NW 1/4 of Section 10, Township 36 North, Range 1 West of the W.M.; and also extends north to County Road No. 63.

SECTION 7. SUNTERRA-ROEHL'S HILL GROUP.

The Sunterra-Roehl's Hill Group Service Area is defined as those properties in a portion of the E 1/2 of the SW 1/4 and in a portion of the W 1/2 of the SE 1/4 of Section 3, Township 36 North, Range 1 West of the W.M., and are portions of the Alder Creek, Roehl's Hill or Roehl's Bluff short plats, all lying north of County Road No. 63.

SECTION 8. SUNTERRA-PIONEER HILL GROUP.

The Sunterra-Pioneer Hill Group Service Area is defined as all properties most effectively served by the Association's major south line, which extends from its pumphouse location in the NE corner of the NW 1/4 of Section 10, Township 36 North, Range 1 West of the W.M., south to its junction with the Obstruction Pass extension in the SW 1/4 of the SW 1/4 of Section 10, Township 36 North, Range 1 West of the W.M., at the south boundary of tax parcel number 1610-33001.

SECTION 9. COW HILL PROPERTY OWNERS ASSOCIATION

Those portions of the following tax parcels above the elevation of 265 feet: 1736-32001; 1736-32002; 1736-32003; 1736-32004; 1736-32005; 1736-32006; 1736-32007; 1735-41001; 1735-41002; 1735-41004; 1735-41006; 1735-41008. (See Article VIII, Section 4)

ADDENDUM NO. 2 TO THE DBWUA BYLAWS

Fee Schedule

[see current year fee schedule]