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HomeMy WebLinkAboutRes 2013-10-04 Interlocal Agreement with City of Melissa for Water PurchaseCITY OF ANNA, TEXAS RESOLUTION NO. 2013-10-04 A RESOLUTION OF THE CITY OF ANNA, TEXAS RELATED TO AN INTER -LOCAL AGREEEMNT BETWEEN THE CITIES OF ANNA AND MELISSA UNDER WHICH THE CITY OF ANNA AGREES TO TRANSFER A PORTION OF ITS CONTRACTUAL MINIMUM TAKE OR PAY WATER OBLIGATION WITH THE GREATER TEXOMA UTILITY AUTHORITY TO THE CITY OF MELISSA IN EXCHANGE FOR AN AGREED PAYMENT FROM MELISSA AND AUHORIZING THE EXECUTION AND ADMINISTRATION OF SAID INTER -LOCAL FM14 "A DI Lt ISM WHEREAS, the City of Anna has previously authorized and executed agreements with the Greater Texoma Utility Authority for a surface water supply system to be planned, funded, constructed, and operated by GTUA, including the payment of monthly minimum take or pay water purchase provisions necessary to fund said water transmission system and purchase of potable water; and WHEREAS, the City of Anna has chosen to not accept delivery of water through the end of the 2013 water year (ended July 31, 2013) and desires to transfer a portion of its obligated minimum take or pay for said 2013 water year to the City of Melissa for consideration detailed in an interlocal agreement pertaining to said water year, said agreement being entitled INTERLOCAL AGREEMENT BY AND BETWEEN THE CITY OF MELISSA, TEXAS AND THE CITY OF ANNA, TEXAS FOR PURCHASE AND CORRESPONDING SALE OF A PORTION OF ANNA'S MINIMUM TAKE OR PAY OBLIGATION UNDER THE GTUA-CITY OF ANNA POTABLE WATER SUPPLY CONTRACT; and WHEREAS, the City of Melissa has indicated interest in purchasing a portion of the City of Anna's minimum take or pay for the water year ended July 31, 2013 as explained in a memorandum to the City Managers / Administrators of the Cities of Melissa, Anna, Van Alstyne, and Anna dated October 2, 2013 by Don Paschal, consultant to said cities, which memorandum is attached to said Interlocal agreement as Exhibit A; and WHEREAS, it is acknowledged that similar agreements are contemplated between the City of Melissa and the other CGMA-GTUA cities (including Howe and Van Alstyne). NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Anna, Texas that: SECTION 1: The City Council of the City of Anna authorizes the execution by the City Manager of the attached Interlocal agreement with the City of Melissa for the terms detailed therein providing for the following: Res. 2013-10-04 ILA with Melissa Transfer Take or Pay 1 10-22-13 A. Transferring a portion of Anna's GTUA required minimum take or pay to Melissa. B. Invoicing Melissa for the agreed portion of the 2013 water year minimum take or pay. C. Accepting Payment from Melissa as provided for in the attached Interlocal agreement. SECTION 2: It is specifically provided that the participating cities shall have the right to verify quantities of water with the GTUA prior to final consummation of the attached agreement. Upon motion of Council Member Hopewell seconded by Mayor Mike Crist, the above resolution was approved by the City Council of the City of Anna at its meeting held this 22nd day of October, 2013, by the following vote: 7 AYE 0 NAY0 ABST 4/�Z/W Mike Crist, Mayor, City of Anna o- Na a wilkison, City Secretary, City of Anna (S A L) `', "`��SY P // l!yf�' Aq7®��,N ®A •til Res. 2013-10-04 ILA with Melissa Transfer Take or Pay 2 10-22-13 INTERLOCAL AGREEMENT BY AND BETWEEN THE CITY OF MELISSA, TEXAS AND THE CITY OF ANNA, TEXAS FOR PURCHASE AND CORRESPONDING SALE OF A PORTION OF ANNA'S MINIMUM TAKE OR PAY OBLIGATION UNDER THE GTUA-CITY OF ANNA POTABLE WATER SUPPLY CONTRACT THIS AGREEMENT (this "Agreement") is made and entered by and between the CITY OF MELISSA, TEXAS, a Texas Home -Rule Municipal Corporation, hereinafter referred to as "Melissa", and CITY OF ANNA, TEXAS, a Texas Home -Rule Municipal Corporation hereinafter referred to as "Anna", collectively referred to herein as the "Cities", as follows: WITNESSETH: WHEREAS, both Melissa and Anna are political subdivisions within the meaning of Interlocal Cooperation Act, Texas Government Code, Chapter 791, as amended (the "Act"); and WHEREAS, the Act provides authority for entities such as Melissa and Anna to enter into interlocal agreements with each other to perform governmental functions and services as set forth in the Act; and WHEREAS, each of the Cities has previously entered into an agreement with the Greater Texoma Utility Authority ("GTUA") for the planning, construction, funding, and operations of a surface water supply system to collectively serve Melissa and Anna, as well as the City of Van Alstyne, Texas ("Van Alstyne") and the City of Howe, Texas ("Howe") (each municipality referenced herein either by name or as "Participating City"), which agreement specifies the obligations of each Participating City; and WHEREAS, each of said Cities has entered an Amended and Restated Contract for Water Supply providing that from the time water has been delivered to each Participating City for one month and forward, on a monthly basis, each Participating City shall be charged for water at the greater of its minimum take -or -pay amount (MT -P) under the Potable Water Supply Contract made and entered between such Participating City and GTUA; and WHEREAS, for the water year 2012-2013 ended July 31, 2013 as provided for in said water purchase agreements, including the North Texas Municipal Water District, hereinafter referred to as "NTMWD" standard water purchase agreement, only the City of Melissa actually received delivery of water and which water delivery equaled the Melissa MT -P; and WHEREAS, Melissa has a predecessor agreement with NTMWD for delivery of water through a separate water delivery point, which delivery point has a separate and distinct MT -P, which exceeded the MT -P entitling Melissa to said excess water purchase (over MT -P) at a significantly discounted purchase rate; and WHEREAS, Anna desires to sell a portion of its unused MT -P and Melissa desires to purchase a portion of Anna's unused minimum MT -P as defined in this Agreement thus allowing Anna to recover a portion of the purchased but unused MT -P for the stated water year; and MT -P Transfer agreement for 2013 water year — Melissa/Anna - Page 1 WHEREAS, the background of the above noted agreements, volumes, rates, and circumstances are further detailed in the October 2, 2013 memorandum attached hereto for reference and labeled "Exhibit A". NOW, THEREFORE, MELISSA and ANNA, for and in consideration of the recitals set forth above and terms and conditions below, agree as follows: I. TERM This Agreement shall apply to the NTMWD water year ended July 31, 2013 and shall be executed and consummated in full between November 1, 2013 and December 31, 2013 and shall not apply to subsequent water volumes or water years unless by amendment to this Agreement. II. GENERAL SCOPE OF AGREEMENT Anna shall transfer 17,655,166.6 gallons (17,655.166 one thousand gallon increments) of MT -P water to Melissa for the water year ended July 31, 2013 and Melissa shall remit to Anna a payment for said transfer of MT -P at the rate of $1.075 per thousand gallons totaling in the sum of $18,797.30 as payment in full for said portion of Anna's MT -P. Following execution of this Agreement, Anna shall submit to Melissa an invoice for the transfer of the described MT -P for the above stated sum and Melissa shall remit payment for said transfer within fifteen (15) days of receipt of said invoice, it being the intent that this transaction shall be completed on or before December 31, 2013. III. RESPONSIBILITIES OF THE PARTIES 1. The respective City Councils of Melissa and Anna approve this Agreement authorizing the sale / purchase of MT -P as described herein and further detailed in the attached Exhibit A. 2. Anna, following approval of this Agreement by Melissa, shall submit to Melissa an invoice for the referenced 17,655,166.6 gallons of MT -P water in the amount of $18,797.30. 3. Melissa shall remit to Anna the above stated payment for the transferred MT -P within fifteen (15) working days of the receipt of the Anna invoice. 4. If either party wishes to verify the metered quantities of water or the portion of the minimum take or pay to which this Agreement refers shall be entitled to verification subject to said verification being completed prior to the submission of the invoice referenced in item III — 2 above. Should GTUA verification indicate a different volume of minimum take or pay than referenced herein, the parties hereto shall modify said quantity and the resultant payment for said quantity of minimum take or pay prior to the invoicing and payment phase (item III — 2 & 3 above). IV. TERMINATION The Cities recognize that this Agreement shall commence upon the effective date herein and continue in full force and effect until termination in accordance with its provisions. Melissa MT -P Transfer agreement for 2013 water year — Melissa/Anna - Page 2 and Anna herein recognize that the continuation of any future contract after the termination of this Agreement or impacting any future water year shall be subject to City Council approval for each City, respectively. Following termination of this Agreement, or should either City fail to execute this Agreement, there shall be no further commitment hereunder. V. RELEASE AND HOLD HARMLESS Melissa and Anna, to the extent authorized under the constitution and laws of the State of Texas, agree to be responsible for their own acts of negligence which may arise in connection with any and all claims for damages, costs, and expenses to person or persons and property that may arise out of or be occasioned by this Agreement. In the event of joint and concurrent negligence, Melissa and Anna agree that responsibility shall be apportioned comparatively. This obligation shall be construed for the benefit of the parties hereto, and not for the benefit of any third parties, nor to create liability for the benefit of any third parties, nor to deprive the parties hereto of any defenses each may have as against third parties under the laws and court decisions of the State of Texas. VI. AUTHORITY TO SIGN The undersigned officer and/or agents of the parties hereto are the properly authorized officials and have the necessary authority to execute this Agreement on behalf of the parties hereto. The Cities have executed this Agreement pursuant to the authority granted by its governing body. IX. SEVERABILITY The provisions of this Agreement are severable. If any paragraph, section, subdivision, sentence, clause, or phrase of this Agreement is for any reason held to be contrary to the law or contrary to any rule or regulation having the force and effect of the law, such decisions shall not affect the remaining portions of the Agreement. However, upon the occurrence of such event, either party may terminate this Agreement by giving the other party thirty (30) days' written notice. X. VENUE This Agreement and any of its terms or provisions, as well as the rights and duties of the parties hereto, shall be governed by the laws of the State of Texas. The parties agree that this Agreement shall be enforceable in Collin County, Texas, and, if legal action is necessary, exclusive venue shall lie in Collin County, Texas. XI. INTERPRETATION OF AGREEMENT MT -P Transfer agreement for 2013 water year — Melissa/Anna - Page 3 It is acknowledged that this is a negotiated document. Should any part of this Agreement be in dispute, the Cities agree that the Agreement shall not be construed more favorably for either city. XII. REMEDIES No right or remedy granted herein or reserved to the parties is exclusive of any right or remedy granted by law or equity; but each shall be cumulative of every right or remedy given hereunder. No covenant or condition of this Agreement may be waived without the express written consent of the parties. It is further agreed that one (1) or more instances of forbearance by either party in the exercise of its respective rights under this Agreement shall in no way constitute a waiver thereof. XIII. SUCCESSORS AND ASSIGNS The parties each bind themselves, their respective successors, executors, administrators and assigns to the other party to this contract. Neither party will assign, sublet, subcontract or transfer any interest in this Agreement without the prior written consent of the other party. No assignment, delegation of duties or subcontract under this Agreement will be effective without the written consent of both parties. MT -P Transfer agreement for 2013 water year — Melissa/Anna - Page 4 IN WITNESS WHEREOF, the parties have executed this Agreement by signing below. Date: APPROVED AS TO FORM: CITY ATTORNEY Date: CITY OF MELISSA, TEXAS Jason Little City Manager CITY OF ANNA, TEXAS LIN Philip Sanders City Manager APPROVED AS TO FORM CITY ATTORNEY MT -P Transfer agreement for 2013 water year — Melissa/Anna - Page 5 ACKNOWLEDGMENTS STATE OF TEXAS § COUNTY OF COLLIN § This instrument was acknowledged before me on the day of , 2013, by , of the City of Melissa , Texas, a Texas Home Rule City, on behalf of said municipality. Notary Public, State of Texas STATE OF TEXAS § COUNTY OF COLLIN § This instrument was acknowledged before me on the day of , 2013, by , , of the City of Anna, Texas, a Texas Home Rule City, on behalf of said municipality. Notary Public, State of Texas MT -P Transfer agreement for 2013 water year — Melissa/Anna - Page 6 Exhibit A Attach copy of October 2, 2013 memorandum from Donald E. Paschal, Jr. to CGMA City Managers regarding the subject: Sale of GTUA-CGMA Minimum Take or Pay to Participant City MT -P Transfer agreement for 2013 water year — Melissa/Anna - Page 7 DONALD E. PASCHAL, JR. 904 Parkwood Court McKinney, TX 75070 Tel. & FAX 972.529.1325 email: don@paschalconsulting.com To: CGMA City Managers Subject: Sale of GTUA-CGMA Minimum Take or Pay to Participant City Date: October 2, 2013 The City of Melissa has used water in excess of their required GTUA-CGMA minimum take or pay (MT/P) through the North Texas Municipal Water District (NTMWD) agreement for the water year ended July 31, 2013. Based on the precedent initiated in 2010 and continued through 2012, a member City may acquire a portion of the MT/P from other CGMA member Cities at an agreed price. If there were no other source of water, the price would be the standard CGMA-GTUA price based on the MT/P. In the case of Melissa, however, they could intentionally curtail consumption from their previously existing supply meter with NTMWD (original NTMWD meter) and shift consumption to the GTUA-CGMA meter. This action kept the original meter from ratcheting up to a significantly higher MT/P and provided the other CGMA Cities an opportunity to recoup a portion of the MT/P water cost paid during the water year. Melissa proposes to purchase the extra water taken (over Melissa's MT/P) from the CGMA-GTUA System at the average price between that which they would have paid if taken from the original NTMWD meter and the GTUA-NTMWD rate. The details of the proposed transaction are provided below; the explanation and process are intended to be as simple as possible. The basic concept is that the other three CGMA Cities (Anna, Van Alstyne, and Howe) sell an equal portion of their MT/P to Melisa at the price / cost of that water as detailed below; this summary is an update of the same document from last year. Background: • CGMA City MT/P: The base MT/P water purchase (minimum contract provision that the GTUA- CGMA system has with NTMWD for water) is a total of 237,250,000 gallons of water annually (MT/P amount) which represents 237,250 one -thousand gallon increments (K gals). Each CGMA City is responsible for 59,312.5 K gals plus pumping and related cost). Once all four CGMA Cities reach the MT/P, excess water is charged to that respective City at the cost then in effect for volumes (plus proportionate pumping and related costs) over the 59,312,500 gallons. • For the recently ended water year, only Melissa has taken water except for minor maintenance and chlorination water requirements. The other three Cities have held off taking the water relying instead on their ground water supplies (the transmission system is fully complete and functional so Cities may begin taking as desired; it is noted Anna is now taking water but did not during the water year). • Melissa actually takes / receives water from two points of delivery: one being the original Melissa connection with McKinney to receive water from NTMWD which dates back about 25 years and the second being the GTUA — CGMA transmission system. Each of these connections is separately metered; the original meter has a MT/P like the GTUA system. For the recently 2 ended water year, the Melissa original meter consumption was 211,360,000 gallons (which was less than taken through the original meter in 2012). Melissa actual use from the GTUA — CGMA meter was 112,278,000 gallons or 112,278 K gallons which was 52,965,500 gallons over their MT/P. Stated in water billing terms (1000 gallon increments), this represents 52,965.5 K gallons (1000 gallons). Melissa proposes to purchase the water in excess of the CGMA MT/P from the other three CGMA Cities. Melissa could have purchased more excess water from their original meter at $0.40 / K gals (the 2013 excess water rate); the standard rate for the recently ended water year (2012) was $1.75 / K gals (same water rate as GTUA — CGMA contract rate, which was the NTMWD customer rate). As in 2012, Melissa could saved some costs by maximizing the consumption from the original line since that consumption would have been at the excess water rate which would represent savings in water purchase costs by paying the excess water rate applicable to the original meter. However, such action would have resulted in a very large increase in the MT/P for the original meter, Melissa believed that moderation for that meter was more prudent in the long term, thus opening the opportunity for the other three CGMA Cities to sell a portion of their MT/P from the GTUA-CGMA meter to Melissa. Thus, this allows Melissa to keep a lower MT/P on the original meter for future years while helping to use a portion of the other CGMA Cities MT/P and reimbursing the other three CGMA Cities a small portion of their MT/P. • The cost calculations for the above described MT/P transaction that was agreed to in 2012 by the CGMA Member Cities was $0.99 / MGD, which was determined by averaging the MT/P water cost with the NTMWD customer city rate. This rate was a compromise between their normal CGMA Member City rate and the NTMWD Customer City Excess Water Rate as illustrated below: 2012 data Entities CGMA MT/P water/ 1000 GPD Melissa Excess Water Average rates $1.54 $0.44 $0.99 • It was noted in 2011 that this methodology could be used until all cities begin using the contract MT/P. Additionally, it actually encourages a City with another option to use a portion of the CGMA Cities MT/P by allowing that City to preserve other sources of water or to keep the other MT/P lower, at least up to the time that all the CGMA Cities are using their MT/P. Applying this same principal to the 2013 water year results in the following calculation: 2013 Proposed Purchase / Sell rate Entities CGMA MT/P water/ 1000 GPD Melissa Excess Water Average rates $1.75 $0.40 $1.075 Implementation Results: Melissa will agree to purchase from each of the other three CGMA Cities (Anna, Van Alstyne, and Howe) one-third of the volume over Melissa MT/P which was a total overage of 52,965,500 gallons. That volume divided by three results in 17,655,166.6 gallons that each of the other three CGMA Cities can sell to Melissa; broken into 1000 gallon increments the amount is 3 17,655.166 K gallons per City (Anna, Van Alstyne, and Howe). Anna, Van Alstyne, and Howe can agree to sell the above noted total of 52,965,500 gallons of water to Melissa at the agreed rate; each of these three cities share of the sale of 17,655,166.6 gallons or 17,655.166 K gallons. At the 2013 calculated rate (see table) of $1.075 / K gals, Melissa will thus pay to each of the three cities the amount of $18,979.30 (rounded to nearest penny). Process / Steps: 1. GTUA has verified the volumes from NTMWD billings; the above is believed to be the final calculations of water purchased by meter. 2. Each of the three selling Cities will adopt a Resolution authorizing an inter -local agreement to sell the above noted MT/P to Melissa at the agreed rate. 3. Melissa will adopt a Resolution authorizing an inter -local agreement to purchase the above noted MT/P from the three respective Cities at the agreed rate. 4. An inter -local agreement will be attached to each of the Resolutions noted in items 2 & 3 detailing the provisions of the sale / purchase between the selling CGMA Cities (Anna, Van Alstyne, and Howe) and the purchasing City (Melissa). 5. Following approval of Resolutions and execution of the inter -local agreements, Melissa will be able to pay the respective city for the agreed purchase. This can be completed as early in the 2014 fiscal year as the respective cities complete authorization of the stipulated Resolutions and Interlocal Agreements. . 6. Consultant will be pleased to draft the respective Resolutions based on the same or similar Resolutions adopted in 2012. 7. It is suggested that this document be attached as a reference document to the inter -local agreement to help clarify the concept and to serve as a future reference.