Loading...
HomeMy WebLinkAboutRes 2015-11-129 Howe Take or Pay Water ILA.pdfDecember 3, 2015 City of Anna Carrie L. Smith P 0 Box 776 Anna, TX 75409-0776 Re: Take or Pay Water Amount Due: Joy Stevens City Secretary CITY OF HOWE 116 East Haning • Post Office Box 518 Howe, Texas 75459 903-532-5571 Invoice $4,469.25 CITY OF ANNA, TEXAS RESOLUTION NO. 2015-11-129 (/LA 's Water Purchase) A RESOLUTION RELATED TO TWO INTERLOCAL AGREEMENTS BETWEEN THE CITIES OF ANNA AND VAN ALSTYNE, AND THE CITIES OF ANNA AND HOWE IN WHICH VAN ALSTYNE AND HOWE AGREE TO TRANSFER A PORTION OF THEIR RESPECTIVE CONTRACTUAL MINIMUM TAKE OR PAY WATER OBLIGATION WITH THE GREATER TEXOMA UTILITY AUTHORITY TO THE CITY OF ANNA IN EXCHANGE FOR AN AGREED PAYMENT FROM ANNA AND AUHORIZING THE EXECUTION AND ADMINISTRATION OF SAID INTER-LOCAL AGREEMENTS WHEREAS, the Cities of MELISSA, ANNA, VAN ALSTYNE, and HOWE have 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 Cities VAN ALSTYNE and HOWE have chosen to not accept delivery of some or all of the required water through the end of the 2015 water year (ended July 31, 2015) and each of said Cities desire to transfer a portion of its respective and obligated minimum take or pay for said 2015 water year to the City of Anna for consideration detailed in an interlocal agreement; and WHEREAS, the City of Anna desires to purchase a portion of the minimum take or pay from the Cities of VAN ALSTYNE and HOWE for the water year ended July 31, 2015 as explained in a memorandum to the City Managers I Administrators of the Cities of Melissa, Anna, Van Alstyne, and Anna dated October 5, 2015 by Donald E. Paschal, Jr., consultant to said cities, which memorandum is attached to the respective lnterlocal agreements for each specified City as "Exhibit A"; and WHEREAS, it is acknowledged that a companion or similar agreement is contemplated between the CGMA-GTUA Purchasing Cities of Melissa and Anna and the CGMA-GTUA Selling Cities of Van Alstyne and Howe. NOW, THEREFORE BE IT RESOLVED, by the City Council of the City of ANNA that: SECTION 1: The City Council of the City of ANNA authorizes the City Manager to execute interlocal agreements with the Cities of Van Alstyne and Howe under the terms detailed in said interlocal agreements, each of which provides for the following: A. Receiving the transfer a portion of said selling City's GTUA required minimum take or pay to Anna as provided for in the respective lnterlocal Agreement. B. Paying the invoice submitted by the respective selling City for the agreed portion of the 2015 water year minimum take or pay specified in the interlocal agreement as provided for in said 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 Cn1H\q IH eiob ci--Cttrne,3 seconded by Cnu nq\ ~~dJec J3 -tjru{ , the above resolution was approved by the City Council of the City of Anna at its meeting held this 10th day of November, 2015, by the following vote: L AYE RESOLUTION NO . 2015-11-129 (ILA's Water Purchase) l--1-o we_ --NAY ABSTAIN -- 2 INTERLOCAL AGREEMENT BY AND BETWEEN THE CITY OF ANNA, TEXAS AND THE CITY OF HOWE, TEXAS FOR PURCHASE AND CORRESPONDING SALE OF A PORTION OF THE SELLING CITIES MINIMUM TAKE OR PAY OBLIGATION UNDER THE GTUA-CITY OF ANNA AND CITY OF HOWE POTABLE WATER SUPPLY CONTRACT THIS INTERLOCAL AGREEMENT (this "Agreement") is made and entered by and between the CITY OF ANNA, TEXAS, a Texas Home-Rule Municipal Corporation, hereinafter referred to as "Anna", and CITY OF HOWE, TEXAS, a Texas General Law City hereinafter referred to as "Howe", collectively referred to herein as the "Cities", as follows: W I T NE S S E TH: WHEREAS, both Anna and Howe 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 Anna and Howe 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, hereinafter referred to as "GTUA" for the planning, construction, funding, and operations of a surface water supply system to serve the collective Contract Cities of Melissa, Anna, Van Alstyne, and Howe, which agreement specifies the obligations of each participant; 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 2014-2015 ended July 31, 2015 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 Cities of Melissa and Anna received delivery of water which equaled or exceeded the individual City required MT-P; and WHEREAS, the Contract Cities of Melissa, Anna, Van Alstyne, and Howe have a multi- year precedent of the referenced Minimum Take or Pay Buy-Sell concept as referenced herein and as is further referenced and detail in "Exhibit A" attached hereto for reference in establishing the buy-sell rate; and WHEREAS, the Cities Van Alstyne and Howe are desirous of selling to Melissa and Anna a portion of their unused MT-P and Melissa and Anna are willing to purchase a portion of the unused minimum MT-P as defined in this Agreement and detailed in "Exhibit A" thus MT-P Transfer Agreement for 2015 water year -Anna I Howe -Page I allowing Van Alstyne and Howe to recover a portion of the purchased but unused MT-P for the stated water year; and WHEREAS, the background of the above noted agreements, volumes, rates, and circumstances are further detailed in the October 5, 2015 memorandum attached hereto for reference and labeled "Exhibit A". NOW, THEREFORE, Anna and Howe, 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, 2015 and shall be executed and consummated in full between October 15, 2015 and December 31, 2015 and shall not apply to subsequent water volumes or water years unless said Cities so authorize by subsequent agreement. II. AGREEMENT The Cities agree that Howe shall transfer 3,347,750 gallons (3,347.75 one thousand gallon increments) of MT-P water to Anna for the water year ended July 31, 2015 and Anna shall remit to Howe a payment for said transfer of MT-Pat the rate of $1.335 per thousand gallons totaling the sum of$ 4,469.25 as payment in full for said portion of Howe's MT-P. Following execution of this agreement, Howe shall submit to Anna an invoice for the transfer of the described MT-P for the above stated sum and Anna 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, 2015, although it is specifically provided that completion of said invoicing and payment after said date shall not invalidate any portion of this Agreement, it being the intent however to complete said transaction by the stipulated date. III. RESPONSIBILITIES OF THE PARTIES 1. The respective City Councils of Anna and Howe shall each approve this Agreement authorizing the sale I purchase of MT-P as described herein and further detailed in the attached Exhibit A. 2. Howe, following approval of this Agreement by the parties hereto shall submit to Anna an invoice for the referenced gallons of MT-P water detailed above in Section II and in the stipulated amount. 3. Anna shall remit to Howe the above stated payment for the transferred MT-P within fifteen (15) working days of the receipt ofreferenced invoice. 4. Any party hereto wishing 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 MT-P Transfer Agreement for 2015 water year -Anna I Howe -Page 2 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 C. 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. Anna and Howe herein recognize that the continuation of any 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 Anna and Howe, 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, cost, 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, Anna and Howe 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. x. VENUE MT-P Transfer Agreement for 2015 water year -Anna I Howe -Page 3 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 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 2015 water year -Anna I Howe -Page 4 IN WITNESS WHEREOF, the parties have executed this Agreement by signing below. CITY OF ANNA, TEXAS CITY ATTORNEY \ CITY OF HOWE, TEXAS Date:-+-/~~' 3~,_a_a;_~--By·W ioesphefd City Administrator APPROVED AS TO FORM CITY ATTORNEY MT-P Transfer Agreement for 2015 water year -Anna I Howe -Page 5 ACKNOWLEDGMENTS STATE OF TEXAS § § COUNTY OF COLLIN § This instrument was acknowledged before me on the /tJ +"-day of /Jcrt1£Jtn be...-= 2015, by C/hiVl0 a k1 o~y c p&i; Up S:t.ndeirS of the City of ANNA, Texas, a Texas Home-Rule Municipal Corporation, on behalf of said municipality. \\'''""'" ··'~;~~'i._t'.~f:'--. CARRIE L. SMITH ti~a7i"\ Notary Public. State of Texas -..~·.r~.·~,o My Comm1ss1on Expires L ·:.,,;:~:~~:~~~,~~ January 2 7, 2019 STATE OF TEXAS § § COUNTY OF GRAYSON § c?.bA 1 ~ d-J:::i/2/2 Notary Public:sta1 .7rieXas This instrument was acknowledged be p re me on the 3rd day of !Jecem6.1Jf , 2015, by Joe_ SAeph11rd , C/ly Adnu)J/SltP"Ji'f the City of Howe, Texas, a Texas General Law City, on behalf of said municipality. MT-P Transfer Agreement for 2015 water year -Anna I Howe -Page 6 Exhibit A Attach copy of October 5, 2015 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 2015 water year -Anna I Howe -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 5, 2015 Both Melissa and Anna 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, 2015. Based on the precedent initiated in 2010 and continued through 2013, 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 Anna, however, they could intentionally curtail consumption from their previously existing supply meter with NTMWD (original NTMWD meter) at a lesser cost per 1000 gallons and shift consumption to the GTUA-CGMA meter to use some of the other cities Minimum Take or Pay (MT-P); that cost has been the average price between that which they would have paid if taken from the original NTMWD meter and the GTUA-NTMWD rate. This action has allowed other CGMA Cities an opportunity to recoup a portion of the MT/P water cost paid during the water year. With Anna also exceeding their MT-P, Anna should be afforded the opportunity to purchase the extra water taken (over their MT/P) thus allowing the other CGMA cities further opportunity to recoup some of their Mt- p water cost. 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 a portion of their MT/P to Melisa at the price I cost of that water as detailed below; this summary is an update of the same document from last year. Background: • Minimum Take or Pay I City -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. The District excess water rate would allow the cities to acquire water at an attractive rate if the MT-P were exceeded for each successive year. • 2014-2015 water year take -For the recently ended water year, only Melissa and Anna have taken their respective full MT-P water. For the water year ended July 31, 2015, Melissa and Anna took water in 10 of the 12 months and with growth are expected to take water year round during the 2015 water year (August 1, 2015 through July 31, 2016. Additionally, it is possible that Van Alstyne may begin taking in the summer of 2016, although it is more likely VA will take water in the succeeding water year (2017). No firm date has yet been set for Howe to take water. During the 2 2015 water year ground water supplies continued to provide a significant portion of the water used by Anna and all of the water used by Van Alstyne and Howe • Break out of Maintenance Water -In an effort to balance the impact of user flushing or maintenance water which increased in the past year as compared to prior year lesser minor water use for overall system maintenance, the two user cities (Melissa and Anna) are being assessed half of the use related flushing which totaled about 20,909 gallons with all four cities sharing equally a more normal maintenance water usage. Thus, all four cities share the more normal maintenance water use resulting in the the non-using cities are being charged about 6,970 gallons or 3,485 gallons each which is similar to prior years . The proration was based on half of the flushing water being charged to the four cities equally and the other half being charged to Anna and Melissa on the ratio of their consumption to the second half. • Melissa background of separate NTMWD take point -Melissa actually takes I receives water from two points of delivery: one being the original Melissa connection with McKinney to receive water from NTMWD which dates back over 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. Melissa actual use from the GTUA -CGMA meter was 83,834,000 gallons or 83,834 K gallons which was 24,521,700 gallons over their MT/P. Stated in water billing terms (1000 gallon increments), this represents 24,521.7 K gallons (1000 gallons). • Buy-Sell rate calculation -The prior year's practice of rate determination for the extra water has been based on Melissa purchasing the water in excess of the CGMA MT/P from other CGMA Cities at a blended rate. That blended rate is based on the fact that Melissa could have purchased more excess water from their original meter at $0.56 I K gals (the 2015 excess water rate); the standard rate for the recently ended water year (2015) was $2.11 I K gals (same base water rate as GTUA -CGMA contract rate, which was the NTMWD customer rate without the McKinney pass through charges). • Historical calculation rationale -As in 2014, Melissa could have 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 followed the practice of moderation for that meter which 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 has allowed 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. • Continuation of Historical Calculation Methodology -It is proposed that the same rate methodology be applied to water purchases by both Melissa and Anna at the historical practice for Melissa. • Cost Calculations for 2014-15 water year -The cost calculations for the above described MT/P transaction that was agreed to in 2015 by the CGMA Member Cities was $1.335 I MGD, which was determined by averaging the MT/P water cost with the NTMWD customer city rate. This rate was an average of the normal CGMA Member City rate and the NTMWD Customer City Excess Water Rate for 2015 as illustrated below: 3 2015 data Entities CGMA MT/P water/ 1000 GPO Melissa Excess Water Average rates $2.11 $0.56 $01.335 In 2014, Anna took a small amount of water and in years prior to 2014, none of the CGMA cities other than Melissa took any water; thus, the amount of excess water over the MT-P that Melissa used was shared equally between the three non-taking Cities. In 2015, the principles of the methodology are extended with both Melissa and Anna taking more water that their respective MT-P. • 2015 Water Compared to MT-P -Continuing with the methodology, except with two Cities exceeding the MT-P, it is suggested that the methodology be amended I adjusted to provide a proration of the unused water to be sold by non-MT-P Cities to Cities exceeding their MT- P. Additionally, this practice actually encourages a City with other options 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/Plower, at least up to the time that all the CGMA Cities are using their MT/P. Calculation of the proportionate share of unused MT-P to be sold is as follows: Proportionate Share of unused MT-P available to be sold to Excess use City: MT-P Melissa Anna Van Howe Alstyne MT-P water 59,312.5 59,312.5 59 ,312.5 59 ,312 .5 Used 83,834 66,008 3,484 .9 3,484.9 Unused 55,827 .6 55,827.6 Excess water to be purchased by 24,521.7 6,695.5 NA NA excess Mt-P City Port ion of Melissa & Anna overage to NA NA 15,608.6 15,608.6 be offered for sale to Melissa (excess water was 31,217 .3 K gal • Applying this revised (prorated) concept to the 2014 water year results in the following calculation: 2015 Proposed Purchase I Sell rate (same as noted above) Entities CGMA MT/P water/ 1000 GPO Melissa Excess Water Average rates $2.11 $0.56 $1.335 2015 Proposed MT-P Sale Amount (total $41,675.02) Item Van Alstyne Howe K i::iallons offered for sale I purchase 15,608.6 15,608.6 Total amount of sale by I purchase from $20837.51 $20837.51 2015 Proposed MT-P Purchase Amount (total $41,675.021 Item From Van Alstvne From Howe K i:iall o ns offered for sale I purchase -Total 15,608 .6 15,608 .6 Melissa: Purchase K Gallons 12 ,260 .85 12,260.85 Purchase $ amount $16368.26 $16368.26 Anna: Purchase K Gallons 3 ,347 .75 3,347.75 Purchase $ amount $4,469.25 $4,469.25 Implementation of Sale I Purchase: • Buying City Actions -Melissa and Anna may purchase from each of the other two CGMA Cities (Van Alstyne, and Howe) the above calculated pro-rated portion of the Melissa and Anna CGMA water volume taken over the Melissa and Anna respective MT/P which was a total overage of 31,217.3 K gallons. That volume applied to the calculated ratio results in Van Alstyne and Howe each selling 15 ,608 .6 K gallons of minimum take or pay to Melissa and Anna . • Selling City Actions -Van Alstyne, and Howe may agree to sell the above noted total of 31,217 .3 gallons (15,608.6 K gallons each) of MT-P water to Melissa and Anna at the agreed rate of $1 .335 / K gallons; the ratio of excess water used by Anna and Melissa is applied to the formula to arrive at the amount each will buy from Van Alstyne and Howe at the blended rate of $1 .335 I K gallons with the total amount shown in the above table. Under this scenario, Melissa would pay a total of $32, 736.52 and Anna would pay a total of $8,938.50 broken down by City as indicated above. It is noted that the amounts are significantly more than in 2014 . With continued growth, consumption is expected to escalate in the 2016 water year and will likely exceed the 2015 water year significantly. Process I Steps: 4 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 two selling Cities will adopt a Resolution authorizing an inter-local agreement to sell the above noted MT/P to Melissa and Anna at the agreed rate. 3. Melissa and Anna will adopt a Resolution authorizing an inter-local agreement to purchase the above noted MT/P from the two 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 I purchase between the selling CGMA Cities (Van Alstyne and Howe) and the purchasing Cities (Melissa and Anna). 5. Following approval of Resolutions and execution of the inter-local agreements, Melissa and Anna will be able to pay the respective city for the agreed purchase. This can be completed by late 2015 or early 2016 as the respective cities complete authorization of the stipulated Resolutions and Inter-local Agreements .. 6. Consultant will be pleased to draft the respective Resolutions based on the same or similar Resolutions adopted in 2014. 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 .