HomeMy WebLinkAboutRes 2024-12-1706 Agree to Transfer a Portion of GTUA Minunum Annual Volume to MelissaRESOLUTION \O. :)0, V ` U - /70 6
A RESOLUTION RELATED TO A\ I'\TTER-LOCAL AGREEE\TINT
BETIVEEN THE CITIES OF AN\A A\D MELISSA IN NVHICH ANNAAGREES
TO TRANSFER A PORTION OF IT'S RESPECTIVE CONTRACTUAL
A\\L"AL VOLUME Vt aTER OBLIGATION WITH
THE GREATER TEXOMA UTILITY AUTHORITY TO THE CITY OF MELISSA
IN EXCHANGE FOR AN AGREED PAYMENT FROM MELISSA A\
D AL'HORIZING THE EXECUTION AND AD.MII' ISTRATIO\ OF SAID INTER -
LOCAL AGREE\IE\T NVHEREAS.
the Cities of MELISSA. A\TNA. VAN ALSTIITE. and HONVE have previously
authorized and executed agreements with the Greater Texonia Utility, Authority fora surface
water supply system to be planned. funded. constructed. and operated by GTUA. including
the payment of monthly Mininium Annual Volume (MAV water) purchase provisions necessary
to fund said water transmission system and purchase of potable water: and WHEREAS.
the City of A\TNA has chosen to not accept delivery of some or all of the required
water through the end of the 2024 water year (ended July 31, 2024) and said City desires
to transfer a portion of its respective and obligated Minimum Annual Volume for said 202.
1 water year to the City of _MELISSA for consideration detailed in ail inter -local agreement: and
WHEREAS.
the City of MELISSA has indicated interest in purchasing the stated portion of
the Minimum Annual Volume from the City of A\1A for the water year ended Jul- 31, 2024 as
explained in a report nleinorandulll to the Cite ManagZN ersAdministrators of the Cities of Melissa.
Anna. Van Alstyne. and Howe dated September 21, 2024 and revised October 3, 2024
by Donald E. Paschal. Jr.. consultant to said cities. which memorandum is attached to the respective
Inter -local agreements for each specified City as "Exhibit A and NOIV.
THEREFORE BE IT RESOLVED. by the City Council of the Cite of ANNA that: SECTION
1: The City Council of the CAN of AN i 'A authorizes the City Manager to execute an inter -
local agreement with the City of MELISSA udder the terms detailed in said niter -local agreement.
which provides for the following: A.
Transferring a portion of said selling City of A\TNTA's GTUA required 2024 water year
MAV to the City of MELISSA as provided for in the respective Inter -local agreement.
B.
Sending all invoice to the receiving City of MELISSA for the volume of water said respective
selling City of A\T\A is transferring to said receiving Cite of MELISSA at
the price stipulated for said agreed portion of the 2024 water year MAN' specified in
the inter -local agreement.
Receiving the transfer of a portion of said selling City of AMA's GTL:A required 2024
water year MAV to MELISSA as provided for in the respective Inter -local Agreenrent,
A. Paving the invoice submitted by the respective selling City of AN?N'A for the agreed
portion of the 2024 water year yLAVV specified in the inter -local agreement.
SECTION 2: It is specifically provided that the participating cities shall have the rialit to verify_
quantities of water with the GTUA prior to final consummation of the attached agreement.
Upon motion ofl-4o-4,4seconded by the
above resolution was approved by the City Council of the City of ata4- atits meeting lield
this & day, of kQ.eyw2 2024. by the following vote: AYE \AY ABSTAIN
avor. City of
Anna Cite Secretary. eity
of Anna SEAL)
INTERLOCAL AGREEMENT BY AND BET«-EEN
THE CITY OF MELISSA, TEXAS AND THE CITY OF ANNA, TEXAS
FOR PURCHASE AND CORRESPONDING SALE OF A PORTION OF THE
SELLING CITY'S 1IINIMUM ANNUAL VOLI--NIE OBLIGATION UNDER THE
GTI-A-CITIES OF MELISSA, ANNA, `_AN ALSTYNE, AND HOR"E POTABLE
NA7 ATER SUPPLY CONTRACT
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
the CITY OF ANNA. TEXAS, a Texas Hoille Rule Municipal Corporation" hereinafter
referred to as "Alma". collectively referred to herein as the "Cities as follows:
WITNESSE TH: R'
HEREAS. both Anna and Melissa are political subdivisions within the ineaning of Interlocal
Cooperation Act. Texas Government Code. Chapter 791. as amended (tile "Act"): and R'
HERE AS. the Act provides authority for entities such as Anna and Melissa to enter into
inter -local agreements with each other to perform goverlunental functions and services as set forth
in the Act: and R'
HERE AS, each of the Cities have previously entered into all agreement with the Greater
Texolna t.Ttility Authority. hereinafter referred to as "GTUA" for the planiiii11i. construction.
ftindlilg, and operations of a surface water supply system to seti-e the collective Contract
Cities of Melissa. Anna. Van Alstvne. and Howe. which agreement specifies the obligations
of each participant: and R"
HEREAS. 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 lnontllh7 basis. each Participating City shall be charged for water
at the greater of its inininium annual volume amount (MAV) under the Potable Water Supply
Contract made and entered between such Participating Cities and GTUA: and HERE
AS, for the water year 2023-2024 ended July- 31, 2024, as provided for in said water
purchase agreements. including the North Texas Municipal Water District, hereinafter referred
to as "NTMNN'D" standard Nvater purchase agreement. only the Cities of Howe. Vail Alstyne.
and Melissa received delivery of water which equaled or exceeded the individual City required
MAV: and HEREAS,
the Contract Cities of Melissa. Anna. Vail Alstvlle, and Howe have a multi- year
precedent of the referenced Minimum Animal Volume (-MAV) Buy -Sell concept as referenced
herein and as is fiirther referenced and detailed in "Exhibit A" attached hereto for reference
in establisllina the buy -sell rate. identifying the MAV water to be transferred, and referencing
the amount of purchase transfer cost: and WHEREAS.
the City of Anna is desirous of selling to each Van Alstvne. Melissa. and Have
a portion of their unused MAV and Van Alstyne, Melissa. and Howe are willing to ILA
for NIAN' Transfer Agreement from Anna to Melissa for 2024 Water Year - Page 1
purchase said unused portion of the SLANT as defined in tills agreement and detailed 111-Elllibit
A" thus allowing Anna to recover a portion of its purchased but unused MAV for tile stated
water year: and
HEREAS. the background of the above noted agreements. volumes. rates. and
circumstances are further detailed ill the September 21, 2024, updated October 3, 2024,
memorandum titled "Sale of GTLTA-CG\I_A Buy -Sell MAN' to Participant City- attached hereto
for reference and labeled "Exhibit A".
NOW, THEREFORE, MELISSA and AN -NA. for and in consideration of the recitals set
forth above aIld terllls and conditions below. agree as follows:
TERM
This Agreement shall apply to the NTMWD water year ended July 31, 2024 and shall be
executed and consummated in frill bet«-een October 31, 2024 and January 31, 2025 or as soon
thereafter as reasonably possible and shall not apply to subsequent Water VOlUllleS or Rater years
Unless said Cities so authorize by subsequent agreement.
11.
AGREEMENT
The Cities agree that ANTNA shall transfer 187,744.200 gallons (187,744.2 one-thousand-
aallon increments) of MAV water to MELISSA for the Rater year ended Jul'31, 2024, and
MELISSA shall remit to ANNA a paynlellt for said transfer of MAV at the rate of 53.09 per
thousand gallons totaling the sum of 5580,129.70 as payment in frill for said portion of Anna's
unused 2024 MAV. FolloNving execution of this agreement. ANTNITA shall submit to MELISSA
an invoice for the transfer of the described MAV for the above stated sum and MELISSA shall
remit payment for said transfer within thirty (30) days of receipt of said invoice. it being the
intent that tills transaction shall be completed as soon as reasonabh, possible. but on or before
January 31, 2025. if possible. although it is specifically provided that completion of said
invoicing and paN inert after said date shall not invalidate any portion of this agreenlellt, it bei11-
the intent Melissa to complete said transaction before or by the stipulated date. `
III.
RESPONSIBILITIES OF THE PARTIES
1. The respective City Councils of MELISSA and ANNA shall each approve an Interlocal
agreement authorizing the sale purchase of tile stipulated portion of MAV Rater as described
herein and further detailed Ili the attached Exhibit A.
2. ANNA. following approval of the interlocal agreement by each party thereto shall submit
to MELISSA an invoice for the referenced volume of MAV water detailed above in Section II
and for the stipulated sell purchase amount.
3. MELISSA shall relllit to ANT\TA the above stated payment for the transferred MAV water
within thirty (30) Nvorking days of the receipt of referenced invoice.
ILA for NIAV Transfer Agreement from Anna to Melissa for 20-4 Water Year - Page ,
4. Any part`, hereto xvishing to verify the metered quantities of water or the portion of the
liiimillum annual volume 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 — ,
above. Should GTUA verification indicate a different yoluille Of Illllllillulll annual volume than
referenced herein. the parties hereto shall niodifv said quantity and the resultant payment for said
quantity of 1ii11111niiiii annual volume prior to the invoicing and payment phase (item III — ? & 3
above).
IV.
TERMINATION
The Cities recognize that this Agreement shall commence upon the effective date herein
and continue in fitll force and effect until termination in accordance with its provisions. AN A
and MELISSA herein recognize that the continuation of any contract after the termination of this
aareenlent or impacting any future water year shall be subject to City Council approval for each
City. respectively. Following termination~of this agreement. or sllould either City fail to execute
this agreement. there shall be no further commitment hereunder. However. upon the occurrence
of such event in which either party terminates this Agreement by giving the other party ythirt
30) days written notice. the selling party shall foilvard such notice to GTL"A so that alternative
billing for the water volume specified in this agreement may be processed per the GTUA-C'G A
billing policy.
V.
RELEASE AND HOLD HARMLESS
ANTINTA and MELISSA. to the extent authorized under the constitution and laxys 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 nezhaence. ANTNA and _X4ELISSA 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 against third parties under the laws and
court decisions of the State of Texas.
U.
AUTHORITY TO SIG\
The undersigned officer and or agents of the parties hereto are the properly authorized
arv° authority to execute this Agreement on behalf of the partiesofficialsandhaveihenecess
hereto. Tile Cities have executed this Agreement pursuant to the authority granted by its
governing body.
Ix.
SEVERABILITY
ILA for 1IAV Transfer Agreement from A is to Melissa for 2024 Water Year - Page 3
The provisions of this Agreement are severable. If any paragraph. section. subdivision.
sentence. clause, or phrase of tills 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
This Agreement and anv of its terns or provisions, as well as the rights and duties of the
parties hereto. shall be governed by the laws of the State of Texas. Tile parties agree that this
Agreement shall be enforceable in Collin County. Texas, and. if legal action is llecessal`T.
exclusive venue shall lie in Collin County. Texas.
XI.
INTERPRETATION OF AGREEMENT
It is acknowledged that tills 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.
ZII.
REMEDIES
No rlallt or remedy granted herein or reserved to the parties is exclusive of any right or
rellledv aranted by law or equity: but each shall be cumulative of every right or remedy given
hereunder. No covenant or condition of this Aareeniellt may be waived without the express
Written consent of the parties. It is further agreed that one (1) or snore instances of forbearance
by either party !n the exercise of its respective rights under tills Agreement shall in no way
Constitute a waiver thereof.
1III.
SUCCESSORS AND ASSIGNS
The parties each bind themselves. their respective successors, executors. administrators
and assigns to the other party to tills contract. "Neither party will assign. sublet. subcontract or
transfer any interest in this Agreement without the prior written consent of the other party. \To
assignment. delegation of duties or subcontract under tills Agreement will be effective without
the written consent of both parties.
ILA for MAV Transfer Agreement firom Anna to Melissa for 2024 Water Year - Page 4
I\ «'ITNESS WHEREOF, the parties have executed this Agreement b4 signing bolo« .
Date:
APPROVED AS TO FORT:
i
CITY ATTORNEY"
Date:
APPROVED AS TO FORM
CITY ATTORNEY
CITY OF AN\A. TEXAS
Bv: 0` 0
van Henderson
City Manager
CITY OF MELISS A, TEXAS
Jason Little
C'it-v TManager
ILA for \IAN' Transfer Agreement from Amta to Melissa for 2024 Water Year - Page 5
ACKNOWLEDGMENTS
STATE OF TEXAS 5
ti
COUNTY OF COLLIN
This instrument was acknowledged before iue on the l q+l day of 44
202. b-,' 4of the City of Anna. Texas, a Texas Honie-
Rule Municipal Corporation. on belialf of said municipality. CARRIE
L. LAND Notary
Public, State of Texas rr
Comm. Expires 02-04-2027 Notary PUb11C. Matz Ot TzxaS Notary
ID 11419404 STATE
OF TEXAS 5 COUNTY
OF GRAYSO\ 5 This
instrument Nyas acknowledged before me on the day of 2024.
by of the Cite of Van Alstvne, Texas. a
Texas Home Rule Corporation, on belialf of said municipality. Notary
Public. State of Texas Exhibit
A. Attach
copy of October3, 2024 memorandum from Donald E. Paschal. Jr. to CGMA Mayors and
Citv Manaaers regarding the subject: "Sale of GTt- A-CGMA MAN' to Participant City" ILA
for CLAN' Transfer Agreement from Anna to Melissa for 2024 Water rear - Paae 6
DONALD E. PASCHAL, J R.
904 Parkwood Court McKinney, TX 75070 Tel. & FAX 972.529.1325
email: don@paschalconsulting.com
To: CGMA City Managers and Mayors
Subject: "Sale of GTUA-CGMA Buy -Sell MAV to Participant City Report'
with Buy -Sell Program Concept Changes / Revisions
Date: October 3. 2024
Buy -Sell Concept Overview:
GTUA-CGMA Cities have engaged the Minimum Annual Volume (MAV) Buy -Sale Concept
since October 2011. The process of the Buy -Sale process includes a detailed Concept Report
with recommendations from the CGMA Facilitator / Consultant (Don Paschal), a summary
report of the recently completed Water Year water take with data showing both unused and
overused MAV (Minimum Annual Volume) includes an annual report, a recommendation from
Consultant (Don Paschal). the MAV available for sell from under using Cites to overusing
Cities. and the projected MAV volume in K (1000) gal units proposed for sale to buying Cites.
Both Selling and Buying cities must execute an interlocal agreement documenting the sale in
MAV volume and the dollar amount of the buy sell actions. The Concept plan and associated
MAV volumes are recommended to the Cities by the CGMA Board at the Fall Board meeting
and subsequently followed by City adoption of the authorizing Resolutions & ILAs. The
Consultant has traditionally prepared the Resolutions and ILA using a consistent format for all
Cities. Consultant typically distributes the documents to all Cities prior to the Fall Board
meeting to allow time for the respective City Staffs to review and provide comments to the
Mayors prior to the CGMA Board meeting and ultimately to their respective City Councils,
The purpose was and still is to allow Cities using more than their MAV (formerly MT/P) to
purchase unused MAV from Cities using less than their MAV (Minimum Annual Amount). The
selling City recoups a portion of their already purchased MAV and the purchasing City
purchases an amount of the selling city(s) unused water up to the amount of aggregate
underuse by the selling City(s). The purchased volume of untaken / unused MAV is prorated
as a ratio of the buying Cites overuse to the aggregate overuse by all CGMA cities. Overage
of water in excess of the MAV purchased by overusing Cities cannot exceed the unused MAV
volume of underusing Cities. .
All the water purchased frorn NTMWD by GTUA for the benefit of CGMA Cities goes through
GTUA as the contracting J managing entity based on the collective CGMA MAV for the subject
Water Year (August 1 through July 31). The MAV for each City is paid in full by all CGMA
Cities in monthly payments beginning the first month of the GTUA (and City) Fiscal Year
October 1 through September 30 following the Water Year completed on the prior July 31 WY
completion. Currently all CGMA Cities have the same FY as GTUA and NTMWD. Following
the end of the Water Year, final accounting is computed by NTMWD (usually the variance in
2
NTMVVD and GTUA total take is negligible with final accounting of volumes based on the end
of WY "true up". Additionally, any rebates i refunds based on NTMWD system cost savings
are also reported and incorporated on any end of year "true up'' by GTUA and either credited
to the last billing of the FY or first billing of the new FY or may be paid directly to the subject
City by GTUA.
The purchased MAV water between buying and selling City is then reduced from the final
calculated take of the buying Cities to arrive at the MAV for the subsequent Water Year (but
not less than the prior year MAV). The Selling City subsequently invoices the buying Cities
for the prior year MAV purchased at a reduced rate generally based on historical variable cost
reduction. Thus, both the selling and buying Cities received benefit with the selling Cities
recouping a material portion of the previously purchased but unused MAV and the buying Cities
paying for the additional water taken, but at the somewhat reduced rate and receiving credit
reduction) for the subsequent WY IV1AV, The Buy -Sell of MAV water is accomplished through
an interlocal agreement as referenced above between the cities and thus is not a component
or process which GTUA either blesses or manages other than documenting the adjustment to
future MAV of the buying Cities (the selling Cities subsequent year MAV is not generally
impacted by the buy -sell process (but could be impacted by flushing water used).
The purpose of this Communication to the Cities is to advise all CGMA participants that the
Buy -Sell Program has been impacted by the Contract Entity agreement implemented in 2021
Water year by NTMWD. Prior to that date. NTMWD operated under a policy which provided
with entities using water volume in excess of the then Minimum Take or Pay which was the
term for minimum required water purchase for the water year: that term and concept were
replaced in 2021 by the new standard Member and Custorner Contract which used the term
Minimum Annual Volume (MAV) referencing the base level of water obligation by each entity
during a given Water Year. The terminology change was mainly to provide awareness of two
major changes:
1. Prior to the change. water purchased more than the MT/P was charged as a significantly
reduced rate based on the calculation of production cost that were not incurred by
NTMWD due to the water not being produced and pumped to the users. Cost related
to debt service, maintenance, and System operational cost were all charged as
budgeted as the minimum revenue to keep the system solvent and operational,
2. Subsequent to the change in 2021. Member Cities which had experienced significant
reduction in water demand due to conservation programs could qualify through specific
criteria for a gradual reduction in MAV whereas there previously had been no way to
reduce annual water year contract water volume.
GTUA and the CGMA Cities had been practicing the buy -sell concept since 2011 using the
reality that the contract was with GTUA. an "aggregating entity" responsible for a single GTUA
MT/P or MAV. Each participant City had its own MT/P or MAV under their contracts with GTUA
same basic contract as NTMWD has with others including GTUA. thus there is consistency in
terms, definitions, etc.). In 2011 we developed the mechanism for under MAV users to sell a
portion of the untaken MAV to other CGMA participants taking excess water over their MAV.
This allows users taking excess water over MAV to reduce a portion of the increase in their
MAV while allowing the under user to recoup a portion of the water charges paid during prior
Fiscal year for water year MAV. The GTUA group is the only group known by this consultant
3
to use this concept to reduce the sunk cost of underuse MAV while helping over users to
reduce their subsequent year MAV, Both entities receive benefits which is a significant offset
to the increased cost of excess water or reduction of cost of under MAV use to the respective
GTUA City customer participants.
This Concept Report also serves the purpose of advising each Participant City of any prograrn
implementation changes for the current Water & Fiscal Year with summaries as needed of the
historical program interpretations and adjustments. The primary adjustments involve
interpretation of the credit to the water rate paid by buying Cities and similar reduction in
payment received by the selling City or Cities. Prior to 2021, the cost of excess water varied
but was generally as much as 35% or more of the base water cost per K gallons Beginning in
2021. the cost credit buyers received from sellers has been relatively moderate being generally
based on the cost of power and chemical cost that the District might have avoided under the
older program.... this was the best way to identify a cost that mimicked the old system. While
underuse does not occur every year.. there are years where this program cannot be used,. but
it was positive under the old definitions / program and has been worthwhile under the new MAV
program.
It appears to be a good opportunity for all CGMA cities for the recently completed water 2024
Water Year to either reduce otherwise lager 2025 MAVs. recoup a large portion of the untaken
MAV cost. and purchase another's unused MAV at an attractive cost: the program is therefore
recommended for 2024 and future years. Consultant will proceed with crafting the final
program for CGMA Board and Cities to act on which consists of Buy -Sale Interlocal
Agreements and Resolutions that will be forwarded to Participant Cities for review by City Staff
to allow review prior to approval of the enacting City Resolutions which authorize execution of
the Interlocal Agreements between buying and selling Cities. This process can be executed
as early as the end of September or in October with payments occurring in October or later. It
is noted as a reminder that the last MAV payment is made in September with October
beginning a new Fiscal Year of payment for Water Year water take based on the 12-month
water year ending July 31. It has been the practice for the CGMA Board to consider and act
on recommending the program for acceptance and approval at the fall, preferably October.
Board Meeting, CGMA Board endorsement at the noted fall Board Meeting (or by email review
and approval as may be necessary) is a historic precedent that serves the purpose of group
review and discussion followed by the CGMA policy advisory Board recommending the
program and having that action recorded in the Board Minutes. There could be adjustments
to the concept details as implementation alternatives are identified,
Concept Modifications Contemplated:
The following summarizes the concepts and proposed actions for Buy -Sell Program
modifications:
Historical 2011 thru 2024 Program & Summary of Proposed Program
Modifications
Based on prior year precedents. a member City which took water beyond its MAV
may acquire a portion of the unused MT/P (now MAV) from other CGMA member
City or Cities. Such acquisition allows the selling City to recoup a major portion of
4
the cost of the MAV paid during the Fiscal Year for Water Year MAV (ending on
July 31 of a given year) for an established discounted price.
This practice is recommended for continuation for the benefit of all CGMA
Cities with adjustments as detailed below.
The change (implemented in 2021) is that the established price no longer has a
NTMWD Excess Water Rate to use for adjusting the price of the buy -sell MAV
water, The NTMWD base contract provides for Additional Water vol over MAV. to
be purchased by Cities at the annual water rate set by NTMWD plus the GTUA-
CGMA cost components set by GTUA-CGMA Policy. The NTMWD Customer
Contract, implemented with the 2021 Water Year provides that Contract & member
Cities (entities) pay the full water rate for Additional Water (at least until such time
as The District reinstates some form of excess or discounted additional water take
policy. Therefore, based on the 2021 Customer contract, buying Cities shall pay
the established water year rate for Additional Water taken over the MAV, This
would require cities using more than the MAV to pay the annually established MAV
water rate for volumes over the MAV. Hence. the benefit of the CGMA-GTUA
group) system. which NTMWD considers as a single MAV purchase by GTUA,
provides the opportunity for unused water by some participants to sell their unused
MAV to participants using more that its established MAV for a given water year at
a discounted rate (otherwise, all cities would simply pay the full rate resulting in
overpayment for the GTUA system.
Basis for buy -sell rate calculation — GTUA and other Customer as well as Member
Cities were impacted starting in 2021 by an advisory notice of failure to reach the
MAV volume from NTMWD if a portion of the MAV was not used, The basis of
this concept was that entities using less than the Water Year MAV could share
proportionally in one-third of the unspent i unused NTMWD budget. This policy
of the District has not produced much savings or refunds for most entities except
larger entities which had allowed their MAV to get out of hand by not implementing
conservation policies aggressively resulting in high and unsustainable use.
Further, this policy is restrictive for CGIVIA Cities as the individual entities are
generally not contract entities of NTMWD. CGMA as a whole seldom has
significant untaken MAV and thus the policy is of little use. In reviewing the recent
history of CGMA Cites. the tendency has been to use excess water (above MAV
level) after hitting the established MAV. The growth of all CGMA Cities tends to
indicate that refunds from unuse are not likely to be significant. On the other hand,
the Buy -sell has projected positive benefits for under and over users of their MAV,
For 2022 Water Year. the available NTMWD data showed a discount for Cities
selling unused MAV at a price of S0.60 1 K gallons, No buy -sell was performed in
2023 water year as all cities used their full MAV
For2024 Water year, it is suggested that the same rate as 2022 be used; thus a
0.60 discounted purchase of unused MAV. As Water Rates rose, it is likely that
if available.. similar data as used in 2022 would have generated an equal or higher
5
rate than the 2022 WY discount for the buy -sell agreement, therefore, using the
same discounted amount as 2022 is rational. If any adjustments were identified,
it is believed that a higher discounted amount than S0.60 / K gallons would result.
Observations for buy -sell alternative discounting polities:
The Policy provision has been: the Selling Participants discounted price for the
water being sold under the Buy -Sell agreements shall be based on the cost
savings from NTMWD budget data using cost avoidance for electricity,
chemicals. and similar cost not incurred for untaken N1AV. Unused group MAV
will be proportionately shared among Participant's individual under use of Entity
MAV allowing individual entity remaining unused MAV to be sold through the
Buy -Sell Program and discounted to the Buying Participant.
The GTUA-CGMA buy -sell cost calculations should be adjusted to apply the
discount methodology as the buy -sell cost calculation using the NTMWD data
if available, although it is likely difficult to secure all the sarne data in the future
since the District does not routinely produce that data as it is no longer part of
District operational contracts. GTUA should be able to secure enough
indicators of likely impact on the discount rate even if specific. detailed costs
are not available. Therefore. if the CGMA group wants to retain the practice of
using available District data there is likely still enough information to provide a
rational provision available to discount the buy -sell MAV water,
Alternatively, the cost discounted rate or rate concept could be one approved
by the CGMA Board with discussion from CGMA Cities Staff. As an example.
the process could be simplified to be a specified percentage such as a fixed
20%. Such a fixed rate could be adjusted annually or periodically as the CGMA
members agree is reasonable and could be independent from the concerns
over gathering appropriated cost reduction data from specific NTMWD.
Another alternative could be to take an average of the % of rate discount over
time. For example: in eleven of the last 12 years, a discounted rate was
calculated using either District data or the same as the prior year. The result
is an average or 21.43 % off the standard NTMWD rate (does not impact the
GTUA budget allocation or CGMA-GTUA debt! capital rate calculation). Based
on the 2024 Water Year rate after $0.05 adjustment recently granted resulted
in a 53.74 % K gallons rate times a 21.43% rate adjustment for purchased MAV
would result in a 50,8015 rate discount. Thus, the above referenced S0,60
discount may seem too low to some cities. If the group overall want toe raise
the discount amount. it is suggested that it be gradually phased in at the rate
of 2 to 3 cents per year in an effort to be as equitable to both buying and selling
Cities.
It is important that:
A
a, There be a benefit that induces the Buying Participants to purchase unused
MAV from Selling Participants, and
b, it is rational that Participants not using all their allocated MAV bear some
cost exposure.
c. This concept proposed has provided the buyers that purchased amounts of
unused MAV a discount ranging from 13% to 16% (except for the 2011 &
2012 anomaly years with the Sellers having the similar,. but moderately
increasing levels of reduction from the base cost of water.
d. Additionally, the buyer Participant(s) will continue to receive credit for the
purchase of unused MAV volume reducing their subsequent year MAV by
the purchase volume. This also allows the aggregate CGMA MAV to match
the calculated GTUA MAV as calculated by NTMWD.
e, The Policy provides that the Selling Participants discount the water under
the Buy -Sell agreements by calculation. if available, of rational cost savings
to the production of water from the source assuming adequate data is
available, Alternatively. the cost discounted rate or rate concept could be
one approved by the CGMA Board with consent of the CGMA Cities Staff,
As an example. the process could be simplified to be a specified percentage
such as a fixed 20%. Such a fixed rate could be adjusted annually or
periodically as the CGMA members agree is reasonable and could be
independent from the concern over gathering detailed cost reduction data
from specific annual cost factors. gallons.
f. For the 2024 water year buy -sell agreement. the S0,05 cost rebated to the
base price resulted in a base price for the year S0.05 less than the initial and
invoiced price for all the MAV water; this nickel system wide credit or
reduction in base price shall be used as the base price for calculating the
buy -sell price.
It is possible (as occurred in the 2021 Water year and again in the recently
completed 2022 Water Year) that an overusing City may have used more water in
excess of its NiAV than available from at the Selling Cities: in such case. said city
shall pay the GTUA-CGMA systern the full rate for the Water Year based on billing
after all true up volume data is validated by NTMWD and GTUA. Such was not
the case for the 2021 WY.
Therefore, to assure clarity, the Buying City is responsible for;
1. Purchasing it's full share of MAV as billed for the WY by GTUA.
2. Purchasing available or agreed portion of unused MAV water from selling
City or Cities.
3. Purchasing any additional water taken beyond said Participant's MAV plus
any unused MAV purchased from Selling Participants; the cost for this
volume shall be the full established rate for the subject water year as a true
up at the end of the water year when volumes and any rebates are validated
by both GTUA and NTMWD.
4. Additionally, purchasing City will receive a credit applied to the subsequent
Water Year MAV thus reducing the subsequent year MAV by the volume
purchased from Selling Cities,
r1
Staff recommends the above methodology which provides:
1. Transparency in source of applicable rate and discount amount
2. Avoids conflicting accounting for short-term issues by charging the annually
charged rates, and
3. Maintaining the credit for subsequent year MAV volume, Back testing has
indicated consistency with audit validity with NTMWD volumes and the
collective GTUA MAV while maintaining full accounting audit capabilities.
The following tables illustrate the funding methodologies and the resulting buy — sell
amounts for the 2023-24 water year which started August 1, 2023 and ended July 31.
2024, The NTMWD beginning of year price i K gal was 53,79 ' K gal. Subsequently,
last month. NTMWD granted a S0,05 / K gal credit (reduced price for the full 2023-24
water year. While no credit for underused water was granted in the 2023 ANY,
Documentation from historical records indicated that if a credit for unused water had
been granted. the adopted Water credit for 2023 WY was would likely have been based
on $0.60 1 K Gallons for that water year and that is the discounted rated included
in the data below. If the Cities want to increase the discount rate, Consultant
will be pleased to make the necessary revisions to this document. Therefore,
it is recommended that the 2024 WY credit for the buy -sell agreements be $0.60
K gallons as a reasonable and equitable discount rate for the 2024 Buy -Sell
program: unless a differing policy is desired. Several optional methodologies are
noted in the above paragraphs_
2023-24 WY (ended July 31, 2024) customer rate data
All CGMA MAV water I K Recommended Discount
Entities gal (1000 gal units) Policy for unused MAV
rates 3.69 0.60
Net sell rate for 2024
Water Year
3.09
Proportionate Share Use: MAV available to be sold to Excess use City for 2023-
94 water vear
MAV (in K Gal) Melissa Anna Van Howe
Alstyne
MAV water (all in K 571.761.6 859.848 126,469 75,505.6
gallons)
Flush. ratio City MAV 0,4453 0.3442 0,1135 0.0464
to tot MAV
Share Flush by Ctiy 37,565 29,032 9,571 3,911 j
Tot Adj Wtr Take incl 778.671.3 601788.5 198,396.0 81.071.3 '
share flushing, maint
Over / under used MAV 206.909.7 258,059 65,264.6 5,050.1
F
M.
Buy -Sell Vol ratio to
total City overused
0.7275 NA 0.2529 0.0196
Buy Vol in K gal 187.744.2 NA 65,264.6
7,717
I 5.050.1
i
622 iTotNettakeover
MAV
22,279.2 NA
K gal purchased 187,744.2 NA 65,264.6 1 5,050.1
K gal sold NA 258,059 NA NA
Total paid $ 580,129.70 NA 201,667.80 15,604.80
Total received $ i NA
i
797,402.30 NA NA
Thus. the purchase of unused MTIP from Seller City to purchasing Cities of Melissa,
Van Alstyne and Howe is shown above resulting in a total purchase of unused MAV
from Anna of $ 810,305.3
Note that there was no refund from NTMWD for rebate program from usage under
MAV to GTUA 2024 water year.
Note that program responsibility is CGMA Cities:
This prograrn is not regulated or controlled by GTUA but has been developed by the CGMA
Facilitator as an Interlocal-Agreement among CGMA participating cities for the benefit of the
participants with GTUA recognizing the cooperative arrangement between the Cities and
reducing the Buying Cities subsequent year MAV by the volume purchased through the
Interlocal Agreements between Buyer and Seller Cities. MAV obligations are paid by all cities
in equal monthly payments beginning in October and concluding in September of each fiscal
budget year for the MAV as set for the water year beginning August 1 of each year based on
the adjusted consumption in the prior water year ending July 31. A true up of additional water
volumes over MAV is charged upon final determination of actual volumes based on both
NTMWD and GTUA records.
Participation in this program is not a requirement, but a choice that each participant
determines independently. It is noted that the Buying City would have to pay the established
water rate for the water year if this option were not available and no recovery would be
available to selling Cities absent this program. However, the program allows:
1. Selling Cities to recoup a portion of the funds already spent for their required 2024
MAV: and for
2. Purchasing Cities to pay for water actually used at a moderately discounted price
which allows said Purchasing City to reduce the increase in their respective MAV
for the subsequent year by up to the amount of purchased MAV from selling City(s).
level.
9
3. Cites should remember that regardless of where its consumption is for any year ....
either a buyer or seller of unused MAV, that position could be changed as growth
and water consumption impacts each Participant differently in future years.
It is anticipated that this program will be presented to the CGMA Board for review at a Board
Meeting in October 2024, CGMA Board meeting. A recommendation will be made by Staff at
that meeting; however, while this report is Staff prepared and recommended, no action is
anticipated or suggested until City Management and other staff have had time to review and
comment if desired.
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